Growth of everyday consumer goods slows

The growth in sales across the country of basic consumer goods including chocolate, rice, tea and shampoo has slowed by half in the past year, data from the research company Nielsen show. In the 12 months to March this year, sales of these everyday products grew at 8.2 per cent, a drop from the 21.3 per cent growth in the same period a year earlier. Ashok Nair, the director of retail measurement services at Nielsen for the Middle East, North Africa and Pakistan, said past growth was driven by the influx of people into the country but after the economic downturn that trend had lessened.

"The whole economy was driven by the excitement and the number of people coming into the country and looking at new opportunities," Mr Nair said. "That has stopped." What is more, the consumer goods tracked by Nielsen are being snapped up faster in Abu Dhabi and Al Ain than in Dubai and Sharjah, he said. Sales growth in Abu Dhabi and Al Ain in the year up to March was 10.9 per cent, while in Dubai and Sharjah it was just 4.8 per cent. This is a drop from 20.5 per cent and 21.8 per cent, respectively, in the previous year.

"Abu Dhabi is growing but still slower than it used to grow," said Mr Nair. But it is growing because in the capital fewer jobs were shed and fewer people left, Mr Nair said. Also, many people who were made redundant in Dubai found jobs in Abu Dhabi and relocated to the capital, he added. Another factor is the addition of new hypermarkets and supermarkets, which has slowed in Dubai but is continuing in Abu Dhabi, Mr Nair said.

The shift is evident when looking at most categories, ranging from food to personal care. With chocolate, sales growth in the past year in Abu Dhabi and Al Ain was 4 per cent, while in Dubai and Sharjah it was down 2.8 per cent. For rice, sales growth in Abu Dhabi and Al Ain was 7.8 per cent. The growth in soap product sales in Abu Dhabi was 20.7 per cent, compared with 14.4 per cent in Dubai and Sharjah.

"Abu Dhabi, you wouldn't call it booming any more, but it is still growing and it is still doing quite well," said David Edwards, the managing director of IMES Consulting Group, a market research company based in Dubai. "People losing their jobs in Dubai have been finding them in Abu Dhabi. There has been a shift in the central economic focus in the country from Dubai towards Abu Dhabi and you would expect to see faster growth rates in Abu Dhabi to Dubai."

Another factor contributing to the overall slowdown is that existing residents have scaled back their spending. UAE consumers were unsure whether their jobs were secure and became more cautious with their purchases, Mr Nair said. For those who are still employed, salaries have not increased, giving consumers less of an incentive to shop, he added. However, consumer sentiment is improving. The latest reading of consumer confidence in the UAE showed an 11-point jump, to 103 points, bringing the country back among the top 10 most optimistic markets in the world, data from Nielsen showed. The company expects sales to improve but consumers will continue to be cautious.