By Staff writer
Best-case scenario is that sales will ‘flatten out’ this year, says Lals Group CEO Jayant Ganwani
A recovery in Dubai’s shopping sector is not expected until after the first quarter of 2017, the head of one of the city’s largest retailers has warned.
Writing in this week’s issue of Arabian Business magazine, Lals Group boss Jayant Ganwani described 2015 as “one of the toughest years for UAE retail” and said that the “attrition in like-for-like sales has varied from moderate to severe” in the emirate.
Ganwani also said that he had not seen a bottom to the market, stating that the downturn had hit the luxury retail market especially hard.
Lals Group owns and operates two malls in Dubai – Lamcy Plaza in Oud Metha and Arabian Center in Mirdif – while it also has franchise rights for several major brands, including Homes R Us, Daiso and G2000.
“High-end brands have witnessed the steepest drop and, to different degrees, items of durable nature like automobiles and furniture,” Ganwani wrote.
“Food and basic necessities retailers such as hypermarkets have seen the lowest impact, but even in that segment customers are choosing to procrastinate purchases on non-food items, affecting the average transaction value and the margins these retailers make.”
Euromonitor International has projected that the value of the UAE’s retail market will be $53.7 billion in 2016, a 7 percent rise on last year. That figure represents a slight slowdown on the 8 percent growth in 2015 over 2014.
“Continued lower oil prices, regional disturbances, a stronger US dollar and low customer confidence all realistically translate into an unenthusiastic outlook for sales going forward,” Ganwani said.
“The best-case scenario is that sales hopefully flatten out in 2016. The burden is therefore on retailers to manage their businesses efficiently to ensure they are well prepared for the turnaround, which in our opinion will take place only after the first quarter of 2017.”
seems fairly accurate, however what is not being mentioned is the beginning of mass redundancies and the still completely excessive rents levels which spell disaster for consumer confidence and overall affordability to make such purchases outside of the basics.
I find the "2015 toughest year" and 8% growth in 2015 a big contradiction . . .
I agree with JMB that rising rents are a major issue and must be rationalized rather than kept artificially high.
From my personal experience, life in Dubai has stabilized and if one provides value-for-money, the customer is willing to pay.
Redundancies have yet to see their highs which is expected during the summer months of June-September.
Low tourism is mainly caused by the crisis in China, oil prices and regional factors.
Hopefully, the year end will see the return of EU tourists in big numbers.
You're absolutely right about the rising levels of redundancies.
The oil & gas sector has been in a sharp dive since the beginning of 2015. The banks have been laying off large numbers since mid-2015 and now the hospitality sector has started the retrenchments.
Retail sales are off target by quite large amounts and we've seen hiring freezes across the major retailers in Dubai.
Service companies are being hit as a result and I pray for a turn around in the economy so it can support fuller employment.
There is some good news with rents seemingly falling across the board and this will increase as further new stock comes on board.
2016 is going to be a tough year, no doubt.
for the last 12 months we have been shopping online from overseas and despite the shipping and import duty we still end up with better value than shopping locally for many items>>
at some point something has to give, rents are too high and people are taking more care and taking time to look around for the best value with the money they have left after paying crazy rental prices
our business have been affected. management have now initiated redundancies plan for the coming months.
what is ironic/interesting that some staff are still requesting pay increases; due to high cost of living.
@scrooge 100% agree with your comments - we do the same. Plus as well as actually saving money and being able to get an item delivered sometimes quicker than a local supplier can give you a price and availability for the same item - we find it a better service and experience than being hounded in stores by salespeople who follow your every step and hang on your shoulder.....Also, the service provided by stores is better outside of the country and you can get it delivered to your door by courier.
Retailers have had it too good for too long here charging over the odds for items and not providing a good customer service - they can moan all they want - but they have to improve and become competitive...and that goes for everything here...rents, property purchase prices, retail, etc. Businesses have forgotten that items are only worth what someone is wiling to pay - its time for the consumer to get wise and stop paying over the odds for inferior products and service