UAE retail economy report shows spending up 16% this year

Supplied

• Shift to Saturday-Sunday weekend contributes to growth
• E-commerce spending up 41%, accounting for 11% of retail economy

Consumer spending in the UAE is proving resilient against the effects of market volatility, supply chain stress, rising fuel costs and inflation.

The State of the UAE Retail Economy report from retail giant Majid Al Futtaim showed that overall spending increased by 22 percent in the first six months of 2022 compared to the same period last year.

The rise was driven by growth of 16 percent in retail spending and 31 percent in non-retail sectors. Spending increased on food and beverages (15 percent), hotels (14 percent) and pharmacy and health (14 percent).

• Retail special: Let the tills rings out – retail is back with a vengeance in the UAE

Majid Al Futtaim’s report also said that the decision to shorten the work week and shift the weekend to Saturday and Sunday has further contributed to economic growth, with weekend retail spending growth in the first half of 2022 outpacing weekdays by six percent.

While rising prices have not put a brake on consumer spending, they have influenced what people buy and where they spend their money, according to an analysis of Majid Al Futtaim’s point-of-sale (PoS) transactions. 

In Q2, spending on fashion and accessories and watches and jewellery rose by 20 percent compared to the first three months of the year, driven mainly by seasonal discounts and Ramadan promotions.

The research further revealed that omnichannel shopping – both online and bricks and mortar – remains consumers’ preferred way to buy, with e-commerce spending increasing by 41 percent in the first half of this year and online sales now accounting for 11 percent of the overall retail economy. Clothing and fashion topped the omnichannel list. 

The hypermarket and supermarket sector also demonstrated growth, increasing by 12 percent in the first half compared to the first six months of 2021.

However, consumer purchases have shifted towards lower value and higher frequency, with the average transaction value down by 12 percent over the same period.

Alain Bejjani, CEO at Majid Al Futtaim – Holding, said: “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.

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

“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.”  

He added: “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.”