Majid Al Futtaim, a leading shopping mall, communities, retail and leisure pioneer across the Middle East, Africa and Asia, in its latest report has revealed that the overall consumer spending in the UAE was up 19% in 2022 compared to the previous year.
There was a notable 13 percent growth in spending across the retail economy for the full year including, leisure and entertainment (29 percent), fashion (25 percent), hypermarkets and supermarkets (11 percent) and general retail (9), stated Majid Al Futtaim in its ‘State of the UAE Retail Economy’ Q4 report.
This increase was driven by the rise in international visitors to the UAE, which more than doubled to 14 million in 2022, bolstered by major events including FIFA World Cup in neighbouring Qatar, it stated.
On the macroeconomic trends, the report said the UAE posted its strongest annual GDP growth since 2006, jumping to 7.9 percent, from 3.9 percent in 2021.
The drivers of this boost were broad-based, across oil and non-oil sectors. As expected, oil remained the main component due to a rise of around 38 percent in the average oil price, causing the sector to rebound to 11.4 percent growth, after contracting by 0.7 percent the previous year.
The non-oil economy demonstrated robust growth at 6.6 percent, buoyed by government efforts to attract investments and boost the country’s tourism sector.
The final quarter of 2022 saw people becoming more cautious with their spend, opting for discounts and deals for essential items, and cutting back on non-essential’s such as electronics.
The average spend per transaction in hypermarkets and supermarkets was down 3 percent during the year, however overall spending in the segment was up 11 percent on the year prior, showing movement towards smaller basket value and more frequent transaction, stated the report.
The extended 2.5-day weekend also influenced the increase in consumer spend, with weekend retail sales increasing by 11.3 percent versus the previous year. This translated to additional spending of approximately AED 5.5 billion according to Majid Al Futtaim Point of Sales (POS) data, it added.
In Majid Al Futtaim’s Happiness Lab survey, 90% viewed the UAE’s current economic situation positively. The Majid Al Futtaim POS data indicated that this optimism is evidenced by a peak in absolute consumer spending in the fourth quarter of 2022, which accounted for 29 percent of all retail economic activity during the year.
Analysis suggests that the UAE has the world’s fastest-growing e-commerce market, with sales forecast to reach $9.2 billion by 2026. Spending in this area peaked in Q4 2022 and surged by 20% for the full year compared to 2021, with three-quarters of consumers saying that digital payment methods are the preferred option, according to Majid Al Futtaim POS data.
Fintech solutions such as buy-now-pay-later gained pace, with 45% consumers using BNPL financing in the past year, up from 21% a year earlier.
A majority of online spending by residents was in the hypermarket and supermarket sector, which witnessed spending growth of 40% during the year, it added.
The real estate sector witnessed a record-breaking year, with property sales at a 12-year-high in terms of volume and value.
According to the report, the transactions jumped 60% in comparison with 2021, with sales values climbing by 76% to AED265 billion last year. The market hit its peak in Q4 at 27,000 transactions, up from 16,000 a year earlier.-TradeArabia News Service
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