Dubai: UAE’s retail economy is showing strong signs of recovery with overall consumer spending in 2021 surpassing pre-COVID-19 levels. Consumer spending last year grew by 4.5 per cent, boosted by Expo 2020 opening in October and a near full return of international travel, according to Dubai-based Majid Al Futtaim.
The report found that the fourth quarter of 2021 was a “standout” period for consumer sentiments, mainly driven by the Expo, improvements in vaccination rates and an uptick in international travel. Tourism was a key driver, seeing as tourist expenditure increasing 22 per cent in 2021 compared to 2019, and tourist-linked spending in the fourth quarter accounted for 74 per cent of the increase. The last quarter of 2021 also accounted for 16 per cent of GDP in UAE in 2021 via direct and indirect spending.
According to Majid Al Futtaim’s ‘happiness lab’ survey, optimism continues to improve, reaching 33 per cent in the fourth quarter, up from 29 per cent in the previous three months. Consumer confidence also increased, with 92 per cent of respondents stating they believe the UAE economy is in good shape. A modest improvement in shopping mall footfall was also recorded, with Majid Al Futtaim experiencing an 11 per cent increase in its destinations in the fourth quarter compared to the third quarter.
Online shopping keeps its ballast
E-commerce flourished last year as consumers continued to prioritise convenient shopping experiences. PoS (point-of-sale) data revealed a 104 per cent increase in online shopping spending in 2021 compared to 2019 with the majority of online spending by residents being at hypermarkets, supermarkets or general retail online offerings, rising 46 per cent in the fourth quarter from the third. Consumer spending in non-luxury fashion and accessories also increased, rising 24 per cent on the third quarter, partly due to many brands introducing online offerings to complement physical stores.
“We witnessed an increasing appetite for digital experiences, particularly for high-quality omni-channel retailing,” said Bejjani. “Shopping trends like webrooming, showrooming and the use of virtual reality will continue to shape the future of retail and we remain confident that customers will continue to seek out experiences that combine the finest features of e-commerce and physical retail when it comes to meeting their demands in 2022.”
Contactless payments grew more popular during the period. Majid Al Futtaim operated Carrefour transactions show that the share of card transactions increased to 53 per cent in 2021 from 40 per cent in 2019, while cash transactions dropped from 60 per cent to 47 per cent.
