According to a report by Ventures Middle East, a business advisory consultant, the United Arab Emirates (UAE) is expected to grow over 33 per cent in 2015, as retailers eye options to invest more in expansion, even while facing challenges such as online competition, attracting footfall and converting them into buyers. With a progressive economic outlook, UAE is emerging as one of the sought- after destinations for international retailers and Dubai is the region’s leading retail destination, with the second largest number of global brands after London.
Benefiting from the impact of a growing tourism sector, new mall announcements and Dubai’s successful World Expo 2020 bid, UAE has been placed at the epicentre of a global retail revolution. The announcement of hosting rights for Expo 2020 has brought optimism to the UAE economy, creating jobs as well as driving the expansion of shopping centres, as the event is expected to attract 25 million visits, 70 per cent of which will be from overseas. This will be the first time that the World Expo is staged in the region comprising Middle East, North Africa and South Asia (MENASA). Since the first Great Fair of 1851, World Expos have continued to be one of the largest and most enduring global mega- events. Lasting six months, World Expos attract millions of visitors who explore and discover pavilions, exhibits and cultural events staged by hundreds of participants including national, international organizations and businesses.
WhAT IS SeLLIng In DubAI?
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• Prints such as fruits, florals, paisleys to pinstripes
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• Fringe skirts
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• Polka dot trousers
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• Neo hues and metallic accents
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• From raw to selvedge, sequinned to stonewashed, denims are in… denim skirts, shorts, dresses, etc.
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• Sultry silhouettes
These developments, combined with rising disposable income levels, have made the United Arab Emirates’ consumers more confident about spending. In 2014, the GDP increased by 4 per cent, which is up from 2 per cent in 2010, as the country’s infrastructure and the favourable Government policy continues to drive inbound tourism. Landmark Group, a retail and hospitality firm with major footprints in the UAE, has announced that it expects to register growth of more than 10 per cent in like-for-like sales in the coming year in the UAE. The aim is to add 25 new stores in 2015 across the retail and hospitality segment. Since, the UAE has carved a niche on the world map as a shopping, entertainment and leisure destination, as a positive spill-over, the retail and hospitality segment in the region will see a growth, bringing both visitor and resident traffic into stores.
In the UAE, Dubai has retained its position as the second most important retail destination globally for the second consecutive year, while Abu Dhabi ranks fourth amongst the top 20 hottest retail markets, as per CRBE’s annual survey. New developments such as Dubai’s recently announced ‘Mall of the World’ entertainment and hotel district, including the world’s largest mall, spread across 8 million square metres, at an estimated cost of US $ 6.8 billion, is being seen as a big investment in terms of expansion, whereas the Dubai Mall and the Dubai Shopping Festival alone attract close to 35 million visitors per year. “A rise in consumer purchasing power and a growing young and brand savvy population have made Dubai one of the world’s most attractive hubs for retailers. To meet these future demands, Majid Al Futtaim has committed to over AED 3 billion (US $ 817 million) of new investment across our Dubai portfolio,” informs George Kostas, CEO of Majid Al Futtaim – Properties, a leading shopping mall, retail and leisure developer in the Middle East and North Africa.
In the UAE, Dubai has retained its position as the second most important retail destination globally for the second consecutive year, while Abu Dhabi ranks fourth amongst the top 20 hottest retail markets, as per CRBE’s annual survey.
Boasting brands such as Prada, Kate Spade, Lipsy London, Franklin & Marshall, Philipp Plein, Galvanni, M&CO, Gocco, Aigner, ZARA, M&S, H&M, Mango, Promod, Next, Balenciaga, Bottega Veneta, Burberry, Bvlgari, Canali, Michael Kors, Missoni, Mulberry, etc. to name a few, UAE has become a hotbed for expansion as new brands are entering into this market almost every day. The largest department store in the US, Macy’s will also open shop in 2018 as part of a 2.3 million sq. feet shopping centre, built on Al Maryah Island, Abu Dhabi’s central business district. “Bloomingdale’s at the Dubai Mall has been a spectacular success, far exceeding the sales turnover of stores there like Galeries Lafayette and Marks and Spencer. Adding Macy’s to the mix will be an extraordinary success in this market and a tremendous building block for Macy’s and Bloomingdale’s worldwide,” reveals Burt Flickinger III, Managing Director of retail consulting firm Strategic Resource Group, which has worked extensively in the UAE.
Giving further impetus to retail growth is internet retailing, which has experienced strong double digit growth as security of online payment improves and lifestyle becomes busier, encouraging many consumers to take advantage of the convenience of online shopping. Furthermore, with the penetration of mobile internet connections reaching 22 per cent in the United Arab Emirates during 2014, it has become essential for players in retail to maintain a strong online presence in order to cater to consumer demand for online price comparisons. While Souq Group maintained the leading position in internet retailing in the UAE in 2014, followed by Amazon.com Inc. with a 12 per cent value share and 11 per cent value share of eBay Inc. According to Euromonitor, Internet retailing is expected to increase in value at a CAGR of 38 per cent in constant 2014 terms, rising to AED 10 billion in 2019 to account for a significant 6 per cent of overall retailing value sales in the United Arab Emirates. Realising the potential of maintaining robust growth across both our e-commerce and m-commerce platforms, Namshi, a web company which specializes in fashion and lifestyle retail, has increased its inventory and overall product offering in line with demand.
Undeniably, a positive economic outlook for the United Arab Emirates and buoyant consumer confidence are expected to encourage higher levels of spending, further encouraged by higher employment and the arrival of growing number of expatriates following the announcement of Dubai hosting Expo 2020. Adding fuel to the upsurge is the growing number of shopping centres which are due to be completed and ready for retailers over the next two years. Though it seems to be a period of growth for the Emirates, but industry watchers caution that only those brands or retailers would be successful who can adapt to rapid changes over the next few years, including fashion requirements of a global customer.
