Dubai: Will the UAE have another record summer of shopping sales in the coming weeks? The answer to that lies in whether its residents plan to travel or not in the coming weeks.
If they don’t have any such plans, even for short breaks abroad, then retailers can expect another solid set of numbers – from stores and online - before the new season kicks off in September. Even if the eventual sales total ends up slightly lower than last year’s, it would still constitute a big win.
Dubai has opened its latest Summer Surprises, while in Abu Dhabi and Sharjah, malls and retailers are lining up 50-80 per cent discounts for shoppers to indulge in one more shopping spree. “A location such as Al Zahia City Centre in Sharjah, which opened just recently, is recording brisk business despite the fact the entire mall hasn't opened,” said Ashish Panjabi, Chief Operating officer at Jacky’s Electronics.
Yet, local retailers have some competition to deal with – not from within the industry but from the many eye-catching summer getaway offers from UAE’s airlines. European destinations beckon as more countries allow return of flights on non-quarantine basis.
Some retailers are hopeful that the resumption of flights will mean more tourists returning to the UAE, if not now than by early September and in time for the Expo’s October opening. “We have to wait to see how the tourist traffic helps us,” said Panjabi. “For now, retailers have to gauge what will be the impact of some UAE residents starting to travel out again. Last year, everyone was here - so they spent here.”
This is indeed the common sentiment among retailers – if residents aren’t travelling, retail benefits.
What will they spend on?
Last year, during summer, UAE residents were stocking up on their technology needs – new laptops, iPads and smartphones – as they settled into a work-from-home routine. That was enough to drive sales of gadgets and electronics to record levels during the summer of 2020, while home and kitchen appliances too were flying off shelves – at stores and online – as residents adjusted to the COVID-19 created disruptions.
Now, with offices and roads filling up again, what shoppers will want is also seeing slight shifts. According to a brand new report by the consultancy Kearney, 21 per cent of UAE residents will spend on “non-essentials” in the coming weeks, notably on active-wear (with 31 per cent giving this a preference), and followed by office-wear (chosen by 30 per cent) and casual-wear (20 per cent). Yes, they intend to top up their collection of footwear (17 per cent) and accessories (8 per cent).
Fashion needs a leg up
Apparel retailers will be hoping that Kearney’s findings translate into sales at stores. In these 12 months, if one retail category has underperformed, it has to be fashion. In the Year of the COVID-19, there were far more pressing issues residents had to iron out than their choice of new clothes. This muted buying of clothes extended to online shopping as well.
“Over these 12-15 months, online sales made up 25 per cent of overall electronics and gadget demand in the country," said Sandeep Ganediwalla, regional Partner at RedSeer Consulting. “But online fashion sales would still be under 10 per cent of the overall sales in the category - that's because it underperformed last year.
"Overall online sales growth was driven more by grocery as people shopped for essential services from the comfort of their homes. But online fashion could be a big winner this year, as more retailers offer ‘Click & Collect’ services. It is becoming a format shoppers are comfortable with.”
Step back from discounts
The summer discounts will also be the final major promotions until November, when the ‘White Friday’ season starts and then heading into the end-of-year sales. (But given the Expo opening in October, chances are retailers could come up with some offers even earlier. Shoppers will need to watch this space…)
“But after more than 12 months of constant discounts, one senses that shoppers are starting to tire,” said Ganediwalla. “The impression is that a two-day promotion run by a big online retailer did not get the numbers expected. It could also be that shoppers – a good number of them - are going back to malls and stores for their shopping and entertainment experiences.
“This is my personal opinion – I think malls and store retailers have done a remarkable job in winning back shoppers after COVID-19.”
Even after the phase when residents wanted to step out after being cooped up in homes for weeks, they are still heading for the malls and stores. Sure, they may split their purchases between online and offline channels, but a visit to the mall remains on their itinerary, especially over the weekends. And shoppers are ready to accept that all such visits will be accompanied by strict safety guidelines.
It is a price they are ready to pay. Because if COVID-19 reinforced any particular thought in residents’ mind, it was to show that each of those shopping and leisure trips matter.
Whether it is entering a store, ordering a sandwich – with an emphasis on more greens and less mayo, please - at the food court, or just soak in the thrills at the cinema, those experiences matter. More.
So, what will be the dominant mood this summer of shopping? Stock up on more local experiences? Or catch a flight to some destination?
UAE retailers, for sure, will hope for a lot more of the first…