Stock Online shopping
More UAE online shoppers are coming back to these channels, and it is showing in the numbers. Image Credit: Shutterstock

Dubai: There is no slide in UAE shoppers going online for their needs. The online numbers are still running way above pre-pandemic levels even as brick-and-mortar provides more direct competition than they could during the pandemic years.

Online retail-related spend is triple that of what was seen in Q1-2019, with F&B and orders from hyper/supermarkets leading the way. Ecommerce transactions made up 11 per cent of all retail spending in the UAE during January to end March this year, against 5 per cent before the pandemic, according to the latest ‘State of the UAE Retail Economy’ report from Majid Al Futtaim.

The spend patterns suggest they can hold up against challenges. “While the UAE will still face some headwinds throughout the year, notably price pressures and the prospect of interest rates edging higher, the data shows the fundamentals are strong,” said Alain Bejjani, CEO at Majid Al Futtaim – Holding, said: “We must take stock of the tremendous economic recovery underway and acknowledge the transformation experienced over the last 24 months.

“The report shows that industries, sectors and businesses have adapted swiftly to new working methods and have supplied new consumer trends and demands using ingenuity and innovation. The encouraging signs we witness from these past three months will lift the UAE towards a stronger economy.”

Going against notions

The impression after the return of physical retail activity was that online sales will drop, even slightly, because options have opened up for UAE consumers. The reality is that shoppers have stuck to online buys – even as they spent in-stores. And the size of the overall retail sector itself has widened, including new malls coming online. There was a 14 per cent jump in Q1-2022 retail spending compared with the same period in 2019, ‘indicating that the nation’s post-pandemic economy continues to recover strongly’.

The Expo did its bit to go big on the numbers. The UAE hotels had sustained demand from October to March, which brought in an improved performance on average daily rate and revenue per available room. The hotels also had the highest occupancy rates in the world for four straight weeks in February and March, with 85 per cent occupancy in mid-March.

The Majid Al Futtaim report suggests that near-term spending patterns will be bolstered by:

  • The UAE government’s ongoing focus on pandemic management and its introduction of a range of growth-friendly initiatives.
  • The decision to adopt a more global Monday-to-Friday working week further strengthened Dubai’s status as a financial hub.
  • Government reforms promoting business development also played a significant role in driving private sector growth. This included a new law permitting full foreign ownership of companies boosting foreign investment, which increased to $20.7 billion in 2021, up 4 per cent from the previous year.

Most sectors tied to the ‘retail economy’ expanded; apart from F&B, the others were pharmacy and health, hotels, duty-free, electronics and home furnishings, with the increase being 19 per cent compared with the first three months of 2019. Additionally, hyper/supermarket spending rose 10 per cent, and accounted for 24 per cent of retail spending growth. First-quarter fashion sales were up by 15 per cent against Q1-2019, boosted by spending on non-luxury categories and accessories, as well as on watches and jewellery.