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Majid Al Futtaim published the latest version of its quarterly report, “The State of the Retail Economy in the UAE” for the last quarter of last year, which showed an increase in consumer spending by 19% in 2022 compared to the previous year. According to the report, consumer spending in the retail sector grew by 13% in general, and this included leisure and entertainment sites, which grew by 29%, fashion by 25%, shopping from supermarkets and hypermarkets by 11%, and general retail by 9%.
This growth was supported by an increase in the number of visitors from outside the country. As the number of visitors doubled to 14 million in 2022; This is thanks to the many major international events hosted by the region, including the FIFA World Cup, which was held in the State of Qatar.
Ahmed Jalal Ismail, CEO of Majid Al Futtaim Holding, said: “The UAE economy has been able to achieve the highest annual growth rate of GDP since 2006, taking advantage of the capabilities that characterize the UAE economy, and its capabilities that enable it to overcome the most complex economic challenges.” . In this edition of the “State of the Retail Economy in the UAE” report, we highlight the strength and resilience of the UAE economy, which supports the country’s position as a global example of social and economic prosperity in the Middle East and North Africa region. We are confident that the UAE economy will continue to achieve sustainable growth in the long term, driven by the vision of the wise leadership, clear policies and firm commitment to achieving success.”
Major economic trends
The UAE recorded the strongest annual growth rate of GDP since 2006; It jumped to 7.9% from 3.9% in 2021, driven by remarkable growth in the oil and non-oil sectors. The oil sector maintained its position as a major component. The average oil price increased by 38% and led the sector’s growth in general to record a growth rate of 11.4%, after contracting by 0.7% in the previous year. While the non-oil sector grew by 6.6%, supported by large-scale government efforts to attract more investments and restore the activity and vitality of the tourism sector.
Major consumer trends
The “State of the Retail Economy in the UAE” report for the last quarter of last year monitored the state of caution that consumers characterized in their spending. They were more likely to receive special offers and discounts on basic consumer items. They were also more keen to reduce their purchases of non-essential preferential products such as electronics. The average spend per transaction in supermarkets and hypermarkets decreased by 3% over the past year, however, the total spend in this sector increased by 11% compared to the previous year, due to the keenness of customers to reduce the amount of purchases while at the same time increasing the frequency of shopping .
The extension of the weekend to two and a half days over the past year has also played a major role in increasing consumer spending; Weekend retail sales increased by 11.3% compared to the previous year, boosting consumer spending by nearly AED 5.5 billion, according to Majid Al Futtaim and point-of-sale data.
Consumer confidence
At the end of last year, the inflation rate reached 5.2%, and despite its high rate, it is much lower than in other places around the world, which boosted the levels of optimism among consumers. According to the data of the “Happiness Lab” of Majid Al Futtaim, nearly 90% of the respondents expressed their positive view of the current economic situation in the UAE. Majid Al Futtaim’s POS data also indicated that this optimism was evident during the peak consumer spending in the last quarter of 2022, which accounted for 29% of total economic activity in the retail sector over the past year.
The digital economy continues to grow
Specialized reports indicate that the UAE is recording the fastest growth rates for the e-commerce market in the world, and its sales are expected to reach $9.2 billion by 2026. Spending in this sector reached its peak in the last quarter of 2022, recording a total growth of 20% compared to 2020. 2021. Three-quarters of consumers said: Digital payment methods are their preferred option now; This is according to Majid Al Futtaim points of sale data
Innovative financial technology solutions such as the “Buy Now Pay Later” service were adopted by consumers, and 45% of them used them during the past year, an increase from 21% in the previous year. Most of the online purchases were directed towards hypermarkets and supermarkets, and they recorded a 40% growth in spending over the past year.
real estate market
The real estate sector witnessed record growth rates; Where it recorded the highest level of sales in 12 years in terms of volume and value. The number of deals jumped by 60% compared to 2021, and sales increased by 76%, reaching 265 billion dirhams in 2022. The market reached its peak in the last quarter, recording 27 thousand deals, compared to about 16 thousand in the previous year.
