Dubai: Shoppers in the UAE are being treated to some of the biggest discounts (or cashback offers) across categories, with retailers hoping to get them back to spending after the summer breaks. Straight discounts, at stores and on online marketplaces, are running as high as 40-70 per cent off, alongside ‘Back to School’ promotions.
Retailers have some work to do to get sales volumes up. This summer was the first in 3 years that a majority of UAE residents and citizens took extended holidays from July on. Some have even taken more than one short breaks during the period.
All of which have resulted in a drop in overall sales during these weeks, and which retailers are trying to compensate for through various offers.
Back to spending on travel holidays
“These are not just the typical 20-30 per cent discounts, but go far bigger than that,” said a retailer at a leading fashion brand. “Our July sales dropped and August is not looking too good either. We need our latest promotions to click instantly once shoppers return from the holidays.”
Retailers do not want to be in a situation where consumers put off buying because they had over-indulged on their spending during their travel. This is why the 50 per cent and 60 per cent discounts are flashing big these days – there’s no chance UAE residents will miss seeing them.
Keep prices level
The other big move on UAE retailers’ part is to keep prices constant, where possible, especially on the high volume daily consumables. “We introduced a new initiative - 'Price Lock' - to help customers cope with global price inflation.
“Prices on a wide variety of grocery and essential products will remain the same until the end of 2023,” said Nandakumar Vijayan, Director of Marketing and Communications at hypermarket retailer LuLu Group. “We are also exclusive sellers of school uniforms in the UAE, and working with suppliers and tailors to make sure families get their needs sorted out more conveniently.
We've slashed prices by up to 70 per cent off on essentials like food, fashion, shoes, stationery, school bags, and more.
Keep inflation worries at bay
Inflation and cost of living are clearly front and center of shoppers’ minds, and retailers want to assuage that – at a cost that will be a win-win for all. There are fresh concerns that food prices could be in for more volatility, brought on by a combination of geopolitics and some countries reducing/halting exports of key staples.
Where possible, “(UAE) retailers intend to support consumers with added value on grocery necessities as a result of the inflation that has impacted customers’ perception,” said Marc Laurent, President of Retail - Everyday Goods at Dubai-based GMG, which owns the Geant supermarkets in the UAE.
With schools starting soon, consumers are preparing for back-to-school expenses, prompting businesses to offer more enticing deals to capture their attention. And encourage spending. This combination of seasonal trends and back-to-school considerations could be contributing to the perception of this year having bigger summer promotions (than usual).
Buy at store or online?
Industry sources say by now there is nothing to choose between what retailers offer as discounts in store or what e-marketplaces such as Noon have online. Retailers and brand owners are being consistent with their promotions, irrespective of the channel.
“Because if a shopper sees a bigger discount on a brand somewhere, it becomes extremely difficult to get him/her back,” said a wholesaler. “So, convenience is becoming the deciding factor in shoppers choosing from where they should be buying.”
Close watch on disposable incomes
So, will UAE shoppers start spending immediately on their returns? Will categories such as computers and other gadgets get a pre-September boost? On electronics and tech, the promotions have started early enough, and the offers on notebooks and smartphones are quite eye-catching.
“In the last few years, what UAE residents used to spend on travel during summer was going into retail,” said Sandeep Ganediwalla, Partner at Redseer Consulting.
This year, we are seeing the reverse phenomenon, with travel taking retail's share of disposable income. So, although summer promotions are on track, there is a slight slowdown in the sales.
This is what retailers are trying to correct. At the earliest, with lots of help from the 40-70 per cent discounts.
“Cashback entails the greatest positivity in shopping, with the best outcome for both consumers as well as brands,” said Sridhar Krishnamurthy, Managing Partner and co-founder of the loyalty platform Bounz.
“This has been gaining greater visibility because of the instant gratification it provides. The aim of all retailers and loyalty programs should be to coexist with other players in the market by not solely focusing on competitive strategies but also complementing them.”
