UAE consumer spending up 22% despite high fuel costs and inflation, says Majid Al Futtaim

Retail spending grew 16% and non-retail spending 31% in the first half of 2022, mall operator says

Majid Al Futtaim says the UAE continued to demonstrate sustainable growth in the first half of the year. Reem Mohammed / The National
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UAE consumer spending increased 22 per cent in the first half of the year, despite rising fuel costs and higher inflation, signalling a continued economic rebound, a report has shown.

Spending on retail items grew 16 per cent, year on year, in the first six months of 2022 while spending on non-retail goods rose 31 per cent in the same period, mall operator Majid Al Futtaim said in its State of the UAE Retail Economy report.

“The UAE has continued to demonstrate sustainable growth through the first six months of the year,” said Alain Bejjani, chief executive of Majid Al Futtaim Holding.

“Bolstered by government-driven diversification initiatives that focus on strengthening the non-oil economy, boosting productivity and creating the best environment for foreign investment, the UAE retail economy looks set to continue on a positive trajectory.”

The UAE economy is set to post its strongest annual expansion since 2011 after it grew by 8.2 per cent in the first three months of this year on higher oil prices and measures to mitigate the impact of the Covid-19 pandemic, the latest UAE Central Bank data showed.

While consumers have continued to spend amid rising prices, they have changed the patterns of what they buy and where they spend their money, according to Majid Al Futtaim's point-of-sale data.

Spending increased on food and beverages by 15 per cent, on hotels by 14 per cent and pharmacy and health by another 14 per cent.

Consumers spent more on average during the second quarter on fashion, petrol and gas, and airlines, while spending less on recreational activities, tourist attractions and restaurants, the report said.

Spending on fashion and accessories, watches and jewellery rose by 20 per cent in the second quarter of 2022 compared with the first three months of the year, driven by Ramadan and seasonal discounts.

Spending at petrol stations rose 17 per cent compared with the same period of 2021.

The data showed that 67 per cent of consumers are "somewhat concerned" or "very concerned" about inflation, driven by rising prices of fresh and packaged foods and baked items, the report said. As a result, they are buying more discounted products and stocking up on essentials.

In terms of where consumers go to buy, both shopping in stores and online is rising.

The research showed that omnichannel shopping remains consumers’ preferred way to buy, with e-commerce spending increasing by 41 per cent in the first half of this year from the same period in 2021.

Online sales now account for 11 per cent of the overall retail economy.

Clothing and fashion topped the omnichannel list, with 54 per cent of shoppers saying they make purchases in this category on and offline, while 54 per cent also said that they prefer to go in-store when shopping for groceries.

Spend by tourists increased in the first half of 2022, with the average amount spent per card up 34 per cent compared with the first six months of 2019, the report said. Visitors from Saudi Arabia, the UK and the US topped the tourist spending chart. It remained focused on hotels, food and beverages, and fashion.

Dubai hosted 7.12 million international visitors in the first half of 2022, nearly three times the 2.52 million tourists recorded in the same period last year, according to the latest government data.

Data from Majid Al Futtaim’s Happiness lab also showed that 72 per cent of the UAE population plans to travel at least once this year.

Dubai’s property market is also rebounding strong, with property sales increasing 60 per cent in the first half compared with the same period in 2021, representing more than 43,000 transactions, the report said.

However, rising prices are becoming a concern for UAE residents, with a recent poll conducted Majid Al Futtaim’s Happiness Lab showing that 70 per cent of respondents were worried about real estate and rent increases.

Updated: August 08, 2022, 2:20 PM