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Consumer spending in the UAE climbed 13% y-o-y in 2023, according to Majid Al Futtaim’s State of the UAE Retail Economy report (pdf), which tracks data from POS machines used at Majid Al Futtaim’s stores and facilities. Growth was attributed to a 14% increase in the retail economy — spanning hypermarkets and supermarkets, F&B, leisure and entertainment, and fashion — as well as a 12% increase in non-retail spending — including government services, airline tickets, petrol and gas stations, and education.
The retail economy was red-hot in 2023, with stronger y-o-y growth coming during the first half of the year, while 2H 2023 was lower y-o-y due to the base effect from the previous year’s FIFA World Cup, which reeled in a surge of tourists in 2H 2022. Consumer spending also “stood out” during 4Q 2023 — comprising 27% of all retail economy spending for 2023 — on the back of COP28, which similarly attracted thousands of visitors to the country.
Super- and hypermarket spending increased by 3% y-o-y, with spending in the first half of the year up 5% y-o-y. Brick-and-mortar stores accounted for 85% of total sector spending despite a 19% hike in e-commerce and digital sales driving the growth. Retail general categories saw an uptick of 16% y-o-y in spending, with F&B contributing 41% (up 25% y-o-y) of spending, hotels comprising 35% (up 17% y-o-y), and electronics making up 9% (up 33% y-o-y).
ICYMI #1- Dubai’s hospitality market achieved an overall average occupancy of 77% in 2023, representing a 6% y-o-y increase in occupancy rates. The emirate recorded a record high of 17.15 mn tourists in 2023 — which surpassed pre-pandemic levels and 2022 figures by growing 19.4% y-o-y. Abu Dhabi also recently earmarked USD 10 bn for the emirate’s new tourism strategy, geared towards almost doubling the number of visitors to 39.3 mn and boosting the sector’s contribution to non-oil GDP to AED 90 bn per year by 2030.
Electronics spending was driven by a reset in retail and wholesale prices, and an increase in e-commerce activity, which comprised 13% of sector spending. E-commerce doubled its presence in the UAE marketplace compared to 2019, rising 7 percentage points to 12% in 2023 on the back of gov’t initiatives to edge the digital economy’s GDP contribution to 19.4% by 2032, a robust fintech sector, and growing digital literacy among consumers. Around 70% of total consumer transactions in 2023 were made using mobile phones.
Leisure and entertainment spending rose 15% y-o-y, with a 33% y-o-y uptick in cinema expenditures driving over two-thirds of the growth. Cinemas saw high activity in 2Q and 3Q 2023, driven by movie screenings of top-performing blockbuster movies, including Oppenheimer and Barbie. Recreational activities for tourists saw a less sharp increase during the year, only growing 4% y-o-y.
Consumer expenditure on fashion climbed 31% y-o-y in 2023, with the first half of the year accounting for 82% of the y-o-y increase on the back of the annual Dubai Shopping Festival and promotional sales. Tourist spending in the sector increased 64% y-o-y, and represented 23% of total spending in the sector (up 4 percentage points from the previous year). The report forecasts the luxury fashion market will continue to rise, owing to an increasing number of tourists in the region and a growing e-commerce marketplace.
Non-retail spending stats: Consumer spending across real estate services doubled in 2023 compared to the previous year, while spending in transportation increased 57% y-o-y. Petrol and gas stations and airlines Witnessed less dramatic increases, petrol and gas stations grew 28% y-o-y, and airlines by 25%.
ICYMI #2- The UAE’s residential real estate market ended 2023 on a strong note, with Dubai’s residential market soaring to a record high of some 119k units sold over the year, up 29.6% y-o-y from the sales recorded in 2022. Abu Dhabi’s real estate market registered over 11k transactions, jumping 77.7% y-o-y in 2023, driven by off-plan sales more than doubling and secondary market sales rising 27.7% y-o-y.
