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United Arab Emirates Retail Report Q1 2011
Business Monitor International, Jan 2011, Pages: 70
The United Arab Emirates Retail Report provides industry professionals and strategists, corporate analysts, retail associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Arab Emirates's retail industry.
The Q111 BMI UAE Retail report forecasts that the country’s retail sales will grow from an estimated AED79.19bn (US$21.56bn) in 2011 to AED103.40bn (US$28.16bn) by 2015. Key factors behind the forecast are strong underlying economic growth (despite the recent problems in Dubai), increasing household consumption, growing acceptance of modern retailing concepts and expatriate wealth.
The UAE’s nominal GDP in 2011 is predicted to be US$299.1bn, with growth of 3.9% predicted for the year. BMI predicts average annual GDP growth of 3.9% between 2011 and 2015. With the population increasing from an expected 4.8mn in 2011 to an estimated 5.2mn by 2015, GDP per capita is forecast torise by the end of the forecast period to US$74,391.
Average household spending power in the UAE stands at US$14,400 per annum, according to property consultants Colliers International. Emirati households account for the lion’s share of this spending, withan average of US$23,000, while Western, other Arab and Asian households have annual spending powerof US$19,500, US$13,500 and US$10,000 respectively.
While Emiratis contribute to retail sales, the buying power of the country’s expatriate residents is the major source of success, according to a study by Indian research firm RNCOS. Tourism is also a massivefactor in stimulating retail growth, with the UAE expecting the number of tourists to have totalled morethan 11mn in 2010.
Growing urbanisation is another factor in the buoyancy of the retail sector. Abu Dhabi in particular is highly urbanised, with the Urban Planning Council (UPC) projecting that Abu Dhabi City’s population will rise to 1.3mn by 2013. In 2005, 85.5% of the UAE’s population was classified by the UN as urbanand this is forecast to have increased to 86.3% in 2010.
The UN describes 73% of the UAE population in 2005 as economically active, forecast to rise to 78.6% by 2015. In 2005, just over 30% of the population was in the 20-44 age range crucial for retail sales, andthis is expected to hit 56% by 2015.
Retail sub-sectors predicted by BMI to show strong growth over the forecast period include over-the counter (OTC) pharmaceuticals, with sales expected to increase by more than 30%, from a forecast US$0.32bn in 2011 to US$0.42bn by 2014.
With the luxury car market in the UAE growing on the back of rising levels of disposable income, automotive sales are forecast to rise by more than 20%, from an expected US$12.84bn in 2011 toURS$15.45bn by 2014.
Sales of consumer electronics are expected to increase from a forecast US$3.28bn in 2011 to US$3.91bn by 2014, a rise of more than 19%. The UAE’s consumer electronics market is one of the largest in the Gulf, accounting for close to 40% of regional spending and serving a potential market of almost 2bn people across Asia and the Middle East.
Food sales, forecast to be worth US$7.71bn in 2011, are expected to increase by 24.4% to US$9.59bn by 2014. The UAE’s mass grocery retail (MGR) sector is one of the Gulf region’s largest by value, with sales forecast at US$5.38bn in 2011 and accounting for 69.8% of the total food and drink market.
The Value of the UAE’s MGR sector is forecast to rise to US$6.92bn by 2014, when it should account for72.7% of the overall food and drink market.
Retail sales for our set of Middle East and Africa (MEA) countries in 2011 are predicted to amount to US$196.69bn, based on the varying national definitions. Total consumer spending for the region based on BMI’s macroeconomic database is forecast at US$722.41bn. In 2011, BMI predicts that South Africa and Israel will together account for an estimated 56.8% of regional retail sales, and their combined share is expected to rise to 57.2% by 2014. For the UAE, the estimated 2010 market share of 10.3% is expected to reduce to 10.1% by 2014.
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