UAE retail sector margins under pressure – AT Kearney

The UAE retail sector is facing a tough time as margins are under pressure driven by lower oil prices, decline in Russian and Chinese tourists and fall in consumer disposable incomes, according to retail consultancy, AT Kearney.

Shamail Siddiqi, principal at retail consultancy, AT Kearney, told the Middle East Retail Forum that the pace of growth in the UAE retail market had ‘slowed a bit’, which was a sign of a maturing market.

The slowdown will continue in the short-term, as the drop in tourism from Russia and China this year continues to impact luxury retailers, the forum was told.

“Even if oil comes back to the levels we knew over the past 10 years, the profits in retail that we saw then will not [be the same] because the UAE is now a mature market,” said Cyrille Fabre, a partner at Bain & Company, according to the National.

The UAE and Saudi Arabia are placed seventh and eighth, respectively, in AT Kearney’s Global Retail Development Index 2016.

The $7,159 (AED26,273) sales per capita in the UAE is the highest in the region, AT Kearney said, but annual retail sales growth slowed from eight percent in 2014 to six percent in 2015.

Another report by Ventures Middle East, a research firm, expects retail sales figure to grow at seven percent per annum until 2018 to reach $285 billion (AED1.04 trillion) across the Gulf Cooperation Council.