Dubai’s retail sector will continue its dominance over the next five years, with a compound annual growth rate of 5.2 per cent over the period, supported by strong international visitor spending, robust demand fuelled by a high frequency of mega-sales and shopping festivals, and growing e-commerce activity, according to new analysis conducted by Dubai Chamber of Commerce and Industry.
Other key factors that are expected to fuel the growth of the sector in the medium term include the growing popularity of traditional and app-based delivery services, sector expansion ahead of Expo 2020 and an increasing number of tourists from China, Russia and other top source markets, following recent decisions to ease visa restrictions. According to the analysis by Euromonitor International, Dubai’s retail sector generated an estimated Dh142 billion in sales during 2018, marking a growth rate of 6.8 per cent. Store-based retailing continues to dominate sales, accounting for a market share of 95 per cent, while e-commerce continues to grow rapidly, with a 19 per cent year-on-year growth and Dh5.5 billion worth of sales recorded in this segment.
Hamad Buamim, president and CEO of Dubai Chamber, said that the analysis reflected the strength and resilience of Dubai’s retailers, as well as the tremendous potential that the retail sector offers local, regional and international industry players. “Retail remains one of the main contributors to Dubai’s economy and one of the most attractive sectors for investment in the emirate. The analysis has identified several positive trends and factors that are expected to fuel the future growth of the sector, and enhance the emirate’s attractiveness as one of the world’s most sough-after shopping destinations.”
Key drivers of e-commerce activity in Dubai include strong government support in line with its commitment to transform Dubai into the world’s smartest city, and a high mobile penetration rate, along with Dubai’s expanding logistics networks. Furthermore, despite the implementation of value added tax (VAT), many hypermarkets have managed to keep their prices competitive which have helped offset such costs. Meanwhile, smaller retailers, such as convenience stores, have continued attracting consumers by enhancing their customer service with extended opening hours and delivery services.