UAE retailers feeling the pinch

Local retailers say sales have fallen since this time last year.

The global retail sales slump has begun to trickle down to the tills and shop floors of the Emirates. Though there are few official statistics on retail sales, shopkeepers say business is notably down - in some cases by as much as 80 per cent. At Abu Dhabi Mall, the Hugo Boss outlet has 50 per cent off stickers on its doors. That did not prevent sales last month from dropping by 20 per cent compared with the same period in 2007, according to the manager Ahmed Kobeissi.

"People are not shopping," he said. "People don't know what is going to happen and are worried. They prefer to keep Dh1,000 [US$272] in their pocket instead of buying new jeans." The swift economic downturn is causing distress on balance sheets across the whole sector. After 100 years in operation, Woolworths stores filed for bankruptcy, closing all 200 of its stores in the UK and costing 27,000 jobs.

Yesterday, retailing giant Marks and Spencer said it was closing 27 stores and cutting 750 jobs, mostly from its Simply Food outlets. Also, 450 positions will be staff at its headquarters in London. "We think it's a necessary action to keep the business moving and we need to point out that there are 70-odd thousand people in the business whose jobs we need to protect," said Stuart Rose, the chairman of the Marks and Spencer Group.

The food and clothing retailer reported that total group sales fell 1.2 per cent, while general merchandise sales in the UK were down 8.9 per cent in the 13 weeks up to Dec 27. The company declined to comment on Marks and Spencer's sales in the Middle East, or what impact the job cuts would have on its five stores in the Emirates. Even shopping-happy Americans have pulled back on spending during the traditional holiday shopping season.

US retail sales dropped by 8 per cent between Nov 1 and Dec 24, according to SpendingPulse, which measures sales activity in the MasterCard payments network. Even stores in the once-resilient Gulf are feeling the pinch. Stock is piling up and previously ordered shipments have started to arrive. Retailers say they are running out of space to store the merchandise. A manager of a family-owned retail and wholesale company in Dubai said sales levels had hit their worst levels in the firm's 15-year history. "We're bringing our prices down to the minimum profit margin, just 2 per cent profit. We just want to sell our goods. It is getting very difficult right now."

Sales of tourist items, such as shisha pipes and pashmina shawls, have dropped by 25 per cent at their Deira souq and Bur Dubai outlets. The company's wholesale business, which specialises in footwear, has dropped by 80 per cent. Gosaya Haile, the assistant manager of the Cool Cat clothing store in Dubai's Mall of the Emirates, says sales last month fell by 30 per cent compared with December 2007. Shoppers are more fussy and fewer tourists are visiting. And newly opened shopping centres mean extra competition just as the market turned sour.

"I don't think it is just because of the crisis. So many malls are opening and it is splitting up people in different locations," said Mr Haile. Some retailers, however, are moving merchandise quickly despite the gloomy economic outlook. The fashion retailer Zara at Marina Mall in Abu Dhabi saw sales increase by 28 per cent in December, compared with the year earlier, according to store manager Baji Abdel.

Cherine Chahine, the store manager at Mango, a women's clothing retailer in Marina Mall, said sales were 40 per cent higher than for the same period last year. [e-mail]