Consumer spending in UAE retail sector up 4% in second quarter

Growth in the country’s retail sector could return to pre-Covid levels by the end of this year, Majid Al Futtaim says

Growth in spending also comes as consumers become increasingly comfortable visiting shopping malls, Majid Al Futtaim said. Chris Whiteoak / The National

UAE retailers registered a 4 per cent quarterly increase in consumer spending in the second quarter amid signs of growth in the country's retail sector could reach pre-pandemic levels before the end of 2020, according to the Middle East and North Africa's largest mall operator Majid Al Futtaim.

The quarterly increase in consumer spending this year was even higher than the 3 per cent registered during the same period in 2019, MAF said.

Consumer spending in retail during the first half of 2021 was down 3 per cent when compared to the corresponding period in 2019, as leisure, entertainment, fashion, and luxury spending were hit hardest by the pandemic-induced slowdown.

"Looking back over the past six months, we continue to see positive trends across the UAE retail economy, and in some sectors significant progress in returning to pre-pandemic levels," Alain Bejjani, chief executive at Majid Al Futtaim, said.

"We see this cautious optimism strongly driven by the robust vaccination measures taken by the UAE government and local health authorities, which has served to protect our communities and provided additional confidence both here and abroad."

The retail, tourism and aviation sectors were the hardest hit globally as pandemic-linked movement restrictions led to the closure of malls and other establishments for months. But the UAE, which has one of the highest vaccination rates in the world, has recovered strongly over the past few months.

Majid Al Futtaim, which tracked card spending across point of sales machines and measured footfall across malls to assess the growth of the sector, said the growth in retail economy is bordering on 2019 levels this year, with consumer spending up 0.2 per cent.

Growth in spending also comes as consumers become increasingly comfortable visiting shopping malls, according to the report.

Nearly half of the shoppers polled by the retailer in its Happiness Lab survey said they were comfortable going to malls with children.

"During the first three months of 2021, there were early signs that confidence was returning to the retail economy. The second quarter of 2021 has seen a continuation of that cautious optimism and encouraging signs that it is growing stronger," the report said.

Consumer behaviour is approaching pre-pandemic normality but it is "continuing to deviate from pre-Covid-19 patterns", the mall operator said. For example, people were spending less on fashion during the second quarter this year compared to the corresponding period in 2019. But spending was up five per cent quarter-on-quarter this year.

E-commerce sales continued to be a bright spot in the UAE's retail economy, growing 17 per cent in the first half of this year compared to the same period last year, according to the report. Online sales also accounted for 9 per cent of overall consumer spending in the UAE during the period.

The value of the UAE’s retail e-commerce market rose 53 per cent to a record $3.9 billion in 2020, largely driven by the digital shift in consumer shopping habits amid the pandemic, according to the Dubai Chamber of Commerce and Industry. E-commerce accounted for 8 per cent of the UAE’s overall retail market last year, the chamber said in a report in June.