By Neil Halligan
Tourists still coming, but not for shopping and sales are in decline, says CEO of one of the region’s largest retail companies
Dubai has become too expensive for retail tourists, with a 20 percent decline witnessed in the luxury end of the market, according to the CEO of one of the region’s largest retail companies.
Jayant Ganwani, CEO of Dubai-based Lals Group, which has 130 stores across the region, said high-end consumers are choosing other markets for their shopping, because of the prices being charged in Dubai.
“There are two things happening in this market. Number one, obviously the expenditure of the Russians was a very substantial part on the luxury end. Conspicuous consumption is something that really is supported by that tourist in that respect.
“We’ve also seen that Dubai has in many ways become unaffordable to a lot of the tourists. Over the years, the impression that Dubai was value for money is under a little bit of a delusion because we’ve been doing some homework and we found that European merchandise is sold here at a far higher price in equivalent dirhams than it is sold in Europe,” he said.
Ganwani said the tourists, which are still coming to Dubai, are becoming more aware of the prices elsewhere and in order to attract the tourists back to the shops, something has to change.
“The tourist that used to come here predominantly with the reason to shop is now smarter. The advent of online information, sales possibilities, everything is making a very difficult scenario for the luxury retail segment because the consumer is able to check what this item sells for on the Champs-Élysées or on Bond Street or on Sloane Street, and say ‘if the difference is going to be substantial, it's worth for me to go a shop in the UK’. And I think that's what's happening.
“A lot of people have decided that they’re not going to come to Dubai to shop and that’s not just Russians. It’s the Indians, the Chinese, the Pakistanis - wherever they came from to load up on their suitcases, they're finding different shores. Emirates is doing great deals out of all those markets to fly people into Europe via Dubai. You can experience the beach and the sun here and then shop in Europe and save money at the same time.
“I think that something has got to give and pricings have to become far more reflective of what the international prices are,” he said.
The year ahead will see further decline in sales for retail, Ganwani said, with luxury to see a deeper slowdown.
“2015 in my opinion, and 2016 to some extent, we expect there to be a ten percent decline in the expenditure for most retail houses in the mid-market consumer segment. On the luxury end, I think there will be an even deeper erosion in their sales,” he said.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Finally someone pinpoints the real reason behind the lower tourist stats in Dubai!
His point can be extended to Hotels, and definitely F&B. Why would a tourist come and pay double rates to eat at the same branded hotels or restaurants in Dubai? All retail stores/hotels have been pricing up in the past few years, to a point of turning off tourists. When even the rich luxury ones are thinking twice, something must be really wrong!
I completely agree.. the increase in retail rent is also contributing the cost of the items. Further even the expatriate residents also are left with less disposable income which is affecting their spending.
Finally!! I've been here since 2010 and have always saved my shopping for when I'm elsewhere. Everything is more expensive here, clothes, supermarket shopping (this one is crazy), beauty products. London is known to be expensive but certain things are almost 50% less there.
I am so happy that this has finally been realized by the people who can make a difference. Also they need to remember that its not just the tourists who will come back to shop. Residents will also choose to shop here rather than online or when they go on vacation.
This article is "Spot-on" in terms of reading the market correctly. While Dubai is a great place to come for 3-5 days, the fact is the shopping incentive is no longer there. Why would I pay 20% more for the same "Brioni Suit", Ralph Lauren casual clothes or Thomas Pink shirt then I would in London? The world is a smaller place and luxury stores are have and will continue to see a huge decrease in revenue / m2.
Residential Rents are also an issue at the luxury end. I am sorry Dubai, but you can not rent at the same levels of London and Paris and expect the consumer to merely cough up the same rent considering the vast amount of empty apartments and villas in Dubai and more in the pipeline coming online.
Dubai has done great things but its really needs some governing when it comes to price in all segments: economy, mid-scale and luxury. If you want to increase the number of people coming, make it worth while, an incentive or at least on par less 10%.
Having lived 10 yrs in Dubai, I must admit, you guys took your time realising you are quickly eroding the USPs that made Dubai what it is today.
The last time I bought a shirt in Dubai was in 2006. For the price of a suit here, I get the same suit AND the 300euro shoes from Boggi/Hugo Milan
I buy my beverages from DF in Europe & took pictures of the equivalent at dubai 'duty free' for comparison. Guess what. Bar heathrow, its cheaper for everything in most EU airports.
For the price of a bottle of wine in dxb, I have dinner for 2 AND a bottle of wine in even the finest hotels in Europe (just stayed at the 5*+ Bulgari in Milan and happy to present F&B bill).
Hotel rooms: 3* priced here for 5* resort in Europe/USA.
& thats just the tourist stuff. Lets not hit the cost of living here & the residents issues of paying $2k a month to share a 2bd flat. & how can car cost the same as it does in a TAXED country?? Margins must be awesome here
Moving fwd, I love Dubai. Its home. Plz Wake up
Now with the current situation prevailing not only luxury retail shoppers Dubai loses, but also many residents/expatriates due to high cost of living due to very very high rents which is untapped by the Government and the greediness of the landlords have no limits and the school and transportation costs left them with no saving besides continuity is not guaranteed as the residents have to go through the same visa procedure every 2 years whether you are here for many decades or few years. This will only result in looking for greener pastures or return back home for many residents. There should be some control on price rise on rents as everyone needs a roof above to stay.
Thank you Mr. Ganwani for pointing this out. About time everyone realized things are getting worse in all segments with the rising inflation in almost everything available, both for residents AND tourists
This is TRUE. We have been saying this for quite a few years now. At present I can get clothing at cheaper prices in UK than here in Dubai, and not only that, if I want to change an item, very easily done in UK than all the fuss from the dealers here. Here the Dealers give guarantees which are not worth the piece of paper they are given on.
at last someone in the retail industry has admitted it.
i know many people from the gcc that used to shop in Dubai and now shop in Europe; in fact they now prefer to shop there.
Unless the economy is controlled, tourism will continue to be hit & residents will continue to leave. At the moment, expats leaving are being replaced by new residents arriving & tourists are coming from new territories such as China. However, there may be a critical point when numbers fall. I know of a growing numbers of friends who no longer come here due to overall costs & congestion significantly limiting where they can go.