Not many countries have a strong implementation and design of a broad roadmap when it comes to technology integration as a crucial aspect of their development objectives; the UAE is surely not one of them. The implementation of tech-savvy policies is massively improving various industries in the UAE retail sector.
In this article, we will ensure you understand why technology is so important in the paced acceleration of the Dubai retail market. With the creation of a Ministry for Artificial Intelligence, the country has established its position as a robust jurisdiction for; innovation and global advances.
- Will the retail sector grow in 2022?
- What are some predictions for the UAE retail market in 2022?
- Why is social commerce growing in popularity?
- What is the retail hybrid model?
- What will be the role of technology in the UAE retail market in 2022 and forward?
- Why are malls in the UAE so popular among tourists?
- The UAE has technology-driven free zones
- How can we assist you to set up your business in the UAE retail sector?
1. Will the retail sector grow in 2022?
The retail sector in Dubai will keep expanding in 2022, with growth being driven by residents’ increased spending, the UAE’s successful covid campaign, and Expo 2020 Dubai.
It is no surprise that the pandemic rewrote the retail rulebook. That is to say, safety and health concerns are not purchasing drivers and sellers are implementing tech-driven transformations in months instead of years. Success will come to businesses that can find a balance between a need for speed and a long-term strategy.
The hybrid retail model is growing in popularity; social commerce is the next growth frontier for regional and local players. Dubai is one of the world’s leading shopping and tourism destinations, in addition; the massive retail state in the emirate is driven by the millions of tourists who travel to the emirate each year.
Being home to more than 60% of the world’s best retail brands, it has successfully developed a flourishing UAE retail sector that; despite global challenges, it is an important contributor to the country’s economy.
2. What are some predictions for the UAE retail market in 2022?
Recent research conducted by the Chamber of Commerce and Industry in Dubai has projected the UAE’s sales to reach AED 259 billion ($70.5 billion) by 2025; this represents an annual growth of more than 6.5%.
The measures taken to support the Dubai retail market such as rent waivers and other benefits have played a crucial part in preserving this field when it comes to the pandemic impact. Likewise, shopping malls in Dubai have adapted harmoniously to integrate the different parts of entertainment outlets and lifestyles into their services.
In Dubai, UAE, and the GCC, in the same vein, shopping malls are social environments; where citizens do not go only to shop but also to socialize. The malls in Dubai being part of the UAE retail sector, are also important global tourist destinations; with them receiving more than 78 million visitors per year.
Social commerce will play an important role and will be the next growth frontier for local retailers. This applies if they are already benefiting from e-commerce’s significant growth over the past years; especially during and after the pandemic.
Another important trend expected to grow in the following 2 to 5 years is social commerce. Moreover, with social commerce, the UAE retail sector will use social media as a channel to sell and promote services and products. Similarly, a recent Snap report states that the “Snapchat Generation” in the UAE alone is estimated at AED 1.56 trillion in spending power.
Aside from traditional commerce trends, this could benefit the UAE retail market size in the following years for more revenue.
4. What is the retail hybrid model?
The hybrid retail model is gaining importance in the UAE and the region after the pandemic outbreak, especially in the Dubai retail market.
Since emerging post-pandemic trends will continue to discover the need for tech innovation that matches ever-changing consumer behaviors in the UAE retail sector; this hybrid model is looking to come out clean in terms of popularity in the UAE.
The UAE grocery market report also indicates a significant increase in Dubai’s entertainment sector between Q2 and Q3 of the retail market in 2020. And since consumer need for fun experiences went up, and the UAE government ensured malls were safe.
5. What will be the role of technology in the UAE retail market in 2022 and forward?
In short, technology will be an essential differentiator in the success of companies across the UAE retail market in 2022. We are seeing huge changes happening in the retail sector across the country, which is slowly creating opportunities for retailers.
There is a big change when it comes to consumer behavior; they are more informed and have tools at their disposal to make better decisions. As a result, their expectation has also changed their expectations; they are expecting a faster service, faster service, and cheaper prices.
On the other hand, this means service providers must deliver their services no matter where they are located.
In an increasingly technology-driven and customer-centric landscape, the key differentiator that can break or make a business is data analytics. In other words, data analytics is a strong tool used to meet customer needs by just looking at their preferences or their past purchases. Therefore, this is an opportunity for you to influence data to drive consumer behavior.
Most importantly, those who use these tools in the right way will be the winners of the UAE retail industry. Further, it is expected that by 2025, the retail e-commerce market will reach AED 29 billion, and grow at a CAGR of 15.5% from 2020 to 2025.
Technology is the base that will bring new players into the market in 2022, and in some cases; will take out companies that have been in the field for more time. Some companies in the UAE retail market in 2021 and in previous years had to keep up with new technologies, at first, they thought that they could continue their legacy without investing in new technologies.
