UAE sees upturn in consumer spending in 2022

Consumer spending saw double-digit growth across the UAE last year, according to new data from retail and leisure giant Majid Al Futtaim.

Its new ‘State of the UAE Retail Economy’ Q4 report, which looks at spending trends in the UAE, found that there was 13% growth in across the retail economy for the full year, including leisure and entertainment (up 29%); fashion (up 25%); hypermarkets and supermarkets (up 11%); and general retail (up 9%).

The across-the-board increases were driven by the rise in international visitors to the UAE, which more than doubled to 14 million in 2022 compared with the previous year, bolstered by major events including the football World Cup in neighbouring Qatar.

However, UAE consumers started turning cautious during the final months of 2022 after successive interest rate hikes and amidst more concerns that the global economy would soon enter a full-blown recession.

Shoppers were “opting for discounts and deals for essential items, and cutting back on non-essential’s such as electronics,” the report said.

“Average spend per transaction in hypermarkets and supermarkets was down 3%. However, overall spending in the segment was up 11% on the year prior, showing movement towards smaller basket value and more frequent transaction.”

It was in the final three months of 2022 that the full impact of the US Federal Reserve rate increases – and these being mirrored in the UAE – started to exert itself on the shopper sentiments.

 

Strong rise in GDP of UAE

The uplift in spending contributed to the UAE posting its strongest annual GDP growth since 2006, jumping to 7.9%, from 3.9% in 2021. However, oil was the main contributor, due to a rise of around 38% in the average oil price.

The non-oil economy grew at 6.6%, buoyed by government efforts to attract investments and boost the country’s tourism sector.

The extended two-and-a-half-day weekend was also a factor in increased in consumer spend, with weekend retail sales increasing by 11.3% over the previous year.

This equated to additional spending of AED5.5bn ($1.5bn), according to Majid Al Futtaim data.

The retail giant’s analysis found that the UAE has the world’s fastest-growing e-commerce market, with sales forecast to reach $9.2bn by 2026.

Spending in this area peaked in the fourth quarter 2022 and grew by 20% for the full year compared with 2021, with three-quarters of consumers saying that digital payment methods are the preferred option.

The volume of payments made via buy-now-pay-later schemes have increased, with 45% of consumers using them in the past year, up from 21% on the previous a year.

A majority of online spending was in the hypermarket and supermarket sector, which saw spending grow by 40% during the year.

 

UAE employment ministry makes contract recommendations

The UAE Ministry of Human Resources and Emiratisation (MoHRE) has published a list of five commitments that companies must consider when it comes to their employees’ contracts, part of the authority’s efforts to safeguard the welfare of employees in the UAE.

The five commitments are:

• Only use the approved contract form that matches the job offer.
• Additional benefits can be added, even if not stated in the job offer.
• Additional annexes can be added to the contract in a manner as far as they do not contradict the Labour Law, its executive regulations, and implemented ministerial decisions.
• Save a copy of the employee’s contract and job offer for no less than two years from the end of the contractual relationship.
• Inform the employees of their rights and duties as stated in the contract.

The ministry also said that UAE employees with unused annual leave can either carry forward the number of days or agree to receive a cash allowance.

MoHRE said that the Regulation of Labour Relations Law and its implementing regulations stipulated that the worker may:

• Carry forward unused annual leave or part of it upon agreement with the employer.
• Or may agree with the company to receive a cash allowance.
• If the worker’s service ends, they shall be paid a cash allowance for the balance of the legally due annual leaves.

Every UAE employee is entitled to at least two days of paid leave for each month working in the country, equating to 24 days of paid annual leave.