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Wed 17 Dec 2008 12:39 PM

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Less will be spent in Dubai malls in 2009 - expert

Spending power of tourists, middle income earners will be hit but shop closures 'unlikely'.

Tourists and middle income earners will be spending less in Dubai’s malls next year but store closures are unlikely, according to an industry expert.“Much of the mall retailing, especially in Dubai, has been predicated on tourism and not only that, but on swelling numbers year on year,” said Simon Thomson, a UK-based retail consultant who has worked with some of the region’s biggest malls.

Thomson, who was also a founding director of The Middle East Council of Shopping Centres, added: “International tourism is likely to be one of the casualties of disposable income as job security becomes less certain.

"The collapse of the UK pound against the dollar and euro will also reduce the number of tourists from the UK."

Even retired people, who up until now have had relatively large amounts of disposable income available for “sunshine breaks” and shopping are being severely hit by reductions in pensions and interest rates on their savings, he added.

Locally, middle income earners in the service sector, who in the “good times” comprised one of the largest consumer categories, will be among those cutting down the most on their spending, as their job security comes under pressure.

Thomson said store closures were “always a possibility”, but that there is likely to be much co-operation between mall owners and retailers to prevent that from happening.

Most mall outlets in the Gulf are international brands held on franchise by a relatively small number of players.

The major malls are owned by a small number of even larger players, and store closures would be bad news for both parties, he said.

“However, because so many malls are populated by a limited number of major franchisees, it does mean that the latter are in a very strong position to re-negotiate rents and lease terms in their favour,” Thomson said.

Asked about the performance of new entrants to the market, such as The Dubai Mall and the upcoming Dubai Marina Mall, he said: “Large shopping malls are much like super tankers, they are difficult to stop unless they ‘hit the rocks’. With some careful navigation...they should avoid running aground in 2009.”

Retailers of food and other essential items will do better than others, he said.

“Perhaps there could be a return to the traditional souks who have lower overheads and where fixed prices are less prevalent than in the modern malls. If so, this would be an interesting turn of events,” Thomson said.

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Kenny 10 years ago

Whilst wondering around Ibn Battuta Mall (supertanker) recently I could not help but count the number of shops that are "opening soon" due to previous tennents doing their maths and vacating the mall i.e. Store Overheads and costs increasing v's less people buying expensive goods = Ever Dwindling Profit. Whilst wondering around Dubai Mall recently I could not help but count the number of shops that are still not open....well why not wait a bit in times like these? Whilst out with the better half in Mall of the Emirates I was suprised to hear her tell me that we won't be buying until the sales kick as we won't buy for AED 100 when it will be AED 50 tomorrow.

William 10 years ago

true, unless GCC countries find a reason to surprises their people with a gift of one-month salary during this festive season

Fred 10 years ago

Of course the sales will be down, finally people are realising Dubai is a big rip-off and hopefully going elsewhere to spend their money. A watch I saw in Dubai and loked at was AED1000 cheaper in Hong Kong than Dubai, and with a real worldwide guarantee. A coat in a big UK store in MOE I looked at had a GBP50 tag price but in Dubai AED450 which is over GBP80. Dont forget UK has VAT, minimum wages and is expensive!! Or maybe not! Dubai is nothing like "tax free" shopping, and is just one big rip off with poor customer service.

Kevin 10 years ago

I recently purchased a very high spec Model car for $1195 direct from Usa in 5 days, cost in Dubai 6000dhs ( $1630) a saving of $435. Dubai is a rip off. Tourists, save your money & buy elsehere, Expats buy on E bay or direct, everything is lower cost than here. Another example is a Canon camera, with cashback & refund of VAT from the UK £300 less expensiver in Manchester !

shilu 10 years ago

I had the same thing, I bought a high end model car from my good friend Mark in the US for 1,500 dirhams shipped in two days to Dubai. Same model in Dubai was 2,500 dirhams. Same thing goes for many things in the city: books, cloths, etc. That is the reason you don't see many tourist in the city anymore, even before the crisis started. If you see them shopping you won't see them carrying bags from these big brand names.

Swani 10 years ago

London is much cheaper then Dubai. Not just for clothes but for food as well. One of my favourite yogurt costs about 2 pounds in London. The same yogurt in Spinneys costs 25 dirhams, with the current exchange rate it works out about 5 pounds. Pure greed or what!

Jon 10 years ago

This is all true. I bought a Hugo Boss suit in the summer in New York while on vacation. Why buy it there? Because it is a third of the price as exactly the same suit on offer in Mall of the Emirates in Dubai. It is literally cheaper to fly to New York and buy it, than buy it here. Dubai is a rip off. I never buy anything here other than essentials.

Marwan 10 years ago

I live in Abu Dhabi and have not noticed what has been mentioned above. I bought an X5 2009 model and when compared to USA price, the USA price was cheaper for a basic model but when I added the extras bought with the car, it is cheaper out here in Abu Dhabi. What is exaggerated is RENTS (Malls and properties) but cost of food is far cheaper than many countries in the world especially Europe and USA. The collapse of the whole world economy will bring prices downwards and that is healthy for the economy here.

SR 10 years ago

You guys are purchasing high end model cars, designer suits, bimmers etc. I wonder whether there is really a credit crunch???

Paul 10 years ago

Too right. Dubai is an absolute rip-off. Go into Topshop and look at the price tag. The tag will be stuck over the Euro and Pound price and when you do the conversion from pounds to dirhams you end up paying an 25% extra here. Sorry Mr Topshop franchise owner but it is actually cheaper to buy clothes on the uk topshop website and get it posted out here via a friend. How stupid is that?? Also factor in the NO REFUND, NO EXCHANGE found in half the stores and you wander why the hell buy here. The consumer has absolutely no rights.