Analysis Retail Let the tills ring out: retail is back with a vengeance in the UAE By Chris Hamill-Stewart July 27, 2022 City Centre Mirdif Media Centre Shopping malls are thriving since the pandemic eased Rises in domestic spending and foreign visits have led to a retail boom E-commerce is joining, not replacing, in-person shoppingLeading retailers are looking to Saudi Arabia for new opportunities The UAE’s leading retailers are benefiting from a post-pandemic boom that has them eyeing further expansion into the region’s largest markets. Dubai was among the first economies to reopen after lockdown in 2020. It welcomed a flood of holidaymakers from all over the world to the relative freedom of the emirate. Anthony Spary, head of office investor leasing and retail at CBRE, said Dubai’s openness in a closed-off world had spurred a boom in the retail market. “Tourists have been back for a year to 18 months. There are more tourists in Dubai, probably, than most countries in the world,” he told AGBI. Ethical fashion: it’s so right now, but it’s granny chic tooNet zero is old hat, says the mall owner that wants to go biggerE-commerce or bust: in-depth analysis on Gulf online shoppingThe tourists are back – and they want to shop till they drop Domestic spending surge In addition, locals and expatriate residents, who normally would have travelled abroad, stayed home and also spent their money in the UAE. Spary said there had been a “significant amount of in-country spend in the UAE. If you look at the luxury sector, for example, it’s had a cracking 18 months to two years.” According to Statista, the value of the UAE’s luxury goods market surpassed its 2019 level in 2021. Sales this year are predicted to reach $2.7 billion and this success is reflected in the results of the region’s top retailers. Majid Al Futtaim (MAF), which operates 29 shopping malls across the MENA, recorded group net profit of $670 million for 2021. It bounced back after posting a loss of $738 million in 2020 on the back of the lockdowns and travel restrictions. Emaar Malls reported revenues of $1.4 billion for 2021, up 42 percent on 2020, while net profit grew 160 percent to $499 million. Its assets maintained an occupancy level of 87 percent. Gold & Diamond Park is an Emaar retail hub specialising in jewellery “The government has had a huge incentive to encourage people to stay and invest in the country more. They’ve relaxed a lot of the laws, in general, to make it a more attractive and appealing place to live. UAE’s gold clean-up rules will shine in the long term Luxury retail rebounds from Covid in the GCC “As a result, population numbers are increasing again,” said Spary. He added that the delayed Expo 2020 also brought large numbers of people into the country. E-commerce is expanding … Dubai’s top retailers have also been profiting from a burgeoning e-commerce market. The e-commerce market in the UAE expanded by 85 percent last year. It rose from $2.7 billion in 2020 to more than $5 billion, representing 9 percent of the retail market, according to a joint report published by Euromonitor Consulting and EZDubai. Online sales are expected to exceed $8 billion by 2025. The largest segments within e-commerce are consumer electronics, clothing and footwear, and food and beverage. According to PWC’s 2021 Global Consumer Insights Survey, 67 percent of Middle East consumers said they shopped online more between October 2020 and March 2021. … but ‘mall culture’ continues to thrive In the UAE, online sales are complementing rather than killing bricks-and-mortar stores, however. Many retailers are shifting towards an omnichannel approach that combines online and in-person shopping to drive sales. “Dubai and the GCC are unique in that they will always have a high demand for traditional stores in malls,” said Nicki Wilson, head of Genie, a Dubai-based recruitment firm focused on retail and luxury markets. “With a huge mix in demographic and a higher level of disposable income than the rest of the world, people still like to shop in physical stores more than ever in this region. “There is still a big mall culture.” Shopping malls also satisfy demand for air-conditioned indoor entertainment during the hottest months of the year. The next big thing Firmly established in the UAE market, retailers including Lulu Group, MAF and Emaar are now planning further expansion. They have one particular target in their sights: Saudi Arabia. Wilson said: “There has been a lot of focus on the kingdom, especially linked to perceptions changing and a lot of stimuli around tourism. “This means there will be more brands entering the market and huge growth potential. In the Saudi market, consumer spending is high.” Spary agreed that Saudi Arabia represents a “natural next step” for these companies. Some have already made major investments there. MAF, for example, broke ground in November on what will be the kingdom’s largest shopping mall: the Mall of Saudi, located in Riyadh. “A lot of these brands, if they are not there already, are looking at how they can enter and position themselves in the Saudi market, with the ability to grow. “They are going in cautiously, but they know this is where they need to be,” said Spary.