UAE's retail industry reaps the DSF harvest
UAE retailers seem more comfortable and are positive that business will be much better in 2010 than last year after getting a much-needed impetus from the Dubai Shopping Festival.
The three indicators of the health of UAE retail – demand, margins and costs – had suffered last year due to the global economic slump. Retailers, on the one hand, were complaining of low sales, and consumers, on the other hand, were reluctant to spend because of uncertainty on the job front.
But all this is changing now, as the sector is poised for a reasonable growth this year. According to an Emirates Business survey conducted last year, the retail industry in the country was then hopeful about 2010 and as per expectations, the first 45 days of the year have definitely been good, as the sector has witnessed growth.
But the surge in sales can largely be attributed to the DSF and retailers expect that this may not be able to sustain itself after the shopping period. The year will be more event-based and the key will be to depend on marketing tactics in the coming months, as one retailer told this paper.
Abraham Koshy, Group General Manager, Rivoli Group
The first 45 days of the year have been much better than the same period last year. We've seen double-digit growth across all sectors. There is marked improvement since last year and people are more confident as they believe the worst of the economic downturn is over.
The first quarter of the year is always healthy because of the DSF. Now, more tourists are coming to the country, especially the Chinese. We have seen established international brands doing much better than the regional ones. Luxury brands are picking up and the sales of watches in this range have gone up by 25 per cent over last year.
The government is supporting the retail sector by encouraging more and more people to visit. For example, getting free visas with Emirates airline is one such move, which encourages people to come to Dubai.
For the rest of 2010, we are cautiously optimistic and hope we'll be able to maintain the momentum. I'm more confident this year will be better compared to last year.
Jimmy Patel, General Manager, Jacky's Electronics
Compared to last year, we've seen a 20 per cent increase in revenue during the DSF period. This is due to the increased number of tourists coming to the country during the shopping festival along with strong promotions by retailers and the mall operators too.
As per the feedback of our outlets, this year we have seen an increase in Indian tourists coming to Dubai, followed by people from the UK, Europe and the CIS region. On the other hand, GCC tourists are a bit less compared to the others.
Even local residents of the UAE, who were stringent in their spends and holding back their electronic purchases, have finally decided to put the hands back in their wallets and make the most of DSF offers and promotions.
The malls have more offerings, are more vibrant and we have seen high footfall across most malls in the city. This category of customer was not buying prior to the DSF and was waiting to take advantage of the deals given out during this festival.
Moreover, confidence is coming back to the UAE consumer market, which is a very healthy and positive sign for the retail sector.
Secondly, another very important factor that has helped in pushing up sales is the drop in average selling price across most product categories. We've seen a double-digit (15-20 per cent) drop in the prices of electronic goods. Thirdly, the shopping festival offers many incredible deals, bundled offers and promotions, which help attract customers. These days many high-end products are bundled with smaller ones. Products like laptops and smart phones are the top sellers followed by cameras and LCD TVs. However, high-end appliances like side-by-side fridges have not peaked like other categories.
As far as DSF sales are concerned, we still haven't reached the peak. The last five days will be important when many customers, especially local residents, will rush to make last-minute purchases and take advantage of the DSF offers.
Post-DSF, I expect a drop in March and sales will come back to pre-DSF levels. But the revenues from the 32 days of the DSF should offset any drop and we'll be able to meet our Q1 2010 targets.
Talking of the entire 2010, I'll say that it will be a very event-based year for the retail sector. A lot will also depend on marketing tactics that each retailer adopts as the year unfolds post-DSF.
In current times, retailers cannot expect to sit and wait for the customers to come to their stores with ease. They need to continuously innovate to get the traffic to their stores. The malls, too, will have to be very pro-active to get the desired footfall for it's tenants who will then have to convert this footfall to sales. Both mall operators and retailers will have to work very closely for a successful 2010.
Kamal Vachani, Director, Al Maya Group
The retail sector sales have been positive in the first two months and we have a positive outlook for the coming months. We are confident the retail sector will pick up further due to Dubai's vision and far-sighted approach.
We feel there is growth in sales of food items. With the offers and prices coming down, the customers are buying and we hope this growth continues. The items that are selling fast are non-luxury and general items (plastics, novelty, household etc).
The DSF has helped tremendously and consumers are buying. Majority of the shops during this time have deals on and these offers are very well accepted by customers. Definitely, there is a positive growth during this time.
Shivam Goyal, General Manager, Emax
The DSF has always been the best season for retailers. The government promotes this event by advertising it outside the country so we see an increase in the influx of tourists and the residents stop buying just before the shopping festival kicks off to take advantage of the sales season.
If we compare our sales during the DSF this year as compared to last year, I can say that we have seen 25 per cent increase but at the same time it is important to note that the general pricing of products have also come down by 25 per cent. To give you an example, if we were selling a product for Dh1,000 last year, today it is going for Dh800. So, there is not much difference in terms of revenue.
In our industry, the price of a product is at its peak when the technology is new but once it is being phased out, prices keep coming down.
There is an expected lull period after the DSF, the same way it was before the shopping festival. But March is a good time to target customers who are interested in buying home appliances when the temperature starts going up. The DSF, on the other hand, is more limited to digital products. Comparing 2009 with 2010, we will be happy if we achieve an increase of 30 per cent in our sales. About 12-15 per cent of it will come from our existing stores and the remaining from potential new ones.
Tim Jones, COO, Arabian Center
Since the beginning of the DSF, Arabian Center has seen a 25 per cent increase in footfall, which has lead to 20 per cent increase in sales when compared to previous months. The fastest moving items are in the fashion retail and the hypermarket segment. These are items that people require irrelevant of what the economic conditions are. Nonetheless, Arabian Center has witnessed an increase in sales across all segments during the DSF.
The deals and promotions have really aided in pushing up sales and footfall in the mall. Customers have been very accepting of the sales and have taken full advantages of the value buys during the DSF season.
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