Optimism is now high in the UAE’s private sector, with three out of four small-time entrepreneurs saying they are optimistic about business recovery in 2021, according to a new study by Visa.
The digital payments provider also found that the majority of UAE merchants (82 percent) believe that their investments in digital payments had paid off and will play a major role in recovering from the COVID-19 slump.
Businesses across all industries have been impacted by the coronavirus pandemic, with those who don’t have an online presence being the most severely affected.
Visa’s “2021 Small Business Recovery” study polled small and medium businesses in the UAE, Saudi Arabia, Egypt and Pakistan to understand how their business has evolved to manage the impact of the health outbreak.
Shift in consumption habits
Most businesses said they have seen a shift in consumer spending throughout the pandemic, with 93 percent of merchants seeing increased use of contactless payments. The majority also noticed a rise in demand for takeaways (87 percent), as well as home delivery services (78 percent).
A lot of the businesses have implemented some changes in response to new consumption habits.
Among the retailers, in particular, more than a third (38 percent) said they have established an online presence in response to COVID-19. About four in ten of them also implemented in-store self-help signages to meet the needs of safety-conscious customers.
More than half (58 percent) of all merchants said they started offering home delivery and pickup services during the outbreak, while one in two have opted to run offers and promotions to attract and retain customers.
“It is encouraging to see that merchants feel optimistic about business recovery in 2021 and the swift adoption of digital payments and recognition of what their customers want—whether it is offering a range of digital payment options, home delivery or promotions – has been pivotal in them shifting gears from survival mode to recovery,” said Shahebaz Khan, Visa’s general manager for the UAE.
Conditions in the UAE’s private sector were subdued in February as a result of renewed COVID-19 restrictions. According to IHS Markit, only six percent of businesses in the country gave a positive outlook for the next 12 months, with overall sentiment remaining one of the weakest so far.
“The COVID-19 restrictions in February had a notable impact on the UAE economy… New orders failed to grow for the first time since last October, while output growth softened since the start of the year,” said David Owen, economist at HIS Markit.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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