x Abu Dhabi, UAEMonday 24 July 2017

A seasonal gift for retailers

Year-end consumer spending points towards a return in confidence after a year many would like to forget.

Although Eid al Adha and Christmas have provided a fillip to retail sales, they are unlikely to go past last year's levels.
Although Eid al Adha and Christmas have provided a fillip to retail sales, they are unlikely to go past last year's levels.

Retailers in the Emirates have been getting a timely boost from holiday shoppers, fuelling hopes for a good end to what has been a difficult year. While retailers say they are not seeing the robust sales of last year's holiday season, this year's performance is an improvement over the sluggish sales of just two months ago.

"It is getting better, slowly," said Keith Flanagan, the general manager of Al Ghurair Retail, which manages brands such as Springfield clothing stores. Mr Flanagan welcomed the news that Emiratis employed by the federal government would be getting a 70 per cent increase in compensation. His enthusiasm was echoed by Moza al Darmaki, who works at the Abu Dhabi Authority for Culture and Heritage. She jumped for joy at Marina Mall after she called her office and confirmed that she would be getting a raise.

"I have a huge feeling it's going to be a prosperous year next year," she said. Retail sales are unlikely to reach the peaks of last year but have been boosted by Eid al Adha and now Christmas. Consumer confidence had dropped to record lows in the first half of this year, deflated by rounds of job cuts and economic uncertainty. But after Ramadan, consumer confidence as measured by the research firm Nielsen, shot up by 13 points, the biggest increase the firm had recorded in three years of polling consumer sentiment in the UAE.

Retailers reported a surge in Eid sales last month. And on Christmas Eve, last-minute shoppers again opened their wallets. "I would say that 100 per cent of the people leaving here have bags in their hands," said Tom Miles, the general manager of Festival Centre at Dubai Festival City. "Some one, some several." Patrick Chalhoub, the joint chief executive of the Chalhoub Group, whose portfolio of 280 international brands includes marquee names such as Chanel and Louis Vuitton, said the waves of shoppers were more tied to events and weekends.

"It is becoming a market that is much more focused on occasions, rather than year-round," he said. "It is an occasion, and we can feel that there is an improvement in the figures." Masoud Barezi, the manager of Paris Gallery at Marina Mall, said that in the days leading up to the holiday, shopping began to gather pace. "At the beginning of December, there was a little dip, but it started picking up. These last 10 days, it has been good for business," he said last Tuesday.

Sales at the cosmetics and luxury goods store were roughly at the same levels as last year, he said, a relatively good performance but not matching the double-digit sales growth the store has seen previously. Mr Barezi, too, hoped the extra cash in the pockets of federal employees would boost his customer traffic into the new year. "When people are getting more money, they are going to spend it in the stores," he said.

That is what Helal al Mahairbi, 23, plans to do. "I'm going to have fun with the money, to live life to the fullest," said the engineer. But others planned to be cautious with the extra income. Mubarak Mansoori, 27, said he still aimed to save at least 30 per cent of his salary as an engineer next year. "Everyone is still complaining about our salaries," he said. "Everything is really expensive. Prices have gone up, which makes it very difficult to save."

Rekha Tamang, the manager of the Body Shop at Dubai's Mall of the Emirates, said she hoped the recent salary top-up would bring some revenue relief for her store in the new year. "If we have more of the local people spending, I don't think we will suffer a lot." The Body Shop has been busier during the holiday season than she had expected, she said. "Sales are not as great as they were last year, but they're not bad."

Sales this year have been 11 per cent below what they were in the best period last year and customer traffic through the speciality soap-and-cosmetics store was down by 13 per cent, Ms Tamang said. The Russian and African tourists who normally frequented the Body Shop were few and far between this year, she said. And the bulk buyers, such as property executives who would buy gifts for all their employees, were also markedly fewer.

While the extensive layoffs that were common early in the year had abated, consumers continued to be cautious. Richard Camm said he had begun spending much more conservatively this year and that the holidays would not bring a change. "I just phoned the wife, and she said be careful what you spend," he said while shopping at Mall of the Emirates. The recent news of Dubai World's request for a standstill on debt payments had introduced another level of uncertainty for consumers, Mr Camm said.

"There are more people out shopping, because it is Christmas, but not as much as I expected them to be. People are spending, but holding back some in reserve." Roshell Fortuna, the manager of Le Chateau at Ibn Battuta Mall in Dubai, said her store, too, was feeling the pinch. "This Christmas compared to last year is too dull," she said. "Sales this year are really down, like 60 per cent. And our regular customers that we used to see most of the time, we don't see them any more."

However, the tale shifts when one looks at different markets across the Gulf, said Mr Chalhoub. In Abu Dhabi, Mr Chalhoub's sales have grown about 7 per cent to 12 per cent compared with last year. But in Dubai, his firm's sales performance varied among the malls. With the addition of the 1.12 million-square-metre Dubai Mall, and at least two other new shopping centres in the emirate, the retail sales pie was being sliced more thinly, he said.

* with additional reporting by Hadeel al Sayegh @Email:aligaya@thenational.ae