Al-Futtaim makes the move for online sales

Al-Futtaim will set up virtual shop with an online retail portal early next year.

Al-Futtaim, the Dubai-based group with retail brands including IKEA and Marks & Spencer, will set up virtual shop with an online retail portal early next year.

Robert Willett, the chief executive of Al-Futtaim, said the organisation planned to launch the first phase of its online portal, which will allow consumers to buy their products online and access its after-sales services by next spring.

Internet penetration in the region and the number of residents who are regular computer users provided an opportunity too good to miss, said Mr Willett.

"In the Middle East, customers are using their personal computers in a big way," he said on the sidelines of the Retail City conference, which runs in conjunction with Cityscape Global. "For us not to be out there helping them, that's a massive missed opportunity."

Mr Willett would not specify which brands would be available for online shopping. The move to e-commerce is among the many shifts the retail industry has experienced after the economic downturn.

After years of double-digit growth and a wave of new retail space, such as Dubai Mall, one of the largest in the world, sales slowed at the end of 2008 amid economic uncertainty.

Consumers cut back on unnecessary spending as more shopping centres opened their doors to the public, putting pressure on retailers to compete for the available spending power.

In turn, merchants have been forced to look for ways to drum up new business, such as improving customer service and taking their shops online.

While online retail websites such as Nahel.com and Aido.com have found relative success with UAE customers, Al-Futtaim is one of the few brick-and-mortar retailers to take their wares to the web.

Last month Carrefour launched an online shopping website for 3,000 of its non-food items, one of at least nine e-commerce sites to launch this year.

"They're doing things they would never do before because they didn't trust online," said Mr Willett. "That's changing fast."

But some obstacles remain, such as secure payment systems and the lack of addresses in the UAE, which makes it difficult to deliver goods, said Tony Jashanmal, the managing director of the retail group Jashanmal.

"For products which we already sell, rather than coming into the store to buy them, they can be bought online and picked up in our store," Mr Jashanmal said.

Analysts say the online presence of major brands, such as those under the Al-Futtaim umbrella, will boost e-commerce because of their brand recognition.

But major retailers may edge out independent online retailers who are selling the same products. Online shopping in the UAE represents only a small portion of the total retail market.

Last year consumers spent about US$19.6 million (Dh71.9m) online compared with an estimated total of $10.9bn of non-grocery retail spending, data from the research company Euromonitor show.

But by 2014, e-commerce in the UAE is expected to grow by 72 per cent to about $33.7m, the research company forecasts.