But the UAE’s mega malls should not be too fearful, because consumer traffic continues to surge, driven by rising tourist arrivals and improving consumer confidence.
UAE online retail sales surge in festive season
Online retailers are reporting a surge in sales during the annual festive shopping spree as consumer preference for shopping online outpaces the physical malls.
Tejuri, an online mall that offers goods from 125 retailers, is just one of several e-commerce outfits that have seen sales rocket this month and last.
“Traffic through November and December has been phenomenal with a 50 to 70 per cent rise in sales depending on which retailer we are looking at,” said Ayaz Maqbool, Tejuri’s managing director.
“Since November we have offered the site in Arabic as well as English, giving an immediate 40 per cent jump in pan Arab traffic, with one million people visiting in December.”
The online retail market has been comparatively slow to take off in the Middle East, as various factors have been constraining growth. They include patchy physical addresses and consumer reluctance in some countries to part with credit card details because of fear of online fraud.
But that may be changing as the number of online retail sites is growing.
Logistics firm Aramex reported a quadrupling of e-commerce deliveries last year, while the sales of the Dubai-based online retailer JadoPado are projected to increase by a third compared to last year’s holiday season.
Omar Kassim, JadoPado’s founder, said: “Both September and October have been up by 51 per cent and 42 per cent respectively versus last year’s numbers, [while] our numbers for December ... are projected to be higher by around 8 per cent.”
This is partially the result of expanding sales from a low base, as “the e-commerce space accounts for less than 1 per cent of retail in the region,” Mr Kassim explained.
“However, [online shopping] basket sizes are healthy at an average of Dh1,300 to Dh1,400 per order.”
However, the growth in online shopping is not driven by bargain-hunters or shoppers who wish to avoid Christmas queues, rather it is being fuelled by a cultural shift.
Khaled Diab, the regional general manager of direct seller Qnet, said: “There is a whole new audience that is connected 24/7 through their smartphones, tablets and other mobile devices. This is leading to a gradual evolution of e-commerce into mobile commerce. At Qnet, we are seeing a slow but steady shift in user behaviour among our customers with an increasing number of shoppers making purchases through our mobile application.”
Even so, the UAE’s mega malls – replete with eye-catching attractions such as Dubai Mall’s Aquarium and the Mall of the Emirates’ indoor ski slope – should not be too fearful, because consumer traffic continues to surge, driven by rising tourist arrivals and improving consumer confidence.
Rashid Doleh, the president of the Middle East Council of Shopping Centres, voiced optimism about the sector’s future prospects.
“Will online commerce threaten malls? Honestly, no,” he said. “Shopping here, more than anywhere else, is at the core of how people socialise.
“Maybe because of the climate, it’s such a habitual part of one’s routine at the weekend and the evening, and at the root of a lot of people’s lifestyle.
“When you have kids, you go to the mall, meet friends at the mall, have a meal at the mall. It is an opportunity to access a whole new revenue stream, so its complementary, not threatening.”