Revamped sales and marketing strategies needed ahead of upcoming Dubai Shopping Festival as soft retail demand and prudential consumer shopping patterns raise retailer qualms

Dubai 24 January 2009, Soft consumer demand will be front of retailer's minds ahead of Dubai's upcoming Shopping Festival. The latest figures from Datamonitor's monthly Recovery from Recession consumer survey show that UAE consumers are still doing it tough.  Only 5% of consumers claim to have increased spending on goods and services over the last six months following an improvement in personal financial circumstances. Most consumers are still trying to live within their means, are paying down debt, and are taking active measures to control discretionary expenditure. Retailers will need to focus on value-centric marketing, shop layout and atmosphere and in-store merchandising to maximize sales during the shopping event.  

Despite rising share markets, Datamonitor figures show that slightly more than half of UAE consumers (55%) feel that they are significantly (23%) or at least slightly (32%) worse off than they were six months ago while only one third (33%) indicate that they have experienced no material change.  Figures are only marginally better than those observed in Q2 and Q3 2009 when 57% and 59% of consumers respectively indicated feeling worse off than six months previous. Only a small minority (13%) feel their financial circumstances have improved over the last half of 2009. Meanwhile, economic sentiment has not improved significantly since August (see Figure 1).

As a result of financial concerns, UAE consumers are not consuming as much as retailers would like. As Datamonitor analyst Richard Adams comments, "70% of UAE consumers now claim to be actively taking measures to control expenditure; 40% claim to be consciously making lifestyle changes to save money. Only a minority (11%) feel now is the time to take advantage of weak retail prices".  

Consumers are particularly unwilling to splash out large ticket luxury items. 58% of UAE consumers claim to have cut back on big ticket and/or luxury items like cars, designer clothes and holidays and a sub-set simply cannot afford to spend big. 20% of 'non savers' have exhausted all previous savings while nearly two in every five consumers (39%) consumers claim to be prioritizing debt repayment.  

The key take out: "Industry players will need to find, and communicate, the value 'sweet spot', the point where expectations are exceeded at a given price, if they are to make the most of the Dubai Shopping Festival (DSF). 40% of consumers report currently shopping around for best price all or most of the time so price visibility is relatively high" comments Adams. Astute marketing, promotions and product bundling, rather than simple price competition, appear to be key ingredients for DSF success. 

The internet should not be overlooked as a medium for communicating value-centric messages. While only about 8 to 9 per cent of UAE consumers report consistently buying online to save money, 38% of UAE consumers claim, according to Datamonitor figures, to be regularly using price comparison websites. "Consumers are turning to the internet to find information about product pricing and to establish formulation credentials" notes Adams. "Marketeers should consider utilizing social media sites and incorporating internet-based WoM marketing into [marketing] campaigns. Consumer trust in corporates has been negatively affected by the economic downturn and consumers are much more receptive to peer reviews and consumer generated content in the broad".  

According to Adams, store and channel behaviours have also changed significantly over the last 9 months. "Not only are UAE consumers visiting a broader range of retail destinations, but Recovery from Recession data shows many (55%) have adopted auto-pilot shopping behaviours, only purchasing items on a pre-determined list". Consequently, "in the lead-up to the Shopping Festival, shop layout and atmosphere must be as compelling as possible. In-store merchandizing should also be utilized to take advantage of brand-switching behaviours and to stimulate demand more generally".  

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