UAE Retail Economy This autumn Report: Consumer Spending Growth 19% in 2022

Key findings from the report embody:

• The UAE recorded its strongest GDP development since 2006, actualising to 7.9%
• Increases in client spending have been famous within the retail (13%) and non-retail financial system (29%) 
• E-commerce gross sales are on a powerful upward trajectory, greater than doubling to USD 6 billion in 2022 from USD 2.6 billion in 2019
• Online grocery store and hypermarket spending grew by 40% in 2022, whereas offline development was at 7% 
• Property gross sales have been at a record-breaking 12-year excessive by way of quantity and worth, with transactions leaping by 60% as compared with 2021

Majid Al Futtaim, the main shopping center, communities, retail and leisure pioneer throughout the Middle East, Africa and Asia, at present launched its ‘State of the UAE Retail Economy’ This autumn report, which revealed that total client spending was up 19% in 2022 in comparison with the earlier yr. 

There was a notable 13% development in spending throughout the retail financial system for the complete yr together with, leisure and leisure (29%), trend (25%), hypermarkets and supermarkets (11%) and normal retail (9%). This improve was pushed by the rise in worldwide guests to the UAE, which greater than doubled to 14 million in 2022, bolstered by main occasions together with FIFA World Cup in neighbouring Qatar. 

Ahmed Galal Ismail, Chief Executive Officer at Majid Al Futtaim – Holding, stated: “The UAE’s unwavering ability to triumph in times of economic adversity has led to the highest annual GDP growth since 2006.  Majid Al Futtaim’s latest State of the UAE Economy Report highlights the strength and resilience that underpins the country’s position as a beacon of social and economic prosperity for the MENA region.   Driven by its leaders’ clear vision, progressive policies and a steadfast commitment to the long-term success of the Nation’s people, the United Arab Emirates is well-placed to continue to deliver sustained growth for the long-term.”

Macroeconomic Trends

The UAE posted its strongest annual GDP development since 2006, leaping to 7.9%, from 3.9% in 2021. The drivers of this increase have been broad-based, throughout oil and non-oil sectors. As anticipated, oil remained the principle part as a result of an increase of round 38% within the common oil value, inflicting the sector to rebound to 11.4% development, after contracting by 0.7% the earlier yr.

The non-oil financial system demonstrated strong development at 6.6%, buoyed by authorities efforts to draw investments and increase the nation’s tourism sector.

Consumer Behaviour Trends

The closing quarter of 2022 noticed folks changing into extra cautious with their spend, choosing reductions and offers for important gadgets, and slicing again on non-essential’s akin to electronics. 

The common spend per transaction in hypermarkets and supermarkets was down 3% throughout the yr, nonetheless total spending within the phase was up 11% on the yr prior, displaying motion in direction of smaller basket worth and extra frequent transaction.

The prolonged 2.5-day weekend additionally influenced the rise in client spend, with weekend retail gross sales growing by 11.3% versus the earlier yr. This translated to extra spending of roughly AED 5.5 billion in keeping with Majid Al Futtaim Point of Sales (POS) information. 

Consumer Sentiment

Inflation was a actuality in 2022 ending the yr at 5.2%, nonetheless, it was nonetheless considerably lower than elsewhere on this planet. Consumer optimism remained excessive although, regardless of inflation. In Majid Al Futtaim’s Happiness Lab survey, roughly 90% of respondents seen the UAE’s present financial scenario positively. The Majid Al Futtaim POS information indicated that this optimism is evidenced by a peak in absolute client spending within the fourth quarter of 2022, which accounted for 29% of all retail financial exercise throughout the yr.

Burgeoning Digital Economy

Analysis means that the UAE has the world’s fastest-growing e-commerce market, with gross sales forecast to achieve USD 9.2 billion by 2026. Spending on this space peaked in This autumn 2022 and grew by 20% for the complete yr in comparison with 2021, with three-quarters of customers saying that digital fee strategies are the popular possibility, in keeping with Majid Al Futtaim POS information.

Fintech options akin to buy-now-pay-later (BNPL) gained tempo, with 45% of customers utilizing BNPL financing previously yr, up from 21% a yr earlier. 

A majority of on-line spending by residents was within the hypermarket and grocery store sector, which witnessed spending development of 40% throughout the yr. 

UAE Property Market

The actual property sector witnessed a record-breaking yr, with property gross sales at a 12-year excessive by way of quantity and worth. Transactions jumped 60% as compared with 2021, with gross sales values climbing by 76% to AED 265 billion in 2022. The market hit its peak in This autumn at 27,000 transactions, up from 16,000 a yr earlier.