Shoppers browse at the Dubai Outlet Mall in Dubai. Consultants say there is tension in Dubai's retail sector. Satish Kumar / The National
Shoppers browse at the Dubai Outlet Mall in Dubai. Consultants say there is tension in Dubai's retail sector. Satish Kumar / The National

Economic uncertainty and online shopping contribute to Dubai’s changing retail landscape



A decade-long retail boom has been built around UAE shoppers’ love of the mall. But a strong dollar, weakening consumer confidence and the rise of e-commerce are changing shopping habits.

This comes with millions of square feet of new mall space due to complete by the end of the decade, including what could be the most lavish shopping centre ever built in the form of the 8 million square feet Mall of the World to be developed by Dubai Holding. “We are seeing some signs of stress since late last year,” says Jayant Ganwani, chief executive of the Dubai-based Lals Group. “It effects different segments of the retail stratosphere in different ways. The fast-moving consumer goods and middle market items have seen far less attrition than the high-end haute couture conspicuous consumption items.” Double-digit passenger growth through airports in Dubai and Abu Dhabi, the tax-free salaries of residents and a rapidly expanding population have encouraged a wave of mega-mall development with a second wave of community mall construction following rapidly behind. But now retailers are facing the strongest economic headwinds since the financial crisis, stoked by a weak oil price and associated slowing economy. Last week the IMF cut its projections for the UAE’s economic growth to 3.2 per cent this year. It was the second time in six months that the IMF has revised its growth forecast for the UAE down from 4.5 per cent in October. Other oil exporters in the region face similar downgrades. “If there is a fear of recession the first thing that the consumer in the middle market does is start to hoard money in case they lose their job,” says Mr Ganwani, whose company owns the Homes R Us chain of furniture stores. “When they go through this phase they basically stop spending money on anything durable in nature – so electronics, furniture and fashion. That is what we are seeing at the moment.” The strong dollar is also crimping the purchasing power of visitors from the euro zone, while the collapse of the rouble has had a devastating impact of on the number of Russian tourists who visit and the amount of money they spend. Those factors are already combining to create tension in Dubai’s retail sector say consultants, as some retailers struggle to reconcile the rents they pay with declining till receipts. “The retail market continues to be constrained by the decrease in spending, restricting overall growth levels,” said Craig Plumb, the regional head of research at JLL, the international real estate consultants in its latest report on the Dubai retail sector. “We expect performance of the retail market to remain stagnant throughout 2015, following estimates of a slowdown in retail sales growth figures,” he said.

“In the end convenience is cost,” says Florian Mack, the co-owner of the e-commerce start-up lens.ae, which sells contact lenses online. That challenges the conventional wisdom of the UAE retail industry, which maintains shopping is a leisure activity in its own right – one of several reasons that shoppers have been slower to adopt online shopping than in other regions – together with a reluctance to trust the web with personal bank details. “We’ve been hearing that since we started,” says Hosam Arab, a co-founder of namshi.com, the online fashion and footwear retailer.

scronin@thenational.ae

Follow The National's Business section on Twitter

UK record temperature

38.7C (101.7F) set in Cambridge in 2019

The BIO

Favourite piece of music: Verdi’s Requiem. It’s awe-inspiring.

Biggest inspiration: My father, as I grew up in a house where music was constantly played on a wind-up gramophone. I had amazing music teachers in primary and secondary school who inspired me to take my music further. They encouraged me to take up music as a profession and I follow in their footsteps, encouraging others to do the same.

Favourite book: Ian McEwan’s Atonement – the ending alone knocked me for six.

Favourite holiday destination: Italy - music and opera is so much part of the life there. I love it.

No Shame

Lily Allen

(Parlophone)

The design

The protective shell is covered in solar panels to make use of light and produce energy. This will drastically reduce energy loss.

More than 80 per cent of the energy consumed by the French pavilion will be produced by the sun.

The architecture will control light sources to provide a highly insulated and airtight building.

The forecourt is protected from the sun and the plants will refresh the inner spaces.

A micro water treatment plant will recycle used water to supply the irrigation for the plants and to flush the toilets. This will reduce the pavilion’s need for fresh water by 30 per cent.

Energy-saving equipment will be used for all lighting and projections.

Beyond its use for the expo, the pavilion will be easy to dismantle and reuse the material.

Some elements of the metal frame can be prefabricated in a factory.

 From architects to sound technicians and construction companies, a group of experts from 10 companies have created the pavilion.

Work will begin in May; the first stone will be laid in Dubai in the second quarter of 2019. 

Construction of the pavilion will take 17 months from May 2019 to September 2020.

Company Profile

Company name: Hoopla
Date started: March 2023
Founder: Jacqueline Perrottet
Based: Dubai
Number of staff: 10
Investment stage: Pre-seed
Investment required: $500,000

How to turn your property into a holiday home
  1. Ensure decoration and styling – and portal photography – quality is high to achieve maximum rates.
  2. Research equivalent Airbnb homes in your location to ensure competitiveness.
  3. Post on all relevant platforms to reach the widest audience; whether you let personally or via an agency know your potential guest profile – aiming for the wrong demographic may leave your property empty.
  4. Factor in costs when working out if holiday letting is beneficial. The annual DCTM fee runs from Dh370 for a one-bedroom flat to Dh1,200. Tourism tax is Dh10-15 per bedroom, per night.
  5. Check your management company has a physical office, a valid DTCM licence and is licencing your property and paying tourism taxes. For transparency, regularly view your booking calendar.
The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat 

Chef Nobu's advice for eating sushi

“One mistake people always make is adding extra wasabi. There is no need for this, because it should already be there between the rice and the fish.
“When eating nigiri, you must dip the fish – not the rice – in soy sauce, otherwise the rice will collapse. Also, don’t use too much soy sauce or it will make you thirsty. For sushi rolls, dip a little of the rice-covered roll lightly in soy sauce and eat in one bite.
“Chopsticks are acceptable, but really, I recommend using your fingers for sushi. Do use chopsticks for sashimi, though.
“The ginger should be eaten separately as a palette cleanser and used to clear the mouth when switching between different pieces of fish.”