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Consumers in the UAE will spend more than 19% more in 2022 than the previous year, according to new report by Majid Al Futtaim State of the UAE retail economy Fourth quarter report.
Spending in the retail economy rose a notable 13% for the year, which includes leisure and entertainment (29%), fashion (25%), hypermarkets and supermarkets (11%), and general retail (9%).
The growth is being driven by rising consumers, especially international visitors to the UAE, which will more than double by 2022, driven by major events such as the FIFA World Cup in neighboring Qatar, reached 14 million.
macroeconomic trends
According to the report, the UAE posted its strongest annual GDP growth since 2006, jumping to 7.9% in 2021 from 3.9%.
The drivers of this boost are broad and span oil and non-oil sectors.
As expected, oil remained a major component as average oil prices rose about 38%, leading the sector to rebound to growth of 11.4% after contracting 0.7% the year before.
The non-oil economy showed strong growth at 6.6%, boosted by government efforts to attract investment and boost tourism in the country.
Consumer Choice Discounts and Deals
In the last quarter of 2022, people became more cautious about their spending, opting for discounts and deals on essential items and reducing purchases of non-essential items such as electronics.
Average spend per transaction in hypermarkets and supermarkets fell by 3% over the year, but total spend in the sector rose 11% over the previous year, showing a move towards smaller basket values ​​and more frequent transactions direction development.
The extended 2.5-day weekend also weighed on growth in consumer spending, with weekend retail sales up 11.3% over the previous year. According to Majid Al Futtaim point-of-sale (POS) data, this translates into approximately AED5.5 billion in additional spending.
Consumer Sentiment Remains Upbeat
Inflation materialized in 2022, ending the year at 5.2%, but still well below the rest of the world.
Despite inflation, consumer optimism remains high. Some 90 percent of respondents to Majid Al Futtaim’s Happiness Lab survey had a positive view of the current economic situation in the UAE.
Our ‘State of the UAE retail economy’ report for Q4 2022 shows that overall consumer spending has increased by 19% compared to the previous year.
Read the full report here https://t.co/BMZmSSbneC
— Majid Al Futtaim (@MajidAlFuttaim) March 17, 2023
Majid Al Futtaim POS data suggests that this optimism is evidenced by the peak in absolute consumer spending in the fourth quarter of 2022, which accounts for 29% of all retail economic activity that year.
The Evolving Digital Economy
Analysis shows that the UAE has the fastest growing e-commerce market in the world, with sales expected to reach $9.2 billion by 2026.
According to Majid Al Futtaim POS data, spending in this area will peak in the fourth quarter of 2022, a full-year increase of 20% compared to 2021, with three-quarters of consumers saying digital payment methods are the preferred method.
Fintech solutions such as buy now pay later (BNPL) are growing rapidly, with 45% of consumers using BNPL financing in the past year, up from 21% a year ago.
The majority of online spending by residents occurs in the hypermarket and supermarket sectors, where spending rose by 40% during the year.
read: MENA customers double spending on White Friday, survey shows
read: Power Letters 2023: Fahed Ghanim, CEO, Majid Al Futtaim – Lifestyle
In other news, Majid Al Futtaim’s consolidated revenue rose 12% to AED36.3 billion in 2022.
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