Total retail spending in the UAE last year reached $71 billion, positioning it 14th globally and on the top spot in the Middle East and North Africa region, according to a survey by global consultancy Kearney.
The Emirates led the Mena region in terms of household spending on e-commerce, with $2,554 in average spending per household, which is twice the global average of $1,156 and four times the Mena average of $629, positioning the country as a high-demand market, the 2021 Global Retail Development Index revealed.
The Kearney study ranks 35 emerging countries based on a set of 26 factors and four key variables to determine markets that are growing, attractive and relatively risk-free.
Driving the retail growth in the UAE are technology and experiential marketing as retailers adopt technologies such as artificial intelligence, Internet of Things and virtual reality, the consumer and retail consultancy said.
“Coupled with the high consumer spending levels, we have seen large international retailers and global brands entering the market or expanding their operations [in the UAE] over the past decade,” said Mohammed Dhedhi, partner at Consumer and Retail Practice at Kearney Middle East.
“The ease of doing business in the country, in addition to the steady support for start-ups and small businesses and well-designed stimulus packages have encouraged foreign direct investment and spurred innovation in the sector.”
The UAE’s e-commerce market significantly grew after the pandemic as more consumers turned to online channels for their shopping needs. The sector grew 53 percent to a record $3.9 billion in 2020 and it is expected to grow further, the Dubai Chamber of Commerce and Industry said in June.
In September, Amazon, the world’s biggest online retailer, said it will create 1,500 jobs in the country this year to increase its storage capacity by 60 percent and raise the area of its delivery stations by 70 percent.
The UAE’s retail market is maturing and its economy behaves like that of a “developed market … so much so that it will soon no longer be considered an ‘emerging market’ within our GRDI rankings”, Mr. Dhedhi said.
Numerous international retailers and global brands entered the UAE or expanded their operations over the past decade, attracted by high consumer spending levels.
To tap into the growing e-commerce market in the UAE, retailers including Bloomingdale’s, Hugo Boss, Diesel, and The Body Shop, recently launched dedicated online stores. The e-commerce market is driven by high internet penetration – nearly 100 percent in 2020 – and well-developed digital payment and logistics ecosystems, according to Kearney’s findings.
Globally, China topped the charts with $4.07 trillion in retail spending last year, followed by India at $1.16tn, the study revealed.
China’s retail market grew only 1.6 percent last year owing to the Covid-19 impact. But with retail recovering at a compounded annual growth rate of 7.3 percent, retail spending in the world’s second-largest economy is forecast to reach $5.8tn by 2025, according to Kearney index.
India’s retail sector, meanwhile, is expected to grow to $1.4tn by 2026 and more than $1.8tn by 2030, driven by higher disposable incomes, urbanization, middle-class lifestyle changes and increased digital connectivity and supporting infrastructure, study said.
However, Africa will be driving the future worldwide retail growth, as the continent is set to move away from traditional retail models in the wake of the coronavirus pandemic.
Africa will become “the fastest-growing, richest and most sophisticated market in the world due to the growth of favorable governmental regulations, rapid digitalization and significant investment by both foreign and domestic companies”, the study said.
“Large local retailers are already ahead of the curve, with some such as Majid Al Futtaim announcing plans to double down on their footprint countries such as Kenya and Uganda, focusing on price, private label and building customer loyalty,” Mr. Dhedhi said.
(Except for the headline, this story has not been edited by The Technology Express staff and is published from a syndicated feed)
