How the UAE Retail Industry Can Survive and Thrive Post-Pandemic
An action plan including 25 recommendations has been drawn up by a high-level retail industry think tank in the UAE to help businesses survive the coronavirus pandemic. The report highlights challenges facing the UAE retail sector and recommends actions for a more sustainable sector, calling for more collaboration between retailers and mall owners, faster digitisation, and new legislation.
Challenges and Crisis Response
The think tank is a focus group comprising leading industry players from across the UAE retail and malls sector brought together by Mashreq Bank and MEED. Analysis from the report shows that, prior to the Covid-19 pandemic, retailers were already facing difficulties from the increasing popularity of online shopping and growing oversupply of mall capacity. Lockdown measures to stop the spread of the virus exacerbated the impact of existing burdens, shutting down revenue streams while operating costs continued.
Joel D Van Dusen, head of corporate and investment banking group at Mashreq Bank, stated: “While the Covid-19 pandemic has exposed weaknesses in and brought new pains to the sector, there continues to be massive value and potential waiting to be seized by those who rise to the challenge.” Only by creating a permanent shift in the way business is done, will the retail sector be able to future-proof its position for the long-term.
Strategic Themes for Resilience
The Resilience in Retail and Malls report identifies four key themes to emerge stronger from the present crisis:
- Increased Collaboration: There needs to be increased collaboration between retailers and landlords by moving away from the current transactional approach to a partnership model.
- Unified Voice: The retail sector should consider developing an effective model that presents a unified perspective to the UAE government.
- Digitalisation: It is imperative that the industry digitalises all aspects of the value chain, incorporating innovation across supply chain management, customer sales and last-mile delivery.
- Formal Legislation: More formal legislation should be introduced to help safeguard the business as well as employees against future disruptions, such as requiring retailers to put aside a portion of their revenue as cash reserves.
Market Recovery and Statistics
In the aftermath of the 2020 global pandemic, the UAE and GCC retail sector has demonstrated remarkable resilience and unprecedented growth. Amid 'cautious optimism', the UAE retail market maintains a strong recovery, with total footfall increasing by 11 percent in Q2 2021 compared to Q1 2021.
| Metric | Growth / Value |
|---|---|
| Saudi Arabia E-commerce Sales (October) | $8.2bn |
| UAE E-commerce Sales Growth (H1 2021 vs H1 2020) | 17% increase |
| Food and Beverage Sales (Q2 2021) | 41% increase |
| Home Furnishings Sales (Q2 2021) | 28% increase |
| Dubai Residential Property Transactions (May 2020-2021) | 215% increase |
Opportunities for Retail Entrepreneurs in Dubai
Dubai offers unparalleled opportunities for aspiring retail entrepreneurs, establishing itself as a global shopper's paradise. The strategic location of Dubai provides access to an extensive consumer market of over two billion people in the Middle East, Africa, and South Asia. Key advantages include:
- 100% Foreign Ownership and easy business setup.
- Low Business Costs: Rent, utilities, and labor costs are all reasonably priced.
- Strong Infrastructure: Modern seaports, highways, and telecommunications networks.
- Tax Benefits: No personal income tax allows businessmen to invest more profit in building their brands.
Establishing Your Fashion Clothing Brand
The UAE is a golden chance for fashion business lovers to start an apparel venture. Steps to open your fashion clothing brand include defining your brand concept, choosing your jurisdiction (such as Dubai Mainland or Free Zones), and getting a commercial trade license. Setting up the fashion brand can be done on average for AED 12,000 – AED 25,000 in a Free Zone, providing a perfect destination to showcase talent and build a successful business.
