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UAE shoppers less price-conscious than Europeans but not for long

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A factor in report results could be shoppers in Dubai are used to paying more for goods than those in most major European cities
  • 23.5% of UAE respondents cost-conscious compared with 36.7% in UK
  • Emiratis and Swiss less likely to compromise on quality for lower prices
  • But 29% of UAE respondents said cost-of-living crisis will have impact

UAE shoppers are much less price-conscious when buying goods and services, compared to their European counterparts, but the record rising cost of living may see this becoming more of a priority for some over the next 12 months, according to a new retail report.

In a survey in April of 5,250 consumers in seven countries – the UK, Spain, Italy, France, Germany, Switzerland and the UAE – global professional services firm Alvarez & Marsal (A&M) found that only 23.5 percent of UAE respondents classed themselves as cost-conscious, with 42 percent saying they thought quality was the biggest factor when they were shopping.

By comparison, 39.9 percent of Spanish respondents said price was important, followed by 36.7 percent in the UK, 32.8 percent in Germany, 32 percent in France and 31.2 percent in Italy. Only Swiss shoppers, with 14.4 percent, had a lower preference for price consciousness.

“Price appears to be a comparatively low-priority factor in decision making… We believe this reflects a relatively affluent consumer population, with lower exposure to current economic pressures versus European peers, as well as retail’s comparatively prominent role as a leisure and community activity in the UAE, and the region more broadly,” James Dervin, managing director of A&M Middle East, said in a press statement.

The report concluded that shoppers in the UAE and Switzerland were less concerned about prices “to reflect higher average incomes”, meaning they were also “less likely to compromise on product quality for lower prices”.

A factor also likely to be playing a part is the fact that shoppers in Dubai – the UAE’s largest city – are also used to paying more for goods, as it is generally more expensive than most major European cities.

According to data from the website Expatistan, which measures hundreds of different price points in global cities, Dubai is 25 percent cheaper than London, about equal to Paris, but 12 percent more expensive than Manchester, 23 percent more costly than Geneva, 20 percent higher than Berlin, 30 percent more than Rome and prices are generally 44 percent steeper than in Madrid.

Going forward, a key factor will be the rising cost of living. The latest monthly S&P Global UAE Purchasing Managers’ Index (PMI) reported that non-oil business activity was at a five-month high in May, but it also found that costs for items such as fuel, metals, chemicals and energy were at their highest for three-and-a-half years.

While competition in the market means that businesses are still absorbing these costs and not passing them on to UAE consumers, David Owen, Economist at S&P Global Market Intelligence, said “this is unlikely to continue indefinitely”.

With costs rising, the A&M retail report also found that 29 percent of UAE respondents said the cost-of-living crisis will have the biggest impact on their expectations of retailers and brands in the next 12 months.

However, this was still low compared to other respondents, with 57 percent of Brits worried about cost-of-living, followed by Germans (43 percent), Spanish (42 percent), French (40 percent), Swiss (37 percent) and Italians (33 percent).

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Source: Alvarez & Marsal and Retail Economics
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