x Abu Dhabi, UAEWednesday 24 January 2018

Temptation to spend early salaries over the Eid holidays

Take our poll: Financial experts warn about overspending during Eid as salaries paid early have to last until almost October, as malls and shops get ready for a busy few days.

Financial experts have warned against the urge to flash the cash, especially with the next pay day up to six weeks away.
Financial experts have warned against the urge to flash the cash, especially with the next pay day up to six weeks away.

DUBAI // The extended Eid holidays and early pay for thousands of residents means shops and malls will have a busy few days.

But financial experts warn against the urge to flash the cash, especially with the next pay day up to six weeks away.

Budgeting is key, says Keren Bobker, senior consultant at Holborn Assets, who advises using cash instead of credit or debit cards to keep track of spending.

"You know that the money paid is your salary," Ms Bobker says. "You need to live on it over the next month so keep reminding yourself of that.

"You don't want to be left out of the festivities but you also don't want to spoil the rest of the month, and your friends will understand if you cannot afford to go out every night."

Public sector workers were paid their August salary two weeks early in time for the Eid celebrations, and many private firms have followed suit.

However, the earlier than expected cash boost was not welcomed by everyone.

Afarin Khazaeni, who works at her father's company as a beauty specialist, refused the offer of an early salary payment to prevent her from overspending.

"I've bought lots of gifts like clothes and jewellery for my friends but I tend to be careful with how much I spend," she said.

"My weakness is shoes and I do have a habit of buying what I like, so I have to be careful I don't over do it but I have a budget and I stick to it - usually."

Malls and retailers are expecting to cash in on the four-day weekend with a huge increase in visitor numbers expected, particularly from GCC countries.

"Things start to pick up slowly from the second week of Ramadan, shopping wise," said Eisa Ibrahim, managing director of BurJuman Mall.

"We tend to find sales really picking up a couple of days before with people buying gifts for Eid."

Ramadan is traditionally a quiet time for retail with many people away on summer holidays and those who are fasting choosing to stay home rather than visit the malls.

"We tend to see the last week of Ramadan pick up with people doing a lot of shopping for clothes, jewellery, gold perfumes and accessories," said Mr Ibrahim.

"During Eid, most people go to the malls to enjoy a meal or coffee and generally celebrate the holiday with friends."

He said the payment of early salaries will mean many people, flush with extra disposable income, will be more inclined to spend.

Electronic stores in particular are expecting a boost in trade.

"This year we are expecting a double figure percentage growth in sales during Eid," said Ashish Panjabi, chief operating officer for Jacky's Electronics.

The Eid holidays also coincide with back to school preparations for many families and smartphones, laptops and tablet computers are expected to be the big sellers, he said.

"In previous years, the custom has been for people to go to the malls after Iftar time but with it being later this year we have had less of that," said Mr Panjabi.

Typically customers spend just below Dh1,000 this time of year, he said.

"We are expecting sales to be up between 20 and 25 per cent compared with last year."

For online stores, much of the demand has been in the run up to Eid as customers stock up on gifts.

"People have been more willing to spend on multiple items like LCD televisions and digital cameras this year," said Sheriff Rizwan, chief executive officer of ALshop.com.

Customers were typically spending between Dh3,000 to Dh4,000 on items, compared to last year's maximum of Dh3,000, he said.

However, Mr Rizwan expected demand to drop over Eid as people head out to shops instead of buying online.

According to Sana Toukan, a research manager for the Middle East at Euromonitor International, Ramadan sales have been strong, particularly on food.

People on higher incomes were spending more on expensive items like jewellery and electronics, while lower income groups tended to shop for lower cost apparel and consumer appliances as gifts.

"Promotions in malls in the run up to Eid are also boosting sales during this period where retailers are focusing on generating more sales outside the shopping festivals," she added.