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Sun 24 Jan 2010 05:49 PM

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DSF retailers facing 'soft demand' challenge

Datamonitor says only 5% of shoppers have increased retail spending since H2 2009.

Soft consumer demand will be at the forefront of retailers' minds prior to the Dubai Shopping Festival as latest figures reveal UAE consumers are still feeling the pinch.

Statistics from Datamonitor's monthly
Recovery from Recession consumer survey

show that only 5 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.

Retailers will need to focus on value-centric marketing, shop layout and atmosphere and in-store merchandising to maximise sales during the shopping event, Datamonitor said.

Its figures showed that slightly more than half of UAE consumers (55 percent) feel that they are significantly or at least slightly worse off than they were six months ago while only one third indicated that they have experienced no material change.

Figures are only marginally better than those observed in Q2 and Q3 2009 when 57 percent and 59 percent of consumers respectively indicated feeling worse off than six months previous.

Only 13 percent felt their financial circumstances had improved over the last half of 2009.

Datamonitor analyst Richard Adams said: "70 percent of UAE consumers now claim to be actively taking measures to control expenditure; 40 percent claim to be consciously making lifestyle changes to save money. Only a minority (11 percent) feel now is the time to take advantage of weak retail prices."

Consumers are particularly unwilling to splash out large ticket luxury items, Datamonitor said, while 39 percent of consumers claim to be prioritising debt repayment.

Adams added: "Industry players will need to find, and communicate, the value 'sweet spot', the point where expectations are exceeded at a given price, if they are to make the most of the Dubai Shopping Festival (DSF)...Astute marketing, promotions and product bundling, rather than simple price competition, appear to be key ingredients for DSF success."

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DXBHeadhunter 10 years ago

"Retailers will need to focus on value-centric marketing, shop layout and atmosphere and in-store merchandising to maximize sales" How about actually offering genuine discounting that will turnover stock inventory and gives that feel good factor to shoppers who are happy to indulge during leans times. UAE retailers need to use the shopping festival to generate the hype and business similar to that of the January Sales in London and other UK towns and cities. The UK is still knee deep in recession with many small retailers facing insolvency but the January Sales saw surprisingly high spending figures for the leading high street retailers who are part of the institution of January Sales in 2010. The whole world now knows that that” Dubai tax free shopping” is a myth; the prices are way over what you would pay in other cities even factoring in their local taxes. Why shop in Dubai during DSF if you can go to NYC or London during the sales for bigger better shopping experiences, be served by knowledgeable and customer centric staff and pay a fraction of the price! The Dubai Real Estate sector have woken up to the realization that the “Emperors Suit” was made of "invisible cloth" and they have paid handsomely for it; it’s time for UAE retailers to do the same, start thinking for themselves and act on it!

Simon 10 years ago

Nothing more to add...totally agree

dip 10 years ago

"The whole world now knows that” Dubai tax free shopping” is a myth" - 100% fact !! i was in LA last year and shopped like crazy coz their prices was 40% cheaper than the actual retail price in Dubai. But, as a buying manager, i still cant control my retail prices either, which is more expensive than my counterpart in UK.. our office rents are still high, inspite of the recession, our rents actually went up last month for the simple reason that it was right in front of the metro (which is still not open), second, retail stores still want to maintain high margins to exploit the poor customers, if retailers sacrificed on a little margin, they would reap from volume sales and "DSF" would finally make some sense. The Dubai government needs to stop wasting time in other countries by advertising the shopping festival and should instead brand it "the looting festival".