UAE consumer spending increases 13% in 2023
Overall UAE consumer spending rose by 13 per cent in 2023 compared to 2022, driven by a 14 per cent increase in the retail economy, a report showed on Thursday.
According to Majid Al Futtaim’s State of the UAE Retail Economy report, the highest growth in spend compared to 2022 came in the first half of 2023, due to the higher base effect from the previous year’s Fifa World Cup, which had given impetus to consumer spending as a result of a surge in tourists in the second half of 2022.
“The country’s vibrant retail landscape has long been on a steep growth trajectory and this trend continued in 2023 as factors including tourism and consumer confidence drove increased spending,” the report said.
Consumer spending in the retail economy displayed robust growth throughout the year, with the absolute consumer spend in 2023 split evenly across the first half and the second half of the year.
Overall, spending remained buoyant throughout 2023 but stood out in the final quarter (contributing to 27 per cent of all retail economy spend for the year), attributed to COP28, which attracted tens of thousands of visitors to the country, in addition to traditional seasonal spend, the report noted.
‘Long-term prosperity’
“The UAE’S far-ranging social and economic ambitions continue to fuel the nation’s success in creating long-term prosperity for its people. Over the past 12 months, its proven resilience to external pressures, coupled with progressive policy-making and an investor-friendly business environment has seen the UAE further strengthen its position as a lighthouse for the Mena region,” Ahmed Galal Ismail, chief executive officer at Majid Al Futtaim – Holding, said.
In 2023, spending in the hypermarket/supermarket sector grew by three per cent. Spending in the first half of the year was up by five per cent on the year while in the second half, consumer spend came in line with the same period last year.16
Growth in the sector was primarily driven by a 19 per cent hike in e-commerce and digital sales, while spending in physical stores remained steady, mirroring the previous year’s spend level. “Despite the digital surge, brickand-mortar stores continued to dominate the market, accounting for 85 per cent of total sector spending,” the report noted.
Consumers have continued to prefer smaller basket sizes while making more shopping trips, following the previous year’s pattern. Consumers were seen splitting their buying between in-store and online, looking for the best deals while limiting the number of products purchased on each trip, whether virtual or actual, data showed.
Average spending fell by two per cent per basket in 2023 while the number of transactions grew by four per cent.
Majid Al Futtaim’s Happiness Lab data showed a growing appreciation for discount shopping. According to its latest survey, 47 per cent of respondents preferred purchasing discounted items, while 20 per cent would switch to cheaper brands, in a continuation of the previous year’s trend towards cost conscious purchasing. The survey also found 52 per cent of respondents consistently pay attention to fluctuations in prices.
Over the past 12 months, its proven resilience to external pressures, coupled with progressive policy-making and an investor-friendly business environment has seen the UAE further strengthen its position as a lighthouse for the Mena region.” Ahmed Galal Ismail Chief executive officer at Majid Al Futtaim – Holding