UAE retail economy grows by 16 per cent from last year, says report

The UAE recorded a 16 per cent increase in retail spending from the first half of last year to the first half of this year, according to Majid Al Futtaim’s State of the UAE Retail Economy released in the second quarter.

Sales of retail general items, such as personal care items, household goods and furniture, rose by up to 15 per cent and accounted for 44 per cent of the overall retail economy’s growth.

The average value of transactions at supermarkets and hypermarkets decreased by 12 per cent from the first half of last year, with consumers shopping more frequently yet purchasing fewer items during each visit.

“In testament to the inherent resilience of its economy, the UAE has continued to demonstrate sustainable growth through the first six months of the year,” said Alain Bejjani, CEO at Majid Al Futtaim Holding.

“Despite the gathering global headwinds, data from the Q2 State of the UAE Retail Economy report confirms an ongoing, steady rebound.”

While footfall at Majid Al Futtaim’s shopping centres in the UAE rose by 15 per cent from the first half of last year to the first half of this year, the e-commerce market grew by 41 per cent.

Online sales accounted for 11 per cent of the UAE’s overall retail industry in the first half of this year.

Consumers preferred omnichannel approaches to shopping, said the report.

Fashion items were most popular online purchases; however, 54 per cent of consumers preferred shopping for clothing both in-store and online.

Analysis of point-of-sales transactions showed that inflationary pressures and rising prices did not prevent spending, but altered consumers’ choice of purchases.

For instance, fashion, accessories, watches and jewellery sales rose by 20 per cent from the first quarter to the second quarter of this year.

Discounts and promotions during the Holy Month largely influenced consumer behaviour during this period.

“Bolstered by government-driven diversification initiatives that focus on strengthening the non-oil economy, boosting productivity and creating the best environment for foreign investment, the UAE retail economy looks set to continue on a positive trajectory.

“While the country is not immune to wider macroeconomic challenges and inflationary pressures, the intrinsic strength and stability of its foundations offer fertile ground for lasting economic growth.”

The country’s retail market was also influenced by increased spending by tourists, especially after the pandemic.

Average spend per card by tourists rose by 34 per cent from the first half of 2019 to the first half of this year.

Continual increased retail spending and signs of economic rebound are expected, said the report.

Majid Al Futtaim operates 28 shopping centres across the Middle East, as well as numerous international brands, such as Abercrombie & Fitch, Lego, Hollister and Lululemon.

The group also holds exclusive rights to Groupe Casino’s Carrefour across the region.