As millions of shoppers descend on Dubai for one of the biggest events in the international consumer calendar, the cavalcade of card-swiping may provide a guide to whether global economics and politics are creating a shift in spending power.
This year’s Dubai Shopping Festival (DSF) is already drawing predictions from experts and analysts about the nationalities of the shoppers who will splash the most cash during the month-long event, which began on New Year’s Day and is expected to boost the emirate’s coffers by about $1.3 billion (Dh4.78 billion).
Of particular concern are the Russian and Chinese source markets. Shoppers from these catchments of consumerism have been notable big spenders in the aftermath of the global financial crisis. DSF’s scheduling was even moved up from February to capitalise on the Russian Orthodox Christmas and Chinese New Year holidays.
However, with the Chinese economy experiencing turbulent times — and ripples of this downturn being felt throughout the world — and Russia suffering from the effects of both Western economic sanctions and oil prices being at their lowest level in more than a decade, there is the prospect of this year’s breakdown of DSF buyers producing a different picture than before.
And while China’s high-end consumer market is reportedly retaining its appetite for luxury goods, the country’s economic difficulties will raise questions over the willingness of its shoppers to travel to the Gulf.
Meanwhile, Russian visitor numbers in the Middle East are dipping.
However, if the latest report by tax refund specialist Global Blue in February, which has published annual figures for the top shopper nationalities, still holds true, Chinese visitors should still be among the big spenders at DSF, assuming the festival echoes global trends.
It found shoppers from China now account for 30 per cent of tax-free shopping worldwide, after growing their spend by 18 per cent year-on-year in 2014, making their home nation the most lucrative country of origin for ‘globe shoppers’. Second place goes to… Russia, with 14 per cent.
Global Blue says China is among a five-strong league of nations that increased their tax-free shopping spend by more than 15 per cent in 2014, along with Taiwan, Hong Kong, Kuwait and Saudi Arabia, with fashion and clothing encompassing almost 50 per cent of purchases. But such splurges were set against a very different economic backdrop in China — DSF may give an indication of how strongly the Chinese consumer market is holding up.
Diana Jarmalaite, Research Analyst with Euromonitor International, says while the biggest DSF spenders are often close to home, Chinese visitors have traditionally made their presence felt.
“The reasonable share of DSF turnover is always associated with the UAE residents, who are usually followed by visitors from neighbouring countries and region, such as Saudi Arabia, India, Russia and China.”
Whatever the final picture, DSF will capture the attention of consumers from plenty of countries aside from China and Russia. Neighbouring Saudi Arabia and the UK are expected to corner a sizeable chunk of spending, according to Visa, which compiles an annual report to provide a snapshot of nationalities that are the most prolific spenders at the festival.
“Visitors from Saudi Arabia and the UK once again emerged as the top spenders in the first two weeks of the 2015 festival, contributing $35.18 million (Dh129.22million) and $29.98 million (Dh110.15 million) respectively to the UAE economy,” says Karim Beg, Head of Marketing for the Middle East at Visa. “This is up from $27.29 million (Dh100.24 million) and $27.74 million (Dh101.89 million) spent during the same sale period in 2014.”
Europeans and visitors from Mena are also expected to play a major role in the spending spree, he adds, saying: “Undoubtedly, Europe remains a focus market for us during DSF but increasingly, we are seeing strong performance from key source markets in Mena for purchases across retail, entertainment and dining options during DSF 2016.
“Additionally, we have witnessed strong performance from the emerging markets of sub-Saharan Africa last year, with countries like Angola doubling their spends on their Visa cards in the first two weeks of DSF 2015 compared to the same period during the previous year.”
Visa cardholders from Angola saw the biggest percentage increase in spending with a total of $28.47 million splurged in the first two weeks of DSF 2015, registering a 97 per cent growth in transaction volume over the previous year.
“So we look forward to a hugely positive DSF 2016 season with high spends from our traditional source markets and emerging markets in Mena and Europe.”
Nasser Rafi, Chief Executive Officer of Emaar Malls, predicted a good mix of nationalities would return to DSF 2016. “We expect visitors from around the world including high-net-worth individuals from the wider catchment area of the Middle East, Africa, South Asia, China and European markets,” he says.
“Visitors from countries in the GCC and China are among the high spenders and we expect the trend to continue.
“Thanks to the vision of Dubai’s leadership, DSF has been a major driving force of the transformational growth achieved by the emirate’s retail, hospitality and tourism sectors over the past two decades.”
Vipen Sethi, CEO of the Landmark Group — a retail group catering to a wide spectrum of residents and tourists — sees the DSF as one of the most important retail initiatives, attracting shoppers from all corners of the world as they look to benefit from the value they see in discounted products, bundle offers and other promotional activities.
However, he does see a recurring geographical trend in terms of repeat visitors.
“Maximum traction has been noted from Emiratis, followed by expat Arabs, South Asian expats, Western nationals and others,” he says. “It is difficult to share more insight as it tends to vary from brand to brand and offer to offer.”
Every January, Dubai’s abundance of malls and retailers offer generous discounts and prizes for the DSF to draw in shoppers from across the globe.
The inaugural DSF in 1996 attracted 1.6 million visitors with a total spend of Dh2.15 billion. That spending figure is expected to be Dh15 billion across the 32 days of DSF 2016, according to the Dubai Festivals & Retail Establishment, an agency of Dubai’s Department of Tourism and Commerce Marketing, which organises the event.
