By Andy Sambidge
Latest research reveals shift in consumer habits after Dubai debt announcement.
The Dubai World debt announcement impacted sentiment among UAE shoppers in December with a large rise of consumers choosing to buy cheaper brands, latest data has revealed.
According to the
Arabian Business Retail Trends Data
, supplied by Dubai-based Datamonitor, the percentage of shoppers seeking out bargain brands rose by 12 percent to 49 percent of those polled.
This represented the largest percentage of shoppers since Datamonitor began their monthly Recovery from Recession research in May.
At the same time, data showed that the number of "hard-core pessimists" who feel the worst is still to come for the UAE economy rose in December. They increased from 12 percent of those polled in November to 19 percent last month.
And those who felt the recovery had already started or had seen signs of recovery in the UAE fell in December, compared to the previous month from 26 percent to 23 percent.
Datamonitor's consumer analyst Richard Adams said that while the announcement by Dubai World in late November undoubtedly affected consumer sentiment last month, it was still unclear how deep the impact would be.
Dubai World, one of Dubai’s three main state-owned business groups, said on November 25 that it would seek to delay repaying $26bn of its debt for at least six months.
"Figures in January and February will be key to this. If they are still depressed, then retailers will have to take note of this. I expect the Dubai World impact to subside gradually with a more muted effect on sentiment this month and in February," Adams said.
The Arabian Business Retail Trends Data, which asks UAE and Saudi Arabian consumers three key questions about their shopping habits each month, also showed a significant increase in the number saying they were limiting the number of shopping trips they go on.
In November, 40 percent of respondents said they were cutting back on trips but this rose to 46 percent in December. However, this was still not as high as the 51 percent seen back in July.
The Datamonitor figures also showed a small increase in the number of shoppers who were cutting back on non-essential goods. This figures rose to 53 percent in December, compared to 52 percent in the previous month.
Adams said early indications from January's figures suggested a significant rise in the number of people who believe it is a good time to shop.
Last week, Datamonitor said soft consumer demand would be at the forefront of retailers' minds prior to the Dubai Shopping Festival which starts on Thursday.
Statistics from Recovery from Recession survey showed that only five percent of shoppers claim to have increased spending on goods and services over the last six months following an improvement in personal financial circumstances.
Most consumers said they are still trying to live within their means, are paying down debt, and are taking active measures to control discretionary expenditure.
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