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Dubai’s bricks-and-mortar stores hold their own against e-commerce

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US young fashion brand Forever 21 has opened new stores in Dubai this year
  • In-person transactions up 133% and transaction value up 184%
  • Tourism, retail-friendly policies and low taxes have all boosted growth
  • Dubai has positioned itself as a ‘retail hub’ for the Middle East

Dubai is experiencing a retail boom — and, bucking global trends for online shopping, much of it is being led by brick-and-mortar stores catering to in-person shoppers.

According to a new report by Dubai-based Commercial Real Estate Consultants (CRC), in-person retail transactions in the city this year are up by 133 percent, and transaction value has increased by 184 percent.

Likewise, a report by real estate consultants CBRE identified positive signs, particularly in Dubai. 

“The UAE’s retail sector continued to see visitation levels trend up over the course of Q3 2022,” it said, with retail footfall visitation in Abu Dhabi and Dubai at 18.6 percent and 20.4 percent above their respective pre-pandemic baselines.

These positive trends in the UAE’s retail sector are all the more impressive given ecommerce’s meteoric rise in the country — which has continued even after the pandemic’s lockdowns and stay-at-home orders are a distant memory for Dubai shoppers.

Over the past three years, ecommerce has grown faster in the region than anywhere else in the world, with an estimated 209 million consumers switching to online shopping during the height of the pandemic. 

According to a survey of more than 15,500 people by Checkout.com, 91 percent of people regularly shop online, and 88 percent of Middle East and North African consumers plan to maintain or increase their online purchases over the next year.

While shoppers are spending more across the board, a divide is growing between those who prefer to buy in person and those who shop online.

Benham Bargh, director at CRC, told AGBI that there are a few reasons why Dubai’s brick-and-mortar stores have been performing well.

“First, the way the government handled the Covid crisis. We were one of the first countries to cut restriction – we could go to the shops and malls; we were open for business. That created momentum in the market.

“Second, a lot of tourists come to Dubai, and normally, they like to shop and enjoy retail. Not many people are coming to the countries and ordering online — this helps the retail sector.”

Retail-friendly policies, such as allowing shops to open late, have also been important in boosting the sector. “The shopping centres and shops are open sometimes until midnight. It’s a lively city,” Bargh said.

The business-positive environment and low taxes help, too. “Obviously it offers a lot of benefits, like being tax-free, and the cost of labour is low. It’s a low-risk entry.”

It also helps that Dubai has positioned itself as a retail hub for the Middle East, attracting various brands to the region, he added. “A lot of retailers look at Dubai as the next destination to open their businesses.”

Alain Bejjani, chief executive officer at retail conglomerate and mall operator Majid Al Futtaim, added that UAE policies have helped to support the country’s retail industry on a “steady march towards a return to sustainable growth”. 

“The continuation of forward-thinking government initiatives underpinning this progress is making the UAE highly attractive to international businesses,” he said.

“With all indicators pointing to a strong fourth quarter this year, and the lifting of Covid restrictions, the UAE has put the pandemic-related turbulence firmly in the rear-view.”

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