The waning days of November have been viewed by retailers as their annual saving grace since the 1960s. After a year in which any number of circumstances could have spelt disaster for any shopkeeper, the period served as the unofficial beginning of the holiday season and a potential return to profitability.
That changed last year. Consumer sentiment dropped to historic lows as the global economic crisis began, sending retailers scrambling to salvage an already tough year. Even US online sales dipped 5.7 per cent to US$28.4 billion (Dh104.31bn), the first such decline since e-commerce began, the international market research firm eMarketer says. Things appear to be returning to normal this year. US consumer spending beat analyst estimates to rise 0.7 per cent last month, alongside a 0.2 per cent gain in personal incomes, figures from the US Bureau of Economic Analysis show.
Meanwhile, the upbeat mood has carried across the pond to the UK as retail sales jumped to their highest level in two years, the Confederation of British Industry said. In the UAE, traditional retailers are gearing up for an influx of customers during the Eid al Adha and National Day holiday break. Mall hours have been extended, promotions are being introduced and entertainment is being used to help draw shoppers and keep them inside stores.
Some retailers, however, are not as optimistic. One jewellery shop manager in the Dubai Mall's Gold Souk is far from confident that the holiday season will ring in sales at his store. "Business is beginning to get better," he says. "But we're not doing anything special for Eid. There are no sales or anything like that." Perhaps, then, shoppers are more inclined to hop on to their computers and browse items on a new breed of online websites promoting e-commerce in the UAE. As Cyber Monday, as retail associations call it, becomes a major event around the world, there is evidence that the same spending spree will occur in the Emirates.
Online shopping has increased during the past year as consumers, mindful of their bank accounts, have shifted into thrift mode. Looking for bargains on the internet has become much easier with the introduction of several new websites that offer robust comparison tools, as well as with existing social networks such as Twitter and Facebook that offer instant recommendations. Shares in Amazon, the world's largest online retailer, soared from $38.70 one year ago to an all-time high of $134.03 last week as the company's customer base appeared to be increasingly willing to spend on discretionary items such as books and electronic goods.
UAE residents are beginning to embrace online shopping and spend more than residents of Hong Kong, Singapore and Australia. On average, UAE residents shopping online spent $1,193 in the fourth quarter of last year, according to a Mastercard survey released last June, the first time the credit card company measured such spending in the region. A quarter of the country's population shops online, the Arab Advisors Group says.
Kajsa Dokakis, the managing director of quickdubai.com and the newly launched quickabudhabi.com, says the sites' special Eid gift section, with chocolate-covered dates and camel-shaped cuff links, has experienced brisk business in the run-up to the holiday, although Eid al Adha is usually much busier than Eid al Fitr. "It's growing every year," Mrs Dokakis says. "It's mostly expat customers but the local customer base is growing."
Despite a common aversion in the UAE to using credit cards online, her customer base has expanded because shoppers can pay cash on delivery as well. After customers use the service once, they feel more comfortable and make their next purchase on their credit cards, Mrs Dokakis says. And those customers tell their friends. Some 30 per cent of new customers came to their gift websites by word of mouth, she says.
Other websites catering to the UAE online shopper have begun to appear. They include nahel.com and citrusstv.com, while others such as souk.com and brownbag.ae have expanded operations, hoping to tap into what could be an extremely profitable trend. There are other indications that this may continue to increase. More than 60 per cent of the UAE is signed up to high-speed internet services, a number that is set to increase in the next year as the country becomes fully wired to broadband connections.
But a true momentum shift for local e-commerce will occur when major UAE retailers such as the luxury brands seller Paris Gallery, the confectioner Bateel and the jewellery maker Damas unveil their own online retailing portals. Each has a valuable opportunity to leverage its well-known brand to local online users and drive further growth. An interesting strategy would be to link up with one of the telecommunications operators, Etisalat or du, to provide a value-added service to users who have already subscribed to internet services.
Until that happens, the smaller players will continue to chip away at the sales of the larger companies, building their own brands before major UAE retailers have a chance to react. Although it is far-fetched that a website could overtake a company such as Damas in sales, it is not beyond the realm of possibility that online sales could be something that traditional retailers cannot ignore. @Email:email@example.com