UAE Retail Spending Reaches $3.8 Billion in Q2 2024: Insights and Trends
- Oct. 28, 2024
- FMCG HORECA BUSINESS
The UAE retail landscape showcased impressive resilience in the second quarter of 2024, with consumers collectively spending a remarkable $3.8 billion on fast-moving consumer goods (FMCG), technology, and durable products. This marks a notable 3.4% increase compared to the same period last year, indicating a robust retail market and growing consumer confidence.
Breakdown of Spending
According to insights from the NIQ Retail Spend Barometer, powered by GfK intelligence, shoppers allocated $2.3 billion to FMCG and $1.5 billion to tech and durable goods in Q2 2024. This represents a 4% uplift in FMCG spending and a 2.6% increase in technology and durable goods compared to Q2 2023.
The rise in FMCG expenditures highlights a continued demand for essential household items and personal care products. At the same time, the increased investment in technology and durable goods reflects the UAE’s thriving digital economy and the growing disposable income of its residents.
Factors Influencing Spending Patterns
While the overall spending trend remains positive, several factors contributed to slower growth in Q2 compared to the previous quarter. Key events like the Dubai Shopping Festival, Pre-Ramadan and Ramadan sales, and the launch of high-demand products such as the Samsung Galaxy S24 in January 2024 significantly boosted consumer spending in Q1. It’s common to observe a dip in retail sales following the Ramadan period, and the summer months also typically see fluctuations in consumer behavior due to changes in tourism.
The market’s relatively flat growth in Q2 can largely be attributed to the exceptionally strong performance in Q1 2024. Following a surge in demand for consumer electronics and gaming products, the market is now stabilizing, with expectations for a more pronounced recovery in sectors like consumer electronics by 2026-2027. This adjustment reflects a shift toward a new normal, with growth rates likely to be more moderate than the spikes seen during the pandemic.
Expert Insights
Roshni Sheth, NIQ retail lead for the Middle East, notes that the Retail Spend Barometer reveals a slowdown in specific categories while highlighting overall stability in consumer spending. “This positive spending trend is indicative of the UAE’s resilient economy and the confidence of its consumers,” Sheth explains. As the UAE continues to attract foreign investment and encourage innovation, the retail sector is well-positioned for further growth.
Category-Specific Trends
FMCG: Growth in this category saw a significant drop from 9.4% in 2023 to 3.5% in Q1 2024. However, in Q2, growth rebounded to 4%, suggesting a potential recovery in market dynamics through effective marketing campaigns or seasonal factors.
Tech and Durable Goods: This category experienced a robust growth increase in Q1, climbing from 9.4% in 2023 to 11% in 2024, thanks to high consumer demand and successful product innovations. Yet, Q2 brought a sharp decline, with growth dropping from 10.6% in 2023 to just 2.6% in 2024, potentially due to market saturation and supply chain challenges.