UAE retail economy rebounds on strong consumer spending

Alleviated concerns around inflation, a long weekend, and rising tourist numbers have contributed to driving a positive performance for the UAE retail economy as the overall economy stays on track to record its strongest annual GDP growth since 2011.

Majid Al Futtaim POS (point of sales) data shows overall consumer spending was up 20 per cent from January-September 2022 compared to the same period a year ago and retail economy growth was 15 per cent, with non-retail up 29 per cent.

Fashion spending increase outpaced other categories in the same period, climbing 23 per cent on the year and gaining 25 per cent on 2019 levels.

Quarter by quarter, January-March delivered the strongest retail sales so far this year, contributing 44 per cent of the growth for the first nine months compared with the same period in 2021.

The retail economy has now grown quarter-on quarter vs 2019 for five quarters in a row, and across all sectors, according to the Q3 2022 State of the UAE Retail Economy report released by the leading shopping mall, communities, retail, and leisure pioneer in the region.

“Growth within the retail economy in Q3 2022 was 12 per cent compared with the same period of 2019, with particularly strong uptick in fashion & accessories (+51 per cent) and watches and fine jewellery (+62 per cent). Spending in the retail general category (food and beverage, pharmacy and health, hotels, duty-free, electronics and home furnishings) rose 13 per cent in January-September vs the same period the previous year, contributing 40 per cent to overall growth in the retail economy. Tourism further boosted growth, with duty-free purchasing increasing by 45 per cent.

Spending in hypermarkets and supermarkets was up by 12 per cent in January-September from a year earlier, with 63 per cent of this increase coming from physical stores.

The report noted that the sharp rise of e-commerce continues, with sales projected to rise by 22 per cent this year, exceeding $6 billion and putting the market on track to reach $9.2 billion by 2026. Spending in this area increased 34 per cent in January-September compared with the same period a year earlier, with sales now accounting for 11 per cent of total retail economy sales.

“Another strong quarter for the UAE retail economy showcases notable sector-wide resilience and reinforces the country’s steady march towards a return to sustainable growth,” said Alain Bejjani, chief executive officer at Majid Al Futtaim – Holding.

He said the continuation of forward-thinking government initiatives underpinning this progress is making the UAE highly attractive to international businesses – as are the government’s steps to become a sustainability leader in the Mena region.

“With all indicators pointing to a strong fourth quarter this year, and the lifting of Covid-19 restrictions, the UAE has put the pandemic-related turbulence firmly in the rear-view. We only need to consider the ongoing opportunity, security, and safety this nation offers to see why the world continues to flock to the region to build their future here,” said Bejjani.

According to the report, travel and tourism visitors have returned and are now spending more than before the pandemic-induced turbulence. As restrictions continue to ease, the pent-up demand for travel has been unleashed – with Dubai experiencing a 182 per cent year-on-year rise in international visitors between January to August. Hotels have been a big beneficiary of increasing tourist arrivals, with the number of occupied room nights rising by 28 per cent on the year in January to August and 17 per cent above pre-Covid-19 levels from 2019, at just under 24 million.

Overall, business conditions continue to boom for the UAE real estate market, with Dubai recording the most robust performance between January and September since 2011. Transactions saw a 60 per cent jump compared with a year earlier and a 14 per cent rise in the quarter to 25,500, climbing by 77 per cent to Dh184 billion this year, setting new records for both metrics.

— issacjohn@khaleejtimes.com