UAE consumers demonstrated robust spending habits during the second quarter of 2024, collectively investing a substantial $3.8 billion in fast-moving consumer goods (FMCG), technology, and durable goods and witnessed a 3.4 per cent change from last year.
According to the new insights from the NIQ Retail Spend Barometer, which has been powered by GfK intelligence, UAE shoppers spent $2.3 billion on FMCG and $1.5 billion on tech & durable products in Q2 2024 with a 4 per cent and 2.6 per cent uplift respectively compared to the same period last year.
UAE consumers continued their strong spending habits in the second quarter of 2024, increasing their investment in FMCG, technology, and durable goods. The total expenditure reached a substantial $3.8 billion, demonstrating the country’s robust retail market and growing consumer confidence.
The rise in FMCG purchases underscores the ongoing demand for essential household items and personal care products. Simultaneously, the increased investment in technology and durable goods reflects the UAE’s thriving digital economy and the rising disposable income of its residents.
Factors leading to the slow growth
Key events such as the Dubai Shopping Festival, Pre-Ramadan and Ramadan Sales, and the launch of the Samsung Galaxy S24 in January 2024 significantly impacted consumer spending in the first quarter. The subsequent slump in Q2 is a typical trend observed following the Ramadan period. Additionally, the summer months and holiday season affected tourism, impacting retail sales compared to Q1.
The market’s flat growth in Q2 2024 can be attributed to the exceptionally strong performance in Q1 2024. After a period of intense demand, particularly for items like consumer electronics, information technology and gaming, the market has reached a more stable phase. The demand for the consumer electronics sector has stabilized and is expected to recover more significantly by 2026-2027. The expected recovery by 2026-2027 indicates that the industry is adjusting to a new normal, where growth rates might be more modest compared to the pandemic-induced spikes.
Roshni Sheth, NIQ retail lead, Middle East, explains: “The retail spend barometer focuses on the slowdown in certain categories and the overall stability of consumer spending in the UAE. This positive spending trend is indicative of the UAE’s resilient economy and the confidence of its consumers. As the country continues to attract foreign investment and foster innovation, the retail sector is poised for further growth and expansion”.
Category-specific trends
FMCG: In Q1, the growth rate dropped significantly from 9.4 per cent in 2023 to 3.5 per cent in 2024. This decline could be attributed to several factors such as changes in consumer behavior, economic conditions. However, in Q2, the growth rate improved, rising from 2.3 per cent in 2023 to 4 per cent in 2024. This rebound might suggest a recovery or a positive shift in market dynamics, such as successful marketing campaigns, new product launches, or seasonal effects.
Tech and durable goods: Q1 experienced a growth increase, with the growth rate rising from 9.4 per cent in 2023 to 11 per cent in 2024. This suggests a strong start to 2024 for the sector, possibly due to high consumer demand, successful product innovations, or other positive market factors.
Q2, however, saw a significant decline in growth, dropping from 10.6 per cent in 2023 to just 2.6 per cent in 2024. This sharp decrease could be due to various reasons, such as market saturation, supply chain issues, declining consumer confidence.
Sheth further adds: “Despite these factors, the overall spending trend remains positive, reflecting the UAE’s resilient economy and growing consumer confidence”.
Source: www.khaleejtimes.com