Expat spending power set to boost retail sales in United Arab Emirates, research suggests

Expat spending to boost UAE retail market

The spending power of expats in the United Arab Emirates is expected to life retail sales as they rush to buy cars and electronic goods, it is claimed.

While Emiratis contribute to retail sales, it is the buying power of the country’s expat residents that is the major source of success, according to a study by Indian research firm RNCOS.

‘The Middle East has emerged as a key market for retailers across the world. The region has been witnessing rapid transformation in retail activities on the back of changing market dynamics and rapid economic development. The retail culture has evolved from traditional outlets to large shopping malls, hypermarkets, supermarkets and organized chains. Changing consumer demographics in countries like Saudi Arabia and the UAE, the presence of a large expatriate population, improving purchasing power and abundance of petrodollars have attracted premium and luxury brands to the region,’ says the Middle East Retail Sector Forecast to 2013 report.

It identifies the UAE as having the most potential and dynamic retail markets in the region. Along with Saudi Arabia, it has been dominating the retail landscape for more than a decade and will continue to do the same in coming years. ‘The presence of large expatriate population and majority of region’s retail investment in these countries have helped to maintain the growth momentum,’ it adds.

Stronger economic growth, increased expat wealth, higher household consumption and urbanization will push up retail sales in the UAE by 30% over the next four years to Dh97 billion, according to forecasts coming from Business Monitor International.

Luxury car sales are projected to increase by 49% to $420 million by 2014 from $280 million in 2010 as levels of disposable income grow. While sales of consumer electronics are expected to increase from $3.07 billion in 2010 to $3.91 billion by 2014, a rise of more than 27%.

The UAE’s consumer electronics market is one of the largest in the Gulf, accounting for close to 40% of regional spending and serving a potential market of almost two billion people across Asia and the Middle East.

Food sales are forecast to increase by 18.4% to $8.44 billion by 2014, the report also says. The UAE’s mass grocery retail sector is one of the Gulf region’s largest by value, with sales forecast at $4.92 billion in 2010 and accounting for 69% of the total food and drink market.

It suggests that there is strong underlying economic growth despite the recent problems in Dubai, increasing household consumption, growing acceptance of modern retailing concepts and a growth in expat wealth.

Growing urbanisation is given as another factor in the buoyancy of the retail sector. Abu Dhabi in particular is highly urbanised, with the Urban Planning Council (UPC) projecting that Abu Dhabi City’s population will rise to 1.3 million by 2013.

Average household spending power in the UAE stands at $14,400 per annum. Emirati households account for the lion’s share of this spending, with an average of $23,000, while Western, other Arab and Asian households have annual spending power of $19,500, $13,500 and $10,000 respectively.

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Tagged as: expat, retail market, spending, United Arab Emirates