5.1. Technology is pushing forward the retail sector
Family-owned businesses that had the monopoly of the UAE retail industry in 2020 are a thing of the past; technology has accelerated some changes both within their favor and against them. Similarly, technology has also accelerated the real growth of new sellers that were not present in the industry before. There will be new players entering the market who will thrive in the market.
UAE grocery market report found that Dubai’s retail and wholesale sector is an important contributor to its economy. It accounts for approximately 28% of the emirate’s GDP. In 2020, the UAE e-commerce retail market reached a value of almost AED 14 billion, 53% higher than in 2019.
Since every customer is an important part of retail business strategies; the UAE retail sector will create differentiation in business through a technology-driven digital transformation. That is to say; by using technology to provide relevant and customized online and offline shopping experiences, customers will become advocates for brands and retailers.
It is important to note how the accelerated pace in the fusion of the physical environment and the online world is changing the in-store customer journey. In other words, technology is becoming the tool for the hyper-customization of the entire shopping experience.
Among all the possibilities, the digital environment finds the evolution on the screens; which is one of the most interesting ways of generating interaction between the consumer’s smartphone and the screen. Some of this mainly happens due to QR codes, a rarely used thing in the past that has found a way of wide use during the pandemic.
As a result, the market will move from a “one to many” type of communication, typical in the digital world to a “one to one”; which is more typical of the UAE retail sector and e-commerce.
6. Why are malls in the UAE so popular among tourists?
Regarded as one of the most visited destinations in the UAE, shopping malls are among the world’s most visited and largest destinations in the country. As aforementioned, they are popular tourist attractions and meeting places for the local population. Further, the Dubai mall alone is used to welcome more than 80 million consumers per year.
Travelers have ranked the mall as #2 on TripAdvisor’s list of the best things to do in Dubai. Moreover, the shopping malls’ prevalence in day-to-day UAE life is in part thanks to the weather, in addition to offering the best experiences, UAE malls provide relief from outside temperatures that can reach 40º.
On a humid and hot summer day, e-commerce convenience cannot compete with the comfort of air conditioning.
6.1. Digital challenges in the UAE retail sector
Retailers in the UAE must constantly innovate their customer experiences with the right technology. But with all the advantages that technology offers to retailers, there are also a number of challenges. In other words, the pandemic has reduced customer-facing revenue; this caused retailers to be more present and active in digital channels.
While at the same time, they must keep direct links with consumers.
Compared to other countries, existing UAE e-commerce platforms are minimalist and contain fewer items, have few product reviews, and provide minimal product details. Moreover, many retailers lack the technological platforms required to run their commerce digitally.
Another issue the digital UAE retail sector must overcome is that malls are an integral part of the social environment of the country. That is to say, while consumer habits are constantly changing; these factors make shopping malls in the UAE more appealing than shopping digitally.
7. The UAE has technology-driven free zones
The UAE’s leadership has embraced new technologies. For instance, the country’s largest financial free zones:
- Dubai International Financial Center.
- And Abu Dhabi Global Market.
They have set up and organized advanced fintech ecosystems ideal for new businesses and start-ups; the free zones are also cooperating among established companies so both ends can obtain the benefits.
In addition, the UAE also supports technology for small- and medium-sized companies in the industrial sector and considers the latter the cornerstone of the economy. In March 2021, the UAE government launched “Operation 300 bn”; a comprehensive 10-year industrial strategy aiming to establish the UAE’s industrial sector as a successful sustainable model.
More than 13,000 small and micro enterprises will benefit from financial and policy support through the newly introduced strategy; this leads to a real subsidized economy.
Tech-savvy companies are not defined only by their support to companies but also through partnerships and synergies they develop through innovation and research. The Abu Dhabi Advanced Technology Council is the first research council in the Middle East. It was created to shape the development and research for transformative technology outcomes.
The creation of the Technology Innovation Institute (TII) is also another policy that contributes toward making the UAE a tech-savvy nation for the UAE retail sector and the Dubai retail market. Further, the TII aims to become a global research center to push forward the knowledge frontiers.
8. How can we assist you to set up your business in the UAE retail sector?
After 2 years of uncertainty, the UAE retail sector is growing again, and with it, consumer spending. Observers predict that this industry will grow by 3.6% in 2022. That is why this industry will be one of the most profitable after the end of the pandemic.
On Connect Free Zone, we offer you the best solutions, packages, and discounts if you are looking to establish your business in the UAE; whether it is on UAE Mainland or in a Free Zone.
We will work hard so you are able to focus on your business, letting us take care of the entire relocation and setup process. Most importantly, we will liaise with the government authorities regarding the documentation and processes. We have more than 21 years of working with businesses across the 7 emirates. We even can help you set up companies remotely.
Do you want to work with the best partner so you can easily set up in the UAE retail sector? Contact us and receive the best advice and counseling with us; or if you have additional inquiries, you can email us via contact@connectfz.com. Call us at +971 43 316 688 or refer a friend and earn!
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