Consumer Dynamics Changing in UAE. What You Should Know in 2018

Consumer spending is set to rise 7.5% per annum in the UAE through until 2021

This is according to the Dubai Chamber of Commerce & Industry, but HOW it is spent and WHERE it will go may change significantly from past dynamics.

Here are a few key reasons for the change:

1. Retail Space Oversupply

 The existing 3.4 million sqm of retail space will increase by another 45% by 2020. As available space grows faster than demand, the resultant surplus will drive down retail rental space costs, which have already seen an 8-9% drop in the past 12 months. Good news for retailers and hopefully for their customers, but those locked into long-term leases at older high rates will experience pressure on their operating costs. Expect to see retailers moving premises, and smaller decentralised retail complexes fighting for market share from the big malls.

2. e-Commerce

e-Commerce is still in its infancy in the UAE and wider GCC region. However, with Amazons new interest in the market through its acquisition of Souq, and with Noon.com investing heavily, the e-commerce market is tipped to grow at 35% by 2020. All things considered, this appears to be a very conservative estimate. Whatever exact growth rate eventuates, it represents a very different way that consumers will choose to shop, purchase, and consume.

Expect to see a surge in omni-channel offerings, from super-cheap and fast delivery to extraordinary convenience and customer experiences as the e-comms and “bricks & mortar” players battle it out on all fronts.

3. Consumer Profile

A key consumer spending input in the UAE is tourism, with visitor numbers increasing annually (6.2% last year) and tipped to grow by 25% by 2020. GCC tourists, particularly from Saudi Arabia, have been big consumers in the UAE, but have dropped by 7% last year. The drop has been attributed to austerity measures, however, the emerging hospitality and entertainment market in Saudi may see many Saudis choosing to holiday at home in greater numbers. Hence, we are likely to see a shift in the profile of consumers in the UAE, bringing with it a subtle change in their preferences and expectations.

Although we expect to see a net increase in consumer spending, there will no doubt be some winners and some losers in the related industries in this changing environment.

Those who resist or deny change are likely to be the losers, and those who anticipate, embrace and plan for change will be the winners.

Effectively managing change and reaping the benefits is the result of sound leadership, vision, strategy, implementation, review and fine tuning. Often, a high level of visibility and agility makes the difference between “make or break” for a business.

Using experienced professional consultants is an excellent way for organisations to gain access to the benefit of a wealth of expertise without the high cost of permanently employing C-level executives.

Contact us at info@B2CLogistics.com to learn more.

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