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Consumer business in the UAE has proved resilient, dropping by 12 per cent compared to the 22 per cent decline seen by the wider economy. Image Credit: Gulf News Archive

Dubai: Despite the the pandemic, consumer business in the UAE has proved resilient, dropping by 12 per cent compared to the 22 per cent decline for the wider economy, according to a report by Majid Al Futtaim.

The report - State of the UAE Retail Economy - tracks the progress of the retail economy, with the first edition revealing optimism that retail will recover strongly in 2021. The data, which combines sales transactions and footfall in malls, shows that in the UAE, e-commerce has increased to double its 2019 level, and by February 2021, this spending had increased by 30 per cent year-on-year.

It is estimated that between 7 per cent and 9 per cent of fashion purchases, and up to 8 per cent of grocery sales now happen online.

Return of optimism

The report indicates clear signs of optimism returning to the local consumer market, and the UAE is predicted to have the fastest growth within the GCC this year. Majid Al Futtaim’s data reports an increase of 17 per cent in consumer spending from February to March 2021, and retail sales in malls showed an increase of 10 per cent year-on-year in March 2021.

“In 2020, we experienced a rapid shift from established consumer patterns to the need for emerging innovation, like e-commerce, to meet customers' changing needs. The report findings come at a time when the nation’s dedicated vaccination programme is offering a real sense of hope and confidence, following an undeniably tough year for everyone,” said Alain Bejjani, CEO at Majid Al Futtaim – Holding.

Improved tourist spending

The welcome return of tourism in the UAE has also shown promise, with tourist spending in Q1 2021 seeing a notable increase in the categories of fashion & accessories (91 per cent), watches & jewellery (207 per cent) and electronics (90 per cent) compared to Q1 2019.

The report adds that digitisation, careful spending, and sustainability and health play a key role in consumer behaviours and buying patterns. Digital shopping has become established alongside physical shops, creating the arrival of the ‘phygital’ age, whilst shifting attitudes of millennials and Gen Xers means these groups are choosing to spend their money wisely, saving on everyday essentials to free up cash to make more emotional purchases.

The data also suggests that sustainability is a focus for consumers in the UAE, with more than two thirds (66 per cent) showing concern for the environment and half now likely to buy products that are kinder to the planet.