Sales sizzle in a long hot summer in the UAE

A man checks out electronics gadgets at Jumbo Electronics store in Mall of the Emirates. ( Jaime Puebla - The National Newspaper )

Shopping sales continued to surge during the summer months, with the malls in Abu Dhabi and Dubai busy and customers splashing out on goods despite retailers having predicted a sharp decline in activity during Ramadan. Rory Jones reports on the unexpected buying boom.

Cars

Financing schemes and promotions helped to keep sales of cars motoring across the UAE during the summer, despite numerous obstacles impeding the path to growth for dealerships.

"We have had a good Ramadan, there's no two ways about it," says Andrew Squires, the manager for sales, planning and distribution at Al-Futtaim Motors, which sells Toyota, the UAE market leader.

The dealership recorded sales growth of 9 per cent last month compared with the same period last year, offloading nearly 7,000 units, Mr Squires says.

"The Ramadan promotions were very warmly welcomed."

Al-Futtaim launched a set of financing options called Toyota Choices earlier in the year and updated them for Ramadan.

Customers were given the opportunity to pay the mandatory 20 per cent deposit for a car over the life of a 24-month loan.

These deals made up 20 per cent of sales during Ramadan, according to Mr Squires, and the company is continuing the offer indefinitely.

Dealerships have had to deal with a number of factors skewing sales, including the Central Bank lending rules introduced in May and the timing of Ramadan, which fell in a traditionally quiet month.

Three of the UAE's major brands, Toyota, Nissan and Honda, have also had to manage lower supply because of the earthquake and tsunami in Japan last March. Al Majid Motors, the exclusive distributor of the Korean brand Kia across the Emirates, benefited from the plight of its rivals, with 17 per cent growth in sales during Ramadan.

"New entrants such as Picanto made noticeable changes in the volume," says Ramesh Amei, the product manager at Al Majid. "We have seen the increase in individuals shifting from their previous brands."

Al Majid offered promotions to entice buyers during the holy month, including one year's free insurance and five years' warranty.

Arabian Automobiles, the exclusive dealer for Nissan, Renault and Infiniti in Dubai and the Northern Emirates, has extended its promotions until the end of this month, including the opportunity to defer payments on financing for six months.

"Ramadan was a great retail month," says Felix Welch, the head of sales and marketing at Arabian Automobiles. "But Ramadan didn't really get going until the second and third week."

Arabian Automobiles sold 2,500 models during the holy month, up 7 per cent on the same period the previous year. Honda had to recall 7,000 Civics and 2,000 Accords over the summer while dealing with a huge supply shortage. It says sales were flat for the period and it hopes for a strong finale to the year.

Supply during Ramadan could not keep up with demand from customers, says Mark Kass, the managing director of Al-Futtaim Honda. However, there was a good mix of sales across the company's range of models, he says.

Clothing & Jewellery

Customers in search of stylish outfits for family celebrations

Fashion brands and jewellery have enjoyed surprising growth in the summer sales.

Many retailers expected a dip during Ramadan because of the shortened mall hours in the middle of the day. But late-night shopping and a high number of Arab nationals staying in the country helped to boost sales.

"It's a bit counter-intuitive, but I think it was busy for retailers in Ramadan because a lot of people did not leave the UAE," says David Macadam, the head of retail in the Middle East for Jones LangLaSalle.

"At 3 o'clock in the morning, there were still customers in the malls."

Boutique 1 Group, the retailer behind its own branded high-end fashion stores, and the franchisee for Mulberry, Chloe, Missoni and Furla, achieved a 30 per cent increase in sales during the summer compared with the same period last year.

"Mulberry is growing very significantly, as the brand has become one of the most desirable luxury bag brands," says Ziad Matta, the chief executive of Boutique 1 Group.

"Booming is probably too strong a word, but there is no doubt that there is continued strong demand for luxury brands, and the right product continues to attract strong demand irrespective of price."

Allied Enterprises, which has partnerships or franchise agreements with brands such as Chanel, Fendi, Saks Fifth Avenue and Louis Vuitton in the UAE, also enjoyed strong growth in sales during the summer.

"July was, I would say, an exceptional month. We have seen growth above 20 per cent in fashion compared to last year," says Mansour Hajjar, the managing director for Allied Enterprises.

"We definitely benefited from the surge in GCC tourism."

Although Ramadan was quiet for the first few weeks, a strong final week and Eid also meant sales increased 10 to 15 per cent, compared with the holy month last year, Mr Hajjar said.

Jewellers also enjoyed an increase in sales this summer, despite a 30 per cent jump in the price of gold in the past six months.

"The price of gold has also actually increased the demand for jewellery this summer," said John Paul Joy Alukkas, the executive director for Joyalukkas Group.

"Consumers feel gold and jewellery is a safe bet, hence they are not holding themselves back."

Mr Macadam believes new home-grown brands, such as Iconic by Landmark Group and Katakeet from Allied Enterprises, are contributing to the buoyancy in the retail market.

"More brands are being embraced by the local public," he says. "It's positively optimistic and moving forward, but it's not anywhere near the 2007 days."

Boutique 1 expects its good fortune to continue and anticipates sales growth this year of 30 per cent on last year as it launches new collections, including one designed by Claudia Schiffer, the supermodel.

Electronic Goods

Shops selling must-have gadgets were the major beneficiaries of a marked retail spree during the summer in the UAE.

Even the traditionally quiet month of Ramadan failed to dent demand for the latest smartphones and tablets.

Sales at Jumbo Electronics, which has 28 stores scattered across all seven emirates, jumped 24 per cent during Ramadan compared with the same period last year.

"For us, the summer has been pretty good, better than expected," says Nadeem Khanzadah, the deputy general manager for retail at Jumbo. "August is usually our weakest month of the year, but for some reason it's not been bad."

Ramadan sales even outstripped overall growth for the year so far, which has been at 18 to 20 per cent for Jumbo.

Stores in Mall of the Emirates, Dubai Mall and Deira City Centre recorded the strongest figures on the back of a flurry of free-spending Gulf tourists.

"This is one of the best summers we've had," Mr Khanzadah says.

Other electronics stores are also enjoying strong growth in sales as customers upgrade gadgets on a more regular basis and buy an increasing number of goods.

The tablet has created a new segment, while laptops are now being upgraded along with mobiles, according to retailers. "Usually Ramadan is a slow month," says Omar Abushaban, the general manager at Plug-Ins Electronix. "But specifically the back half of Ramadan was very, very good."

Overall, sales in Ramadan increased 8 to 10 per cent compared with the same period last year.

Sales at Plug-Ins were also helped by the high level of retail activity during the Dubai Summer Surprises festival and the timing of the Eid holiday this year, which meant many people were off work for five consecutive days.

Many retailers say promotions on cooking appliances sold strongly during the holy month as well as cameras to expatriates going abroad for holidays.

"Eid was good because everyone is back, schools are opening, there's a lot of activity." says Ashish Panjabi, the chief operating officer for Jacky's Electronics, which has nine stores in the UAE.

"Overall the summer was a bit of a mixed bag."

Despite the relatively peachy sales performance, some retailers are becoming more pessimistic about the economic news from the West and how that might affect spending in the Middle East.

"The only anticipated downside is how the bad news from Europe and the US will affect sentiment," Mr Khanzadah says.

Retailers fear shoppers may begin to reduce spending and start saving more if the global news deteriorates. But for now, the tills are ringing.