The UAE’s retail economy is predicted have the fastest growth within the GCC with the sector showing solid signs of recovery as consumer confidence returned with a bang while spending by residents increased by 17 per cent, data from a new study reveals.
Regardless of the challenges of the global pandemic, consumer business in the UAE has proved resilient, dropping only by 12 per cent compared to the 22 per cent decline seen by the wider economy, according to the first State of the UAE Retail Economy report released by Majid Al-Futtaim, a leading retail and malls operator.
As a result, a quarter of the country’s electronic sales, up to nine per cent of fashion purchases, and up to eight per cent of grocery sales now take place online in the UAE, the study revealed.
The UAE’s overall economy is projected to grow by 3.1 per cent in 2021 as compared to 1.3 per cent in October 2020, according to the International Monetary Fund.
The Central Bank of the UAE expects economic activity to continue to pick up, supporting positive growth of 2.5 per cent during 2021 and recovering fully in 2022, with overall real GDP surging 3.5 per cent.
The data, which combines sales transactions and footfall in malls, shows that while retail sales in malls showed an increase of 10 per cent year-on-year in March, e-commerce has increased to double its 2019 level and by February 2021, e-commerce spend had increased by 30 per cent year-on-year.
The report indicates clear signs of optimism returning to the local consumer market, and the UAE is predicted to have the fastest growth within the GCC this year. Despite the lingering effects of the pandemic, the report highlights that UAE residents are gaining confidence when it comes to spending. Alain Bejjani, chief executive officer of Majid Al Futtaim Holding, said the report findings come at a time when the nation’s dedicated vaccination programme is offering a real sense of hope and confidence, following an undeniably tough year for everyone.
“In 2020, we experienced a rapid shift from established consumer patterns to the need for emerging innovation, like e-commerce, to meet customers’ changing needs. Today, we see a renewed sense of optimism that retail in the UAE will effectively recover, and our inaugural State of the UAE Retail Economy report underlines this,” said Bejjani.
“With comprehensive data-driven insights, our report findings will empower our stakeholders to make clearly informed business or policy-related decisions which, over time, will contribute to the wider UAE economy. I am confident that the promising signs we’ve seen from the first few months of 2021 will continue to drive a positive outlook on economic recovery as we continue to adapt to a post-Covid-19 world,” he said.
The report noted that the return of tourism is also a promising signal with tourist spending in Q1 2021 seeing a notable increase in the categories of fashion and accessories (91 per cent), watches and jewellery (207 per cent) and electronics (90 per cent) compared to the first quarter of 2019.
“Digitisation, careful spending and sustainability and health play a key role in consumer behaviours and buying patterns. Digital shopping has become established alongside physical shops, creating the arrival of the ‘phygital’ age, while shifting attitudes of millennials and Gen Xers means these groups are choosing to spend their money wisely, saving on everyday essentials to free up cash to make more emotional purchases,” said the report.
The data also suggests that sustainability is a focus for consumers in the UAE, with more than two-thirds (66 per cent) showing concern for the environment and half now likely to buy products that are kinder to the planet.
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