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Dubai is building bricks-and-mortar appeal, says Jumbo CEO

January 18, 2024, 8:58 AM

Vikas Chadha jumbo, dubai shops — Vikas Chadha believes Dubai's high tourist numbers are one of many reasons why bricks-and-mortar stores still popular

Physical retail has ‘continued relevance’
3 in 4 residents like store shopping
E-commerce worth $9.2bn by 2026

Dubai will remain a stronghold for bricks-and-mortar shopping despite the increased competition from online retailers, according to the chief executive officer of the UAE conglomerate Jumbo Group.

“The city’s unique market dynamics, such as demand for luxurious goods, coupled with a significant tourist influx contribute to the continued relevance of physical stores,” Vikas Chadha told AGBI.

“Dubai is different from other markets because of the tourists,” Chadha said. “Buying in a store is more convenient for those travelling than buying online.”

Jumbo Electronics, the group’s consumer electronics division, has not launched a daily-use app but reports strong footfall in its 17 retail stores and 40 franchise stores in the UAE.

“Shoppers want to touch and feel the latest tech before they purchase,” Chadha said. “It is often essential to see and hear large appliances such as televisions before buying, which is why in-store visits are so important.”

A study by the e-commerce platform Zbooni backs this, finding that 56 percent of Middle East consumers prefer the tangible experience of shopping in physical stores. A desire for one-on-one human interaction was cited as a driving force.

The UAE Retail Report 2023, published by the Dutch payment company Adyen, also found the majority of residents in Dubai still favour traditional bricks-and-mortar shopping, with 73 percent shopping in stores.

Jumbo CEO Vikas Chadha says Dubai's 'unique market dynamics' keep bricks-and-mortar stores relevant — Jumbo CEO Vikas Chadha says Dubai’s ‘unique market dynamics’ keep bricks-and-mortar stores relevant

Many major retailers continue to open new stores in the city. Last year, the retail group LuLu opened a branch at Dubai Mall that covers 72,000 square feet and the electronics brand LG opened a showroom on Dubai’s Airport Road.

Dubai Mall, the Gulf’s largest mall, is also looking to expand further, Mohamed Alabbar, founder and chairman of the developer Emaar Properties, disclosed on his social media.

Slow e-commerce progress

Chadha acknowledged the growing influence of e-commerce, particularly among younger people.

However, he said he believed that reaching the global adoption levels of 30 to 35 percent was unlikely in the near future.

The emirate was making progress in attracting e-commerce companies and creating a startup-friendly environment, Chadha said, but it had not yet managed to match other countries’ standards of e-commerce skills.

“If you compare with the other global markets, e-commerce talent is not at the same level. But for what is present here, we are able to find the people,” he said.

The market research company Euromonitor forecasts that the UAE e-commerce market will be worth $9.2 billion by 2026, accounting for 12.6 percent of total retail sales.