The financial crisis sent sales plunging around 30 per cent in the first part of the year, but they are improving.
Dubai retailers say worst may be behind them
DUBAI // Dubai retailers are bracing for a slow summer but say the worst may be behind them after the financial crisis sent sales plunging around 30 per cent in the first part of the year, industry representatives say. "Whatever figures we got in the last months are stabilising," said Majid Saif al Ghurair, chief executive of Al Ghurair Group, which operates the BurJuman Centre, a luxury mall typical of Dubai with designer brands nestled among marbled fountains and air conditioned corridors.
"People say summer will be very tough when a lot of people will leave on vacation but after that I think things will pick up again." Retail sales may have been down 30 percent in the first quarter of this year compared with last year, said Peter McElwaine, the chief executive of Jumbo Electronics, which has 30 retail stores across the UAE. "The pickup in May was miniscule but there appears to be a slowing down in the slowdown and we appear to have hit bottom," Mr McElwaine said. "The next quarter is going to be pretty flat, but I am also not expecting to see any further decline."
In April, Mr Ghurair said sales at Dubai malls fell up to 20 per cent in the first quarter. One of seven emirates comprising the UAE, Dubai went through a six-year boom resulting in rapid growth in the retail sector and a sharp increase in mall space, with the number of malls growing beyond 40. As the economic downturn hit, the region's consumer hub suffered from a decline in tourism, which accounts for a significant part of the business. Retail, which generates a third of Dubai's gross domestic product, has slowed markedly.
Sales have improved but not significantly, said Mohi bin Hendi, president of Bin Hendi Enterprises, which distributes luxury brands such as Brioni and Calvin Klein. "Retailers in Dubai got used to huge turnover and profits in the past in a very lucrative market and now for any retailer to accept less than that becomes an issue," Mr Henti said. Tourism is "vital for the retail industry to survive", he said, noting tourists make up 70 per cent of Dubai's retail clothing sales. For big electronics retailers such as Jumbo and Sharaf DG, tourists comprise around 20 to 30 percent of their cutomer base.
"Tourists are the biggest factors affecting the Dubai market," said Sharaf DG chief executive Nilesh Khalkho, adding that the company's sales grew in double digits during the month of May compared with April. Dubai's tourism industry slowed in the first quarter after a 16 per cent fall in guest nights and 15 per cent drop in revenue. For now the market appears to have bottomed out, said Mr McElwaine, but adding that to suggest it was on the road to recovery was premature.