COVID-19: Challenges and opportunities in UAE's consumer, retail sector

Online grocery retailing has enjoyed exponential growth

A woman wears a protective mask, following the outbreak of the coronavirus, at the shopping mall in Dubai, United Arab Emirates, March 15, 2020.

A woman wears a protective mask, following the outbreak of the coronavirus, at the shopping mall in Dubai, United Arab Emirates, March 15, 2020.

REUTERS/Satish Kumar

The UAE’s consumer and retail sector has seen both challenges and growth opportunities after the coronavirus outbreak, a study by KPMG Lower Gulf showed.

Most grocery retailers have witnessed a 20 percent to 40 percent increase in their sales in the first half of March, compared with the same period last year, while online food/grocery retailing has enjoyed exponential growth, according to the report.

Grocery and food retailing businesses are faced however with a challenge to meet rapidly growing demand, KPMG said.

The report also notes that online marketplaces have witnessed strong demand, particularly for laptops/tablets (online learning and work from home requirements) and gym equipment.

The UAE has implemented a series of precautionary measures to stem the spread of the coronavirus. Schools and fitness centres have been shut as residents are being urged to stay indoors or observe social distancing.

On the other hand, sales at most luxury and fashion retailers declined by 20 percent to 50 percent in the first half of March, while across F&B concepts, sales dropped by 30 percent to 80 percent according to the report.

KPMG also said that several prominent non-food retail businesses have indicated that sales in the first half of March were down by as much as 50 percent to 60 percent compared to the same period last year.

“The Covid-19 outbreak has reshaped the UAE’s consumer landscape, disrupting businesses and impacting socio-economic health, Anurag Bajpai, Partner, Head of Retail at KPMG Lower Gulf, said.

“With no end to the current crisis in sight, businesses that are agile and already thinking of various future scenarios are better positioned to survive and potentially thrive,” Bajpai said.

Challenges ahead

Increasing concerns around the pandemic, as well as the measures taken to stop its spread, have contributed further challenges for the UAE’s consumer and retail sector according to KPMG.

The report states the following key near term challenges for the sector: business continuity, cash flow management, supply chain issues, changing consumer behavior, managing product delivery, health, safety and hygiene concerns.

Path to sustainability and recovery

To weather the COVID-19 storm, KPMG advises UAE retailers to manage demand fluctuations, evaluate current cash positions and assess the liquidity profile and potential changes in working capital dynamics.

According to the report, retailers must also have a plan for the health and safety of their employees, think ahead and prepare their supply chain operations for any form of economic recovery in the coming months.

(Writing by Gerard Aoun, editing by Seban Scaria)



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