Gerard Bselis, the manager of the Louis Vuitton boutique at the Mall of the Emirates, loves the Shopping Festival in Dubai. It is a time when tourists from around the world converge on the city for the 32-day extravaganza and, Mr Bselis hopes, walk away with luxury items in a brand new Louis Vuitton (LV) bag from his store.
"Many people when they travel here they come with what they need," he says. "But just before they leave, they need something to carry all their shopping in, so we tend to sell a lot of luggage." Now in its 15th year, the Dubai Shopping Festival (DSF), which opens tomorrow, has become an institution in the emirate. Retailers such as Louis Vuitton stock up their stores with popular merchandise and increase staffing to prepare for the extra wave of consumers.
"We see a lot of people from all over the Gulf, and from South East Asia and Japan," says Mr Bselis, whose LV bags sell from Dh6,000 (US$1,633) to Dh12,000. Since its launch in 1996, the event has attracted about 35 million visitors with its blend of entertainment and bargains. And they have spent some Dh74 billion in Dubai, further fuelling the emirate's retail industry and helping it become the fourth most attractive destination for international brands behind London, Paris and New York.
Last year's event, which began in mid-January as the global economic downturn began to buffet the UAE, attracted 3.35 million visitors, up 4.6 per cent from the year before. But retail spending dropped to Dh9.8bn compared with Dh10bn in 2008, despite an extra 2,000 shops taking part in the festival. Organisers say about 6,000 retailers and 50 malls are involved this year. They say they are optimistic about this year's event, given the increase in visitors last year despite the difficult times.
"Our main aim for DSF 2010 is to maintain the same momentum of last year's," says a spokesman. Last year, organisers adapted to the tough economic circumstances by offering bigger discounts to try to attract guests from other GCC countries and India. It is a tactic they hope will work this time, too. "We have refocused our marketing and PR initiatives to reach out to the less affected regions, such as the GCC, India, Japan and China; the latter being one of our main target tourism markets in the past two years, as we believe that they are shoppers with abundant purchasing powers," the spokesman says.
Retailers are also confident the festival will be a success, although analysts are cautious in predictions for domestic spending. Richard Adams, a retail analyst at Datamonitor based in Dubai, says weak consumer demand is still a major concern. About 55 per cent of UAE consumers polled feel they are significantly or slightly worse off than they were six months ago, Datamonitor's monthly Recovery from Recession survey shows.
But this is slightly better than in the second and third quarters of last year, where 57 and 59 per cent respectively felt worse off than the same periods the previous year. "Judging from these numbers, I expect [the DSF] to be relatively robust but there are concerns at the moment," Mr Adams says. "Consumers are very, very value-conscious. The real challenge retailers will face in the shopping festival is making consumers spend when they are quite reluctant to do so."
Consumer confidence rose steadily throughout last year, but took a major hit in the fourth quarter after Dubai World called for a standstill on its $26bn of debt. Consumer sentiment in the UAE took the biggest hit worldwide last month, the global data monitoring company Nielsen said, dropping 10 points to 92. The fall knocked it out of the 10 most optimistic countries for the first time since 2006.
But the mood is marginally better than it was in the first half of last year, at 89 points. "Sentiment is a bit better than last year during the same period," says Laurent-Patrick Gally, a retail analyst at Shuaa Capital. "Last year was probably the worst time of the year with respect to consumer sentiment." This year should be different, Mr Bselis says. Although the LV brand is sticking to a no-discount policy, he is still hoping for a sales surge like "the good old days of Dubai".
"Last year, it was in the middle of the crisis and people were looking at buying and spending differently," he says. "Now, we do see a recovery. It's probably more 2007 levels than 2008 - quite an improvement." * additional reporting by Rebecca Bundhun @Email:email@example.com