Interview: Colm McLoughlin
How have changing source markets affected the traditional shopper profile in Dubai, and what does this mean for retailers?
COLM MCLOUGHLIN: The traditional shopper profile has changed considerably in recent years. Not only has Dubai grown to become one of the most visited cities for tourists but also a haven for luxury retail. Evidence for this can be found in the number of malls that have come on-line in the last decade.
The most significant change to have occurred has been the rising number of Chinese nationals visiting or transiting through Dubai. China alone now contributes 4% of total passengers but 17% of total sales, a 3% increase since 2017. To cater to the increasing number of Chinese travellers, there has been an increase in demand for Chinese nationals in the retail labour market. The employment of Chinese workers is expected to enhance the quality of customer service for this market segment. On top of this, companies are increasingly working closely with China-based tour operators, and conducting specific market intelligence studies in order to be able to satisfy Chinese consumers and reach even more potential travellers through Chinese social media platforms, such as WeChat.
The Indian sub-continent is another high-growth source market in terms of tourist spending, which adds to the enormous importance that Indian nationals already have in the UAE as the primary country of origin for expats. We have also seen an increase in retail spending by European and Middle Eastern nationals, which now represent, at a company level, 18% and 17% of our sales, respectively.
How will the introduction of value-added tax (VAT) refunds for tourists encourage consumer spending in the short to medium term?
MCLOUGHLIN: The introduction of VAT refunds for tourists – which started in November 2018 – will help to offset the slight impact VAT could have had on Dubai’s international cost competitiveness. This is expected to have a very positive impact on consumer demand by boosting spending from tourists visiting the UAE. Furthermore, it will contribute to Dubai’s already strong reputation as a shopping destination, which will in turn help to further drive the growth of the hospitality sector.
What retail investment opportunities are we likely to see as a result of the newly constructed Expo 2020 venues over the long term?
MCLOUGHLIN: The expected footfall of 20m people during Expo 2020 is set to generate a significant amount of jobs across the region. These jobs will be in sectors linked to the implementation of the exposition and the legacy plans for the event, ranging from aviation and construction to retail and transportation. The impact of Expo 2020 will be very important as it will cause an increase in the population, which in turn will boost consumer spending at the emirate’s shopping centres.
What will it take for e-commerce to increase its share of the market in the UAE?
MCLOUGHLIN: E-commerce has gained considerable traction in the UAE, and we expect this to continue over the medium to long term. In particular, we strongly anticipate the emergence of home- grown e-commerce platforms. Nevertheless, there is still strong demand for physical brick-and-mortar retail stores, especially in this part of the world where visiting the mall is as much a social activity as it is a retail one. As a consequence of this, while it is important for retailers to ensure that they provide the best possible e-commerce offering, they still nonetheless need to make plans for the future and continue to stay relevant to their main target audiences by ensuring an omni-channel presence.
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