Revitalising Dubai's retail sector

The UAE economy is set to benefit from some much-needed retail therapy with the 14th annual Dubai Shopping Festival. Despite a low-key start last night in solidarity with the beseiged people of Gaza, the next 30 days will see the city play host to 150 events, raffles worth millions and spectacular shopping promotions.

And in the face of a slowed growth forecast, DSF CEO Laila Suhail says the 14th edition of the annual spectacular can help boost spending.

The festival normally generates a 10 per cent growth in visitor numbers, but the effects of the global financial crisis has forced a revision in projections.

This week's release of a new MasterCard International survey indicated a dip in consumer confidence in the UAE over the first six months of the year. The findings come amid growing fears of job losses in the region. "Though there are doubts about the ability of the world economy to weather the current economic storm, we remain optimistic DSF is a strong catalyst for tourist, entertainment and commercial projects in Dubai," Suhail told Emirates Business.

"Hopefully, we can match last year's record numbers, of 3.2 million visitors and a total spend of Dh10 billion."

Businesses in the city are pulling out all the stops to help meet that goal. Some leading hotels have slashed their rates by as much as 60 per cent and Emirates airline is marketing Dubai in feeder markets with package deals from $55 per night.

Retail has traditionally been at the heart of the event since it was first organised in 1996 by Mohammed Al Gergawi, now UAE Minister for Cabinet Affairs, who created a shopping season from the first six weeks of the New Year, traditionally among the weakest for the trade.

Over the years, DSF has become a cultural extravaganza, and this year, 150 events have been organised under its theme, Celebrate the Festivities. These include a month's residency of the Chinese State Circus, a two-week-long food festival and performances by chart-topping international acts such as Shaggy, Iron Maiden, Fatboy Slim and Zakir Hussain.

The current economic climate has seen the festival put retail centre stage once more. Suhail has advised retailers to do everything to ensure DSF stayed true to its core focus – shopping. "Shoppers want genuine discounts and added value," she said, "and some retailers are marking prices down by 70 to 80 per cent."

Goods at Donna Karan stores are discounted 60 per cent, while Zara is seeing reductions of 75 per cent. Jeweller Pure Gold is offering 55 per cent off diamond jewellery and giveaways on purchases over Dh3,000.

And luxury retailer Damas is giving away 20 kilos of gold across its stores over the month. "During DSF, we witness at least a 40 per cent increase in retail activities across our outlets," says Tawhid Abdullah, Managing Director of Damas and Managing Director of the Dubai Gold and Jewellery Group.

"Though the world is passing through an economic meltdown, I'm sure more and more people will buy gold as it still is considered the safest investment," he said.

In total, 6,000 retail outlets are running DSF promotions citywide. And malls are doing their bit, too.

Mall of the Emirates is offering customers spending Dh350 or more at its 450-plus outlets a chance to win Dh1m in cash and vouchers. "Our footfall is always on rise during DSF," said Fareed Abdel Rahman, Vice-President, Asset Management-Shopping Malls, MAF Properties, which runs Mall of the Emirates and Deira City Centre.

The Italian-themed Mercato, in Jumeirah Beach Road, has been transformed into the venue for a traditional Venetian carnival with exhibitions, parades and daily show, as well as the chance to win both cars and holidays.

Burjuman shopping centre, in Bur Dubai, which is hosting fashion shows and balloon artists, is offering shoppers spending Dh200 or more entry into a draw to win a BMW X6 35i and diamond jewellery.

"Malls are trying to create a lot of noise, with bigger discounts, stronger prizes, and better entertainment – and more advertising to get the message out," says Eisa Ibrahim, General Manager of Burjuman and the former Chairman of the Dubai Shopping Malls Group. "It's time for retailers to look into their budgets and make the maximum use of any available dirhams." Such as Nissan retailer Arabian Automobiles, which has upped its promotional spend by half a million dirhams to Dh7m.

This year's DSF sees its annual budget cut by Dh10m to Dh75m to accommodate the new Eid in Dubai promotion and Suhail has had a harder time finding sponsors. "Sixty per cent of our budget comes from the marketing budgets of the private sector – and in lean times, the first thing they cut are marketing costs. But we have not been affected very badly," she said, insisting that the focus must be on remaining upbeat. "It's all about creating the right mood. People need festivities when they are depressed," she said.

As a result, organisers are raffling off three cars every day – two Lexuses and one Nissan. Apartments, trips to the football World Cup next year, and a complete electronics fitout of winners' apartments are all part of the prize pot.

Complicating matters are downturns in international markets, the effects of which will be felt in the Emirates. The recession-hit United Kingdom accounts for 30 per cent of tourists into Dubai. A weakened pound and a strengthened dollar mean these tourists could find shopping in Dubai – even on sale – more expensive than home, with some significant price differences when the same products are compared.

"European tourists are here for the experience, for the beach, the luxury hotels, the culture, so they aren't so much of an impact on retailers and the other sectors of the travel business can only be positively affected," said Suhail. "Yes some tour operators have cancelled bookings, but we haven't restricted our tourism marketing to Europe. We're looking beyond, to Iran, India and the CIS states, as well as the GCC." She said that Saudi Arabia is a key market, and next week's spring school holiday will boost tourism into Dubai.

And the growth of the UAE in recent years also means domestic tourism now comprises almost 50 per cent of total visitors to the festival.

But for sceptics, there's proof that DSF can deliver: "In terms of ROI, last year's DSF campaign proved very successful, with a 40 per cent increase in Visa sales volume," Norliza Kassim, Head of Regional Marketing for the Mena region at the electronic payments network Visa, told Emirates Business.

And one mall at least is ploughing ahead confidently. "Retailers at Mall of the Emirates are not affected," said Fuad Sharaf, mall Vice-President. Footfall at the shopping complex is likely to touch last year's aggregate of three million shoppers, he said.

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