Dubai’s retailing market size is estimated to have reached $35.4 billion, witnessing sustained annual growth rates of 3.5 per cent to 7.5 per cent since 2010, according to a report.

 

The analysis by the Dubai Chamber of Commerce and Industry was based on data from Euromonitor International, prepared ahead of the World Retail Congress which will take place next week.

 

Consumer spending is expected to support the retailing activity to expand 7.7 per cent this year, with growth thereafter at an average rate of 8.1 per cent until 2020, when retailing sales turnover are expected to surpass $52 billion.

 

The analysis stated that store-based retailing was behind 98 per cent of the total value of retailing in 2015, and its pace of growth has by large margin outpaced growth of the non-store retailing category since 2010.

 

Hamad Buamim, president and chief executive officer, Dubai Chamber, said: “Growing economic prosperity, steady population growth, and rising incomes have all helped to increase consumers’ overall expenditure in Dubai. In addition, the boom in tourist numbers have kept the wholesale and retail sector vibrant. Dubai Chamber has encouraged the development of business in Dubai and promoted Dubai as an international business and retail centre. 

 

"The Chamber’s research analyses have helped the business community in Dubai identify key market trends to chart their growth plans. The latest analysis on Dubai’s retail market offers vital insights on the prospects available for Dubai’s retail sector.”

 

Categorising Dubai’s store-based retailing into non-grocery retail and grocery retail, the Dubai Chamber analysis has valued non-grocery retail at $22.3 billion in 2015, and grocery retail at $10.9 billion. 

 

It pointed out that non-grocery retail sales witnessed a strong compound annual growth rate of 7.1 per cent, driven by growing demand which is backed by higher per capita incomes.

 

The analysis attributed Dubai’s trendy, youthful population as a major factor for this growth, considering that this segment of the population keeps up to date with the latest trends in many retail product categories such as apparel, footwear, health and beauty products, as well as luxury products. 

 

This has encouraged retailers to introduce new merchandise and expand their physical presence in recent years, leading to higher value growth, it stated.

 

The analysis said that grocery retail saw a 6.8 per cent growth in sales over the period 2010-2015, mainly due to strong demand for convenient shopping formats such as convenience stores and supermarkets. 

 

This growth has been backed by strong real estate activity in the emirate, with the emerging trend showing that an increasing number of newly constructed office buildings have their own convenience stores, as they are seen as an attractive add-on amenity by prospective firms when considering moving to a new office location.

 

On the same note, a growing number of residential projects being delivered in the outskirts of Dubai are actually located relatively far from existing malls; this has attracted major supermarkets to open smaller outlets in those new areas to meet the increasing need for convenience shopping, the analysis points out.

 

Meanwhile, non-store retailing channels have enjoyed very rapid growth over the past five years, with an average growth rate of 21 per cent for the entire category, with internet retailing driving growth of 23 per cent.

 

The Dubai Chamber analysis estimated that both categories of retail will witness high levels of consumer spending in the medium term, inspired by the positive prospects for the Dubai economy, the continuous growth of the expatriate population, and rising incomes. 

 

Non-grocery specialists, in particular, will benefit from the extra boost to demand stemming from the expected inflow of over 20 million tourists by the start of EXPO2020, as well as rising incomes of Dubai’s expatriate residents, the analysis states.

 

According to the analysis, apparel and footwear retail outlets are set to lead growth in the medium run at a forecast CAGR of 6.6 per cent; which will keep it as the largest sub-segment under the non-grocery retailing category. The remaining major sub-segments, such as electronics and appliances, health and beauty, home and garden, leisure and personal goods, are forecast to witness growth rates in the range of three per cent to six per cent over the same period.

 

Non-store retailing channels are forecast to witness rapid growth over the medium run with a CAGR of 19 per cent, with internet retailing, and in particular mobile internet retailing, leading sales with up to 34 per cent annual growth.

 

Despite being the leading non-store retail channel in terms of growth, internet retailing remains at a very early stage of development, especially when considering that it only makes up less than two per cent of total retail sales value- a relatively low figure compared to other global markets, according to the analysis.

 

On the back of rising household penetration of tablets and smartphones, as well as financial credit and prepared cards, local store-based retailers have the home ground advantage to tap into this small but promising channel, while keeping their in-store sales as the backbone of business, the analysis concludes, it added. - TradeArabia News Service