UAE residents’ robust consumer power is poised to propel economic growth against the odds, experts say.
Corporate executives and business consultancies noted the UAE market has efficiently ramped up its operations to withstand the impact of lockdowns. They remarked consumer spending has persevered throughout the most acute period in the face of an unstable global macroeconomic environment, and the trend is here to stay.
Senior partner at advisory firm Crowe UAE, Saad Manair, said that now the UAE residents find themselves in a better place than some Western countries’ counterparts and are more adept at managing their finances.
“The UAE consumers have been generally extravagant in their spending, and they need to be smart in how they deploy their earnings,” Mr Manair told Khaleej Times.
CEO of UK-based advice firm Business Link, Hatem ElSafty, said the UAE’s consumers’ confidence is rising while their purchasing power is growing, catapulting the emirates’ economy and boding well for local businesses.
“With more disposable income and a desire for the latest technology and trendy products, consumers are becoming increasingly willing to spend, boosting the overall economy,” said Mr Manair.
Revenge buying continues unabated
A recent study by Chicago-based consulting firm Kearney found that UAE consumer spending remains high despite economic concerns. Moreover, they do not expect to reduce their spending in the foreseeable future.
“While price increases have been noted across most retail categories, about 16 per cent of consumers have reported an increase in spending on non-essential items compared to 2021. Over half, 56 per cent of the consumers, are planning to spend on a major household purchase (Dh1,000+) in the next six months,” the Kearney research reveals.
General manager at Ascent Partners, Ravi Krishnan, underlines the impact of pent-up demand from the lockdown era- the gift that keeps on giving.
“Consumers, who embraced e-commerce during the pandemic, continue to make robust online purchases, while at the same time boosting retail purchases thanks to a renewed appreciation for brick-and-mortar shopping experiences. This might explain the strong consumer sentiment even in the context of increasing prices,” Mr Krishnan told Khaleej Times.
UAE is in a good place
Managing director of Jaleel Holdings, Sameer K Mohamed, said that the UAE economy has escaped almost unscathed from the global financial sector turmoil.
“Although, prices have increased for almost all products across the market in the UAE, the spending power of consumers has remained robust due to the increase in their revenue compared to the consumers in other markets of the world. This is because the UAE economy has remained stable despite the challenges of the Covid-19 pandemic. The lives of the residents have not been affected by the pandemic as it was in other markets with job losses and revenue cuts,” Mr Mohamed told Khaleej Times.
“The UAE market stepped up its activities very fast to drive through the impact of the pandemic while maintaining the standard protocols and gradually easing the restrictions. In fact, the UAE market leveraged the situation by upping its game to maintain consumer spending power. This has positively impacted the economy without major government interference in the market.”
Group managing director of UAE manufacturer and supplier of food packaging products Hotpack Global, Abdul Jebbar, seconded this opinion: “In fact, consumers have accumulated more wealth through the pandemic than before as they have not had the same opportunities to spend it. One of the ways retailers took advantage of the increased spending power for consumers is by adopting an omnichannel model, taking advantage of the rise of e-commerce in recent years.
“It also enabled retail store expansions, special offers and discount campaigns, and other channels to reach consumers. Consumers today are also more conscious of their carbon footprint than before. They are willing to pay a higher premium for sustainable and eco-friendly products even during the current economic climate,” said Mr Jebbar.
