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One reason why the Dubai retail industry is so successful lies in the fact that it is driven by an ever growing tourism industry – Cityscape investigates.

September 2015

Because it never had the oil or gas reserves of other emirates or neighbouring Gulf states, Dubai has always understood the importance of tourism, and it is paying off. This year Dubai was recognised as the fourth most popular international tourism destination – after London, Paris, and Bangkok – in the MasterCard Global Destination Cities report.

Tourism 2020 Vision

Two years ago Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates, and ruler of Dubai, signed off on the ambitious Tourism 2020 Vision that mandates doubling the number of visitors to the emirate from 10 million in 2013 to 20 million by 2020. Dubai is already well on the road – in 2014 13.2 million visitors arrived to see, to do business, and to shop. As a result, Dubai has become the world’s second most important retail destination – preceded only by London.

Five years before 2020, retail in Dubai accounts for 13 percent of the economy, the same proportion as the financial, real estate, and construction sectors. The three goals of the Tourism 2020 Vision are 1) position Dubai as the world’s leading family destination; 2) make it a leading event destination; and 3) identify it as an easy place to do business. The three goals all involve retail although only the second addresses it directly; the major retail opportunities like the annual Dubai Shopping Festival every January are events.

Dubai Shopping Festival (DSF)

DSF has attracted visitors and shoppers from its inception in 1996 when Dubai had only a handful of malls and some international brands to offer. Nineteen years later more than 70 malls attract tourists and a well-oiled publicity and marketing machine has made the Dubai Shopping Festival a major destination for people around the world. “For those who have never been, I urge you to consider a visit in January. It’s one of the very best times of year for a visit and a wonderful way to sample the best in international retail in one venue. There are events galore, raffles, shows, music and entertainment – pretty much a fashionista’s dream come true.”

That’s from the woman the New York Times has called the Queen of Retail, Faith Hope Consolo, Chairman of The Retail Group at Douglas Elliman. “I’m an enormous fan of the Dubai Shopping Festival,” she says. “It’s brought millions of visitors to Dubai and allowed the city to showcase its position as a world-class retail and tourism destination. The festival works hand-in-hand with the tourism and commerce department to welcome return visitors as well as those who are new to the city.”

Retail grows with tourism

According to KPMG’s Top of Mind survey 2015, this year’s prospects are good for retail companies in Dubai. Almost half saw growth in income of more than 10 percent in 2014 compared to only 15 percent of global companies that saw growth above 10 percent. Consolo agrees: “I have a great deal of optimism for Dubai’s retail and tourism markets. Dubai is a dynamic retail and tourism destination that is here to stay. While numbers are nice, the presence of retail’s most exclusive brands and loyal following of elite shoppers throughout the world tells me more than any quarterly report can relay.”

Dubai’s retail success is no surprise to Eric Hertz, Senior Vice President of Education & Organisational Development at the International Council of Shopping Centres. He recognises “Dubai and the UAE have been extremely progressive, embracing the trends at an early stage.” The trends include creating “a complete living experience” around shopping or “experiential retailing.” He commends Dubai’s Mall of the Emirates for opening a ski slope inside the shopping centre in 2005 and for “being so far ahead of the industry in engaging people.”

Because of tourism, retail in Dubai gets a head start. “Tourism is a driver for innovation,” explains Hertz, “and the proportion of shoppers who are tourists is high” because “Dubai is a transit point that gets impulse business – less price resistance.” Tourists who shop are generally more relaxed than local shoppers. They don’t mind waiting for a sales assistant. They usually aren’t racing to a business meeting or to pick up children from school and worrying about traffic.

Who buys in Dubai

Among the 13.2 million visitors to Dubai last year were more Chinese that ever before, 25 percent more than in 2013. They spent around USD 488 million in 2013 and are expected to reach USD 781 million by 2023, according to an article in The National. They account for 13 percent of duty free revenue at Dubai International Airport while comprising 5 percent of total passengers.

“We’re witnessing a shift in the type of visitor that will spend their dollars in Dubai,” says Consolo. “Could we see more Asians and Africans hitting up the shopping malls? Absolutely! Could there be a rebound in the number of Russians travelling to Dubai? Certainly. In fact, Dubai’s tourism chief predicts a shift by the third quarter.”

Beyond that, the answer to who buys in Dubai is everyone. “The well-heeled, discerning shoppers are looking for the best of everything and will remain loyal customers of top luxury brands,” concludes Consolo, adding that looking at the “striking shopping bags on the arms of those strolling the retail district…you’ll see why it’s the Arabian answer to Rodeo Drive and Fifth Avenue.”