Non-grocery retail hits Dh82.5b
Dubai’s grocery retail saw a 6.8% CAGR in sales over the period 2010-2015
dubai — Dubai’s trendy and youthful population helped boosted the Emirate’s non-grocery retail to $22.3 billion (Dh82.5 billion) in 2015, according to an analysis by Dubai Chamber of Commerce and Industry.
It is estimated that the Emirate’s retailing market size was $35.4 billion (Dh133 billion) in 2015. Non-grocery retail was valued at $22.3 billion and grocery retail at $10.9 billion.
The analysis is based on Euromonitor International and prepared ahead of the World Retail Congress next week in Dubai.
It says consumer spending is expected to support the retailing activity to expand by 7.7 per cent in 2016, with growth thereafter at a CAGR of 8.1 per cent until 2020, when retailing sales turnover are expected to surpass $52 billion.
The report indicates that storebased 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-
The boom in tourist numbers have kept the wholesale and retail sector vibrant
Hamad Buamim,
President and CEO, Dubai Chamber
store retailing category since 2010. “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,” said Hamad Buamim, President and CEO, Dubai Chamber.
The analysis says that grocery retail saw a 6.8 per cent CAGR 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 a CAGR of 21 per cent for the entire category, with internet retailing driving growth at an impressive CAGR of 23 per cent. The Dubai Chamber analysis estimates 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 sixper 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.
The analysis states that 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.
On the back of rising household penetration of tablets and smartphones, as well as financial credit and prepared cards, local storebased 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.