Even with the reopening of shopping malls and other commercial establishments, it will take some time for many businesses to recoup their coronavirus losses and fully return to normality, according to a top UAE retailer.

Karim Merchant, CEO and managing director of Pure Gold Jewellers, said consumer spending is not likely to come back to pre-pandemic levels before the latter part of the year.

“I think that in the first few weeks [of reopening], customers will adopt a wait and see approach. Eventually, they will return to the stores when they adapt to the new way of shopping and feel the comfort to do so,” Merchant told Zawya.

“[As to when sales will return to normalcy], it will depend on the coronavirus situation…Realistically, I don’t see sales coming back to pre-COVID-19 level before December 2020,” he added.

Merchants in the jewelry sector, along with fashion, furniture and electronics, have been hit the hardest by the pandemic. The UAE government had ordered in March the closure of all shops in the non-essential category as part of the precautionary measures to stem the spread of coronavirus.

The shutdown left many entrepreneurs struggling to sustain their business and keep their employees. One of the major players in the sector, Alshaya Group, reported a massive 95 percent decline in revenues in just two months.

According to BUZ Management and Marketing Consulting’s new survey released last week, most of the UAE retailers (75 percent) have reported “major negative impact” by the health crisis, adding that 12 percent feel that a positive recovery will not be possible within this year.

To mitigate the financial impact, retailers have asked for rental relief and discounts, while nearly half of them (41 percent) implemented temporary salary cuts. A small portion of the businesses reported considering permanently cutting salaries and freezing recruitment.

Precautionary measures

Last week, the government announced its decision to lift coronavirus restrictions, allowing shopping malls and non-essential businesses to reopen their doors, provided certain protocols are strictly followed to avoid more infections.

Business owners have assured that they have put precautionary measures in place, such as temperature checks, social distancing and regular sanitization.

At Pure Gold Jewellers, staff wear disposable gloves and masks at all times and continuously sanitize the shops. “If the customer needs to try a product… we will be cleaning each piece with an alcohol pad after the customer has tried it. We are currently not accepting returns due to safety concerns as suggested by the health authorities,” said Merchant.

He said customers will be asked to maintain social distancing and, depending on the size of the store, shopper numbers will be limited to five people for larger outlets and three for smaller branches.

Colliers International had earlier said that the retail sector will be one of the fastest to recover, as consumers are expected to resume non-discretionary spending once the situation is contained.

“Research into previous economically challenging situations points out that when an economic downturn or recession takes place, consumers will particularly focus on spending money on necessities while deferring or cancelling large purchases… We expect that the boundaries of the definition of necessities will gradually widen once consumers have more economic certainty,” said Ricardo Bergsma, director of leasing and retail advisory services at Colliers International MENA.

Wholesale and retail trade is one of the drivers of the economy in Dubai. As of 2017, the sector represented 26.6 percent of the gross domestic product (GDP). The sector, however, derives a huge part of its revenues from tourist traffic, which has ceased since the shutdown of all passenger flights last March.

Helal Al Marri, director-general of Dubai’s Department of Tourism and Commerce Marketing, hinted on Tuesday that Dubai could start welcoming tourists in July. 

(Reporting by Cleofe Maceda; editing by Seban Scaria)

Cleofe.Maceda@refinitiv.com

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