The UAE retail economy continues to show robust signs of recovery, surpassing 2019 levels by achieving a 4.5% growth in overall consumer spending in 2021, according to Majid Al Futtaim, the prominent shopping mall, communities, retail and leisure Group across the Middle East, Africa and Asia. The company’s fourth edition of its quarterly State of the UAE Retail Economy report confirms we are witnessing the most significant increase in spending so far, paving the way for 2022 to continue an upward trajectory.
Q4 2021 marked a standout period for consumer sentiment and overall spending, boosted by EXPO 2020, improvements in global vaccination rates, and an uptick in international travel. Data revealed that tourism was a key driver for growth, seeing tourist expenditure increasing by 22% in 2021 compared to 2019, and tourist spending in Q4 accounting for 74% of the increase. The last quarter of 2021 also accounted for 16% of GDP in the UAE in 2021 via direct and indirect spending.
According to Majid Al Futtaim’s happiness lab survey, optimism about the future continued to improve, reaching 33% in Q4 2021, up from 29% in the previous three months. Consumer confidence also increased, with 92% of respondents stating that they believe the UAE economy is in good shape. A modest improvement in shopping mall footfall was also recorded, with Majid Al Futtaim experiencing an 11% increase in its malls in Q4 compared to Q3 in 2021.
Alain Bejjani, Chief Executive Officer, Majid Al Futtaim - Holding, said: “The UAE has made tremendous strides over the last 12 months to positively recover from the ongoing effects of the pandemic. Data from our latest report is evidence that a strong fourth quarter boosted the economy, finishing the year on a high note, with all sectors reporting growth or continued momentum. Our research also suggests that consumers have regained faith in the UAE's economic resilience, reflected in higher spending across all retail sectors. EXPO 2020 has rightly shone a spotlight on the region’s vibrancy and investment opportunities, the real estate market, for example, has seen healthy and sustained growth in 2021, recording its best performance since 2014.”
Perhaps unsurprisingly, e-commerce flourished in 2021 as consumers continued to prioritise convenient shopping experiences. POS data revealed a 104% increase in online shopping spending in 2021 compared to 2019 with the majority of online spending by residents in hypermarkets or supermarkets or general retail online offerings, rising 46% in Q4 2021 from the third quarter. Consumer spending in non-luxury fashion and accessories also increased, rising 24% on Q3 2021, in part due to many brands introducing online offerings to complement physical stores.
Alain Bejjani added: “We have witnessed an increasing appetite for digital experiences, particularly for high-quality omnichannel retailing. Shopping trends like webrooming, showrooming and the use of virtual reality will continue to shape the future of retail and we remain confident that customers will continue to seek out experiences that combine the finest features of e-commerce and physical retail when it comes to meeting their demands in 2022.”
As new ways of shopping take hold, and convenience is prioritised, contactless payments remain on the up. Majid Al Futtaim Carrefour transactions show that the share of card transactions increased to 53% in 2021 from 40% in 2019, while cash transactions dropped from 60% to 47%.
Heightened consumer awareness and engagement with sustainability is also on the rise showcasing a behavioural shift that is here to stay and poised to be a key theme in 2022. Findings show that 57% of the population say they need help to reduce the plastic they use, while the majority want to buy from brands that can demonstrate they are sustainable. This is in line with Majid Al Futtaim’s commitment to phase out single-use plastic by 2025 and to becoming Net Positive by 2040.
Bejjani continued: “The Q4 State of the UAE Retail Economy report provides evidence that the country's comprehensive vaccination efforts, the adoption of new working practices and global events like EXPO 2020 have contributed significantly to driving forward the UAE’s economy over the last 12 months. We have now entered 2022 with a renewed sense of optimism and a belief that the region is poised to benefit from continued policy innovation, a rebound in tourism and a gradual global recovery.”
You can visit the links below for an explanation of the methodology and sources relating to the data quoted and to read the State of the UAE Retail Economy report for Q4 2021: