Dubai likely to lose 'shopper's paradise' status: S&P

Visitors to the UAE becoming more concerned with value for money

gordon

I was offered 25% discount on a famous electronic brand here as my piece of equipment was broken beyond compare. Even with 25% discount it was cheaper to buy in Germany.

As online keeps picking up speed, it is obvious that there will be less spend in the malls. All over the US they are closing malls as they keep loosing anchor tenants.

It is a trend that will only worsen.

How can a bricks and mortar store with all the costs be able to compete with online?

UAS

Although I agree with the fall in value for money in Dubai over the last few years, the economics of this article perplexes me. An appreciation in the US dollar would make benefit American tourists in Dubai, however the article is written in a way that suggests this is not the case. If my degree in Economics serves me right (!), an appreciation of the dollar will mean that more AED can be purchased with one unit of the currency (1 dollar). This doesn't match what is said in the first line of the article. I do agree though that the ridiculous fall in the value of Sterling has certainly hit us British tourists visiting the UAE. Could someone therefore clarify?

Telcoguy

AED is pegged to the USD. A dollar appreciation will make Dubai dearer to non US tourists.

Erik

Eeehm, your argument is not valid. The AED is pegged to the USD so you always get the same amount of AED for your USD.

nastyrunner

UAS, the Dirham value is pegged to USD. Therefore, if the USD increases, the value of Dirham increases, and will therefore, result in tourists from other part of the world spend less in Dubai.

some bloke

The dollar is pegged to the dirham and so it doesn't make any difference. It will always be 3.674 dollars to the dirham. Compare that to the times when brits used to get 7 pounds to the dirham. It's an almighty fall. But still, people still travel here regardless.

du forum

I am not sure you can blame the retailers .
They have to factor in multiple cost factors including:

1. Sky High rents for a mall in the desert
2. Unrealistic DEWA prices
3. Employee benefits - like Housing, insurance , tickets, visa fees, transportation costs etc

when you consider all these factors , there is no way they can compete with cut throat realistic prices in the US and Europe.


Some bloke

The UK also has (I've focussed on London;

1. Very high retail rent prices (bond / oxford street in London will almost certainly be a lot higher than any of Dubai's malls)
2. Utility prices are ever on the increase (one of the big guys NPower recently hiked prices by 15%)
3. High minimum wage. London has a new 'living wage' policy of �9.15 per hour. On a 48hr week that equates to almost 8,000 AED per month for a shop assistant. Plus they must pay for National Insurance, Pensions, sick pay, holiday pay.
4. 20% VAT on all products.

Factor in all of the above and retail prices are still lower than the UAE. So yes, I think you can blame retailers to a large extent. And shipping can't be blamed as the majority of consumer products in the UK are shipped even further than Dubai.

Perhaps the only thing might be the prices set by the brands. They aren't able to own their stores outright here so perhaps to make that money back they set the costs higher than elsewhere.

Kaif

I have been travelling to Dubai frequently and have observed how over the years it has become expensive. I gave up shopping at the airport duty free a long time back when I realized that the same stuff could be bought cheaper in the supermarkets inside Dubai. Now that even the supermarkets have become expensive compared to other countries I have given up shopping in Dubai altogether except for the bare necessities. Every time I visit Dubai I end up wondering aren't the authorities aware of the economic impact on tourism?

European Tourist

I have been visiting Dubai since 2008 and have seen prices going up like crazy which I interpreted as "Greed" of the sellers in Dubai. They have been wanting more and more on their products and services while the quality has been going down. Even Deira area which used the cheapest place in Dubai (restaurants,shops,etc.) has become more expensive. I stopped going to Dubai in 2015 because everything has just become too expensive. I do not know how they plan but in future, they will have to lower their prices because if they do not do, nobody will fly there. Even the tickets on Emirates and the hotels have tripled their prices within less than 4 years. It is incredible how greed ... can mess up things in such a short time.

One Guy

Not a truer word said on this forum in a long long time.

Jim Star

Oh yes and Value added tax (VAT in 2018 and after) will not make it better...will become worse. So sad.

MT3

Looking at the strategy being played out in Downtown and at Dubai Mall it looks like someone has already worked out that the game is up with regard US, European and UK tourists - one more year of extreme sticker shock and they're gone. Indians and Chinese as the analyst points out are value seekers and why stop in Dubai when you can get the real deal in London, Paris or Milan for a few extra bucks on your airfare. The only game in town is locals, Saudis and other GCC nationals until the dollar weakens and there's no guarantee the rest of the world will return then.

In addition, the mall paradigm is creating footfall but increasingly failing to monetise it as a lot of the current demographic see a mall as a destination and will happily visit repeatedly without buying. Alabaar is positioned as well as anyone to see this and he's just launched a mega- Internet initiative.

Telcoguy

I think there is some potential on Chinese/Indian, visas may be an issue, plus hotels are cheaper in Dubai than in London.

And do not forget that Dubai has a strong brand in South Asia, I have seen Pakistanis gladly pay a 30-40% premium just because they are buying it in Dubai. this is probably sustainable for a few more years, let see if this time is used to refocus.

Kate

While it is true that prices are higher than in the West, let us not forget that salaries, on average, are higher as well.
There are teachers who move here from Ireland and they get twice what they would get back home. Same goes from most other occupations, expats get a premium on their home country salaries to work here, and in turn end up paying more for goods

rey kardoso

For example, It's a fallacy that because the Dubai Mall shops are near the tallest tower then the shops can command premium pricing...bloated pricing. The products remain the same and no other aura can make them pricier.

gvk

Increasing cost to operate business and reduced volumes compel importers, distributors, wholesaler and retails to work on higher margin to break-even. Rentals have been going up only for past few years. Other costs are going up and up, it also reduces buying power of residents and falling exchange rates make it more difficult for tourist to shop in Dubai. Most come with the hope of big shopping as before but many return back after sight seeing and they do complain Dubai is too expensive and not for shopping as before

smallbusiness

Exactly. Our business is keep on losing money, every month. It's heartbreaking that we might have to lose the business after years building it and countless dirhams investment.


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