Dubai retailers report sales drop of up to 70%
Dubai retailers are reporting up to 70% loss of opportunity in profits as a result of the postponement of the Dubai Shopping Festival (DSF). The month-long event has been put back to 20 December following the death of HH Sheikh Maktoum bin Rashid Al Maktoum.
The sales drop is attributed to a lower number of tourist visitors, many of whom have switched their flights elsewhere in the Gulf. The postponement or cancellation of some of the aggressive marketing campaigns and raffles has also contributed to this staggering figure.
Last year's results showed 3.3 million visitors came into Dubai for DSF 2005, with a total spend of $1.83 billion.
"Everyone benefited from DSF," said Laila Suhail, chief marketing and communications officer, DSF. "With 45% of the profits going to the retailers and traders while the rest went to the hospitality industry, tourism trade, rent a car and related companies."
January and February are usually strong months in the retail calendar - with or without DSF, say many businesses.
However, with finances and planning already poured into DSF this year, for retailers these months are all about minimising cost.
"During DSF, we get about $150 million at retail level. Without DSF, we can expect only 50% of that," said K.P. Baiju, general manager, Dubai Gold and Jewellery Group. "So, we're trying to upscale the sale. There will be a continued aggressive campaign to let people know that the raffle stands without DSF."
ENOC, a key DSF sponsor, echoes most of the sponsors and retailers. "It is not so much of a loss but rather of missed opportunities," said Khalid Hadi, group brand manager. "From a sponsorship perspective, it has had a big impact with retainer investment.
"We had invested $1.4 million for the month-long period and expected ROI of much more than that number, which has now reduced to $550,000 in profits. All things considered, we probably will spend a little over $270,000 for a scaled promotion with proportionately scaled-down profit targets."
To offset the hole in the events schedule, DSF has allowed outlets to retain individual discounts and promotions, as long as they are not under the DSF banner.
Global Village continues until March 3, along with its 'Visit-and-Win' competition giving away $1.4 million.
The City of Gold coin raffle has also been retained with revised draw dates.
However, most of the entertainment events and raffles like the Lexus Mega Raffle, the Nissan Grand Raffle are cancelled.
There are a few surprises reported however. One of them is Damac reporting that its sales have leveled and that its audience has simply shifted from primarily tourists to a majority of residents.
"The footfall has risen and it's because of the population growth. There are enough customers to sustain the hole that DSF left," said Mario Samaha, manager, marketing and communications, Damac Properties.
With the delay of DSF, many shoppers are having to wait until December for the biggest promotions and sales. This could potentially lead to other countries in the Gulf benefiting from the delay.
Other shopping festivals include the Sharjah Spring Promotions, which is scheduled at the same time as DSF; the Hala February in Kuwait, which has its own Global Village-style arena; the Qatar Summer Wonders every July, which targets both locals and visitors; and the Muscat Festival, which promotes cultural heritage.
"They will see success but it's not because they've taken from DSF. It's more because the market has gotten bigger," said Samaha.
Suhail refutes the idea of Dubai losing business to other Gulf festivals saying, "DSF is not catering to Dubai or the UAE but the world at large. Thus it involves airlines, travelers, and performers, among other sectors."
"All festivals have their own share of visitors and the DSF, being the pioneer, has its own set of die-hard fans."
Gulf Marketing Review 2006
