$5bn extra Ramadan spending splurge predicted in UAE

Reuters/Francis Mascarenhas

• Positive predictions for gift shopping and dining out for Iftar
• People eating out means buying fewer groceries for home cooking
• Consumers start getting ready for holy month 15-30 days before start 

People in the UAE are upbeat about shopping and dining out more this Ramadan despite inflationary pressures and an elevated cost of living.

Retail sales are set to rise to $66 billion over the holy month, up $5 billion compared to last year, a study by India-based Redseer Strategy Consultants says.

It said that constant demand is expected to lead to the overall increase in spend, coupled with higher prices.

The UAE’s household spending is predicted to grow by a real rate of 4 percent year-on-year in 2023, according to Fitch Solutions’ Consumer Spending Outlook, the same rate as in 2022.

The acceleration in growth is largely attributed to increased domestic fuel prices, rising rental prices and strong demand-side pressures in 2022, that led to tightening monetary policy and lower real household spending growth.

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Stefano Martinelli, retail director at Amazon for the GCC, said that customers usually start getting ready for Ramadan 15 to 30 days before it starts.

“As customers get ready to celebrate Eid with family and friends, as well as gift loved ones, we anticipate increased focus across categories such as fashion, beauty, and electronics,” he said.

Amazon is aiming to entice shoppers to look online by offering up to 50 percent off certain items during the holy month.

#Ramadan retail sales in Mena are set to rise to $66bn as a result of #inflation. Christophe Orcet, Head of Commercials and Operations at Carrefour talks about changes in customer behaviour, shoppers’ affinity toward deals and how private labels benefit shoppers and retailers. pic.twitter.com/CZ5HkRHVKy

— AGBI (@AGBInsight) March 21, 2023

Ashish Panjabi, chief operating officer at Dubai-headquartered electronics retail giant Jacky’s, said the shopping mall footfall figures he has seen in the past week are a strong indicator of greater spending on the cards.

“Every mall I’ve spoken to has said footfall is up double digits,” he told AGBI.

“Sales have been up, and they’re reporting a jump in footfall in the first two months of 2023.”

Panjabi added that the liberalisation of policies related to Ramadan over the past few years have also contributed to increased overall spend.

Previously, food and beverage outlets in the UAE, including bars, would remain closed or cordoned off until the Ramadan fast was broken at sunset, but rules have been relaxed over the past few years and outlets now remain open all day.

Although inflationary pressures persist, Panjabi noted that the drop in freight rates has made the cost of moving goods “manageable” and oil price jumps have been relatively smaller.

Freight shipping costs roughly tripled as the global supply chain was disrupted by the pandemic and continued to be exacerbated by the Russia-Ukraine war.

Rohan Siroya, founder of jewellery brand Evermore, expects strong sales as Ramadan this year coincides with the big tourist season. “It’s a time of gifting, making it a mandatory sale season.”

Aditya Singh, head of Jewellery International Business at Titan Company Limited, added that while gold is considered a sound investment irrespective of time of year, jewellery is a particularly popular choice of gift during Ramadan and Eid for its keepsake value.

Reuters/Christopher Pike

Eating out

Alongside growth in retail spending, Redseer’s report also predicts that more people are expected to cook less and buy less groceries during the holy month, and spend more on dining out or ordering food delivery.

Eti Bhasin, owner of Indian restaurant Dhaba Lane, expects a rise in food delivery orders in the first week of Ramadan and more dining-in reservations over the following weeks.

“Similar to last year, where at least 70 percent our sales came from dining in, we expect guests to make reservations early on, especially during the weekends, with groups reaching up to 30 persons,” she said.

She added that the overall restaurant industry, could expect to see a higher average spend per person. “With Iftar spreads, we can expect to see an average of at least four persons per table, as compared to the standard two.”

Bhasin said that all-day dining was also popular last Ramadan, and the same trend is expected this year.

Ramya Sivaprasad, managing partner at Dubai-based Pan-Asian restaurant Mogao by Socialicious, added that 2023 has already been “very positive” for the F&B industry, with growth expected to continue through Ramadan.

People in the UAE are dining out more frequently (nearly 30 percent more in September 2022 than September 2019) but spending nearly 20 percent less per visit as even higher-income consumers reined in excess, according to the Mastercard Economics Institute.

However, contradicting Redseer’s forecast on decline in grocery purchases, Marc Laurent, president of Consumer Goods at GMG, which operates Geant and Aswaaq supermarkets and hypermarkets, said he expects the “usual surge” in sales of food over Ramadan, as well as home appliances and gift items.