(MENAFN- Khaleej Times) Consumer spending in the UAE rose 19 per cent in 2022 compared to the previous year, a recent report said.
According to the 'State of the UAE Retail Economy' Q4 report, released by Majid Al Futtaim, there was a notable 13 per cent growth in spending across the retail economy for the full year including, leisure and entertainment (29 per cent), fashion (25 per cent), hypermarkets and supermarkets (11 per cent) and general retail (9 per cent).“This increase was driven by the rise in international visitors to the UAE, which more than doubled to 14 million in 2022, bolstered by major events including FIFA World Cup in neighbouring Qatar. growth for the long-term,” the report said
The UAE posted its strongest annual GDP growth since 2006, jumping to 7.9 per cent, from 3.9 per cent in 2021. The drivers of this boost were broad-based, across oil and non-oil sectors. As expected, oil remained the main component due to a rise of around 38 per cent in the average oil price, causing the sector to rebound to 11.4 per cent growth, after contracting by 0.7 per cent the previous year. The non-oil economy demonstrated robust growth at 6.6 per cent, buoyed by government efforts to attract investments and boost the country's tourism sector.
Consumer behaviour trends
The final quarter of 2022 saw people becoming more cautious with their spend, opting for discounts and deals for essential items, and cutting back on non-essential's such as electronics. The average spend per transaction in hypermarkets and supermarkets was down 3 per cent during the year, however overall spending in the segment was up 11 per cent on the year prior, showing movement towards smaller basket value and more frequent transaction.
The extended 2.5-day weekend also influenced the increase in consumer spend, with weekend retail sales increasing by 11.3 per cent versus the previous year. This translated to additional spending of approximately Dh5.5 billion according to Majid Al Futtaim Point of Sales (POS) data.
In Majid Al Futtaim's Happiness Lab survey, approximately 90 per cent of respondents viewed the UAE's current economic situation positively. The Majid Al Futtaim POS data indicated that this optimism is evidenced by a peak in absolute consumer spending in the fourth quarter of 2022, which accounted for 29 per cent of all retail economic activity during the year.
Burgeoning digital economy
Analysis suggests that the UAE has the world's fastest-growing e-commerce market, with sales forecast to reach $9.2 billion by 2026. Spending in this area peaked in Q4 2022 and grew by 20 per cent for the full year compared to 2021, with three-quarters of consumers saying that digital payment methods are the preferred option, according to Majid Al Futtaim POS data.
Fintech solutions such as buy-now-pay-later (BNPL) gained pace, with 45 per cent of consumers using Buy now, pay later (BNPL) financing in the past year, up from 21 per cent a year earlier.
A majority of online spending by residents was in the hypermarket and supermarket sector, which witnessed spending growth of 40 per cent during the year.