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In a clear indication of how strategic UAE shoppers are getting, spend during Q2-2022 was higher. This was the phase during which special promotions, 90% discounts, and Eid offers were available. Image Credit: Supplied

Dubai: In the first six months, UAE consumers were in the mood to spend – and they did, driving up overall transactions by 22 per cent over last year. Retail sector sales accounted for a 16 per cent spike in spending, while non-retail saw a 31 per cent growth during the period, led in large part by travel and tourism.

All of which was happening despite worries in the background about inflation and how it would push up retail prices. Some of the effects were still there despite the higher spending, according to the latest Majid Al Futtaim report on the ‘State of the UAE retail Economy’.

In particular, the worries about cost gains ‘influenced what people buy and where they spend their money’, according to the report, which bases its findings on the group’s point-of-sale transactions. In the April-June phase, spending on fashion and accessories and watches and jewellery rose 20 per cent compared with Q1-22, ‘driven mainly by seasonal discounts and Ramadan promotions’.

Indeed, the 50-90 per cent discounts offered offline and online have influenced cost-conscious consumers. According to retail industry sources, more of the same can be expected in the second-half.

“Despite the gathering global headwinds, data from the Q2 State of the UAE Retail Economy report confirms an ongoing, steady rebound,” said Alain Bejjani, CEO at Majid Al Futtaim – Holding. “Bolstered by Government-driven diversification initiatives that focus on strengthening the non-oil economy, boosting productivity, and creating the best environment for foreign investment, the UAE retail economy looks set to continue on a positive trajectory.

“While the country is not immune to wider macroeconomic challenges and inflationary pressures, the intrinsic strength and stability of its foundations offer fertile ground for lasting economic growth.”

In the hyper/supermarket space, while overall volumes are up, average transaction size was actually down 12 per cent as shoppers indulged in more prudent buying behaviour.

  1. What were UAE shoppers spending on?
  2. The overall retail general category was up by 15% from the same period in 2021, and contributing 44% growth to the overall retail economy, according to the Majid Al Futtaim report.
  3. Spending increased on F&B (15%), hotels (14%) and pharmacy and health (14%).
  4. The hypermarket and supermarket sector 'demonstrated growth', up 12% in the first-half.
  5. However, consumer purchases shifted towards lower value and higher frequency, with the average transaction value down by 12 per cent compared with the first half of 2021.

Buy, pick up later

Going by the Majid Al Futtaim findings, the omni-channel way of shopping is finding greater acceptance. This also explains how UAE’s brick-and-mortar retail destinations and stores retain their relevance at a time when online keeps on growing.

So, even as ecommerce spending increased by 41 per cent in the first-half of this year, it is something that physical retail can absorb – or co-opt through omni-channel. Online sales now account for 11 per cent of the overall retail economy.

“Perhaps unsurprisingly, clothing and fashion topped the omni-channel list, with 54 per cent of shoppers saying they make purchases in this category on- and offline, whilst 54 per cent also stated that they prefer to go in-store when shopping for groceries,” the report adds.

Travelling more - and spending

Visitors are returning to the UAE and spending more, with the average spend per card up by 34 per cent compared with the first six months of 2019. Data from Majid Al Futtaim’s Happiness lab shows 72 per cent of the UAE population plans to travel at least once this year.

"While the country is not immune to wider macroeconomic challenges and inflationary pressures, the intrinsic strength and stability of its foundations offer fertile ground for lasting economic growth." - Alain Bejjani of Majid Al Futtaim – Holding