Traders are optimistic about sales this year

(AFP)   

After two years of a slump in sales expectations, traders have forecast a level of optimism for this year that almost matches 2005.
 
As many as 57 per cent of traders surveyed by Dubai Chamber of Commerce and Industry believe sales will increase this year, as opposed to 13 per cent with negative expectations and 30 per cent saying they expect no change.

The last instance of this level of optimism was at the start of 2005, when 60 per cent of traders surveyed expected higher sales than in 2004. Corresponding figures at the beginning of 2006, however, showed a majority expected the same level or even lower sales than in the previous year. 

In fact, the relative size of traders with negative sales expectation rose to 19 per cent in 2006 from 13 per cent in the previous year.

Signs of improvements were recorded in 2007, when the percentage of traders with higher sales expectation rose to 54 per cent, the number of those expecting the same level of sales as in 2006 remained at 32 per cent, and the relative size of those with negative expectations declined to 14 per cent.

DCCI conducts an annual survey of retailers to gauge their expectations for the year. Such expectations, coming from the market players themselves, have been shown to be reliable indicators of the market.

The Dubai Traders Outlook Survey 2008 asked respondents for their sales expectations for the year. Responses provided by 441 representative samples showed increasing expectations for higher sales since 2006, when expectations declined as the nation mourned the deaths of Sheikh Zayed bin Sultan Al Nahyan and Sheikh Maktoum bin Rashid Al Maktoum.

“The market for goods responds to the changes in the socio-demographic and economic characteristics of the area,” DCCI analysts said in the survey report. “The growth of the industrial sector of Dubai has fuelled the increasing optimism among traders.

While 74 per cent of traders of industry inputs expected higher sales in 2008, 70 per cent of traders of machinery had similar expectations. These figures were comparable to their respective 2005 expectations.” 

General traders were the most optimistic group in 2005 and the second-most pessimistic the year after, with only 44 per cent expecting higher sales. For 2007 and 2008, however, the group has regained optimism as more than 60 per cent of them expected higher sales for the respective years.

There has also been a growing optimism among traders of household goods. This observation signals the changing nature of the population towards a greater number of families, exerting more demand for household goods. Percentage of traders of these goods rose from 48 per cent optimistic in 2005 to 57 per cent in 2008.

The growing population failed to positively effect the sales expectations of traders of consumer goods, however. “In terms of numbers, the market for consumer goods is dominated by micro establishments, organised and operated in the traditional manner,” the report said.

“However, in terms of market share, large chains of hypermarkets are the dominant players. Thus, as the latter become more and more aggressive in their marketing strategies, the small traders become less optimistic of their market, as shown in the relative number of traders with higher sales expectations dropping from 67 per cent in 2005 to 49 per cent in 2008.
 
Declining expectation for sales of consumer goods is also an expected impact of rising inflation.”

Traders of textiles and garments have traditionally shown relatively lower sales expectations, as the competition had been relatively high, the report said. “Thus the relative number of those with positive sales expectation remained below the majority during the surveyed years.”

The declining optimism of traders of vehicles was unexpected, DCCI said, given the rising population and the increase in per capita income among Dubai’s residents. The group, however, includes the traders of spare parts and accessories, which are generally small.