While for many, Dubai might be synonymous with shopping malls, the traditional retail format – the souk – is holding up surprisingly well, although the winds of change mean that it has had to adapt to one of the most dynamic retail scenes in the world. Traditionally, the souk, meaning “market” in Arabic, consists of shops arranged along narrow streets, clustered according to the type of goods on offer. This allows for cooperation among wholesalers and retailers, and offers the consumer the advantage of knowing where to go for a given item. Many souks are covered, providing protection from the sun for shoppers and shopkeepers alike.
MAINTAINING POPULARITY: According to the Dubai Statistics Centre, retail accounted for 30.7% of the emirate’s GDP in 2011. Over the past 25 years much of the industry has moved into modern malls, which offer shoppers much the same advantages as the souk, but with added benefits such as parking and air-conditioning. At the same time, as in most developed countries, day-to-day needs are now met by hypermarkets offering greater choice and standardised quality control, as well as competitive pricing. As such, the small independent shop has been in relative decline.
Although such a climate might appear unfavourable, the souk has managed to maintain a certain vitality thanks to meeting niche demand. The souk is still the best place for traditional goods, including various fabrics, spices and perfumes. Since traditional Emirati apparel is often tailor-made, men and women buy new clothing from the souk, where local tailors can provide the personalised service not always found in a mall. Many spices and traditional perfumes (particularly oud) are sold wholesale and retail in the souk, whereas these may not be available in large quantities, or at all, in malls.
GOLD TRADING: The gold souk is perhaps the biggest in Dubai, attracting customers from South Asia as well as the Middle East. Gold jewellery is traditionally seen as an investment as much as a decoration in many Asian countries, and the long trading links between the Gulf and the Indian subcontinent mean that tastes for jewellery are broadly similar. The Dubai Gold Souk is home to more than 300 shops, including names such as Damas, Joyalukkas and Al Zain.
The Dubai Multi Commodities Centre (DMCC), a free zone based at Jumeirah Lakes Towers Free Zone, has a vault and free zone incentives for wholesale purposes such as a lack of Customs duties. According to figures from the DMCC, the price of gold has risen from $1445 per ounce during the first half of 2011 to $1651 per ounce during the first half of 2012 – a 14% increase year-on-year. The Dubai gold trade grew at a compound annual growth rate of 28% between 2003 and 2011, and was worth $56bn in 2011, a 35% increase on the previous year. The Dubai Diamond Exchange put the value of the local diamond trade at $35bn in 2010, although this included wholesale and auction sales of the commodity as well as sales at the souk.
INVESTMENT & RENOVATION: The authorities in Dubai have tried to keep the souk sector healthy by investing in new entrances, installing more air conditioning and adding carparks nearby. The Naif Souk was closed after a fire in 2008 and re-opened two years later, while the Gold Souk is the latest to benefit from a renovation programme that finished in May 2012. Currently, Dubai has several other old souks, including the Spice Souk, Souk Al Kabeer, Deira Souk and Bur Dubai Souk, while Souk Madinat Jumeirah is a newer development in traditional style oriented primarily to tourists.
Copyright protection was once considered an issue for souks, with pirated products from branded clothing and accessories to DVDs on sale until fairly recently. However, the UAE modified its intellectual property laws in 2010, and has been a signatory to the World Intellectual Property Organisation since 2005. As such, authorities have been cracking down on counterfeit products. In 2011 the Dubai Customs Department estimated that less than 1% of such goods reaching the EU originated in the UAE in 2010, compared to 15% in 2009. All in all, however, by playing to its traditional strengths, the souk is, in many ways, a thriving market.
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