Apparel & footwear leading Dubai’s retail

April 17, 2016 | By RetailME Bureau

The apparel and footwear market in Dubai is estimated to be worth $12.8 billion, registering 5.5% annual growth in sales since 2010, indicates a report by the Dubai Chamber of Commerce and Industry based on data from Euromonitor International.

The category is mainly composed of apparel, footwear and sportswear, with apparel leading total sales in both areas of value and growth rate. The emirate’s apparel sector in Dubai is valued at $10.4 billion, recording CAGR of 5.8%. The report, however, states that sales of the maturing segments of footwear and sportswear have flattened in recent years, and are roughly estimated at $2.4 billion and $1 billion, respectively. Supply has kept pace with rising demand, as retail space expansion continued in 2015 with the launch of new malls and new brands.

“Growing economic prosperity, steady population growth and rising incomes are driving sales in major retail segments of Dubai. Dubai Chamber’s sectoral report highlights the vibrancy of the emirate’s retailing industry and its contribution to the overall economy. The report represents Dubai Chamber’s commitment to supporting the development of businesses, and our efforts to promote Dubai as an international business hub,” says Dubai Chamber president and CEO Hamad Buamim.

The Dubai Chamber report points out that while Dubai is known as a leading luxury shopping destination in the region and a major hub for premium brands, mid-priced brands are also starting to gain popularity. This could be attributed to the rise in the numbers of budget-minded tourists who seek to stretch their dollars.

At the same time international brands have launched new stores in the city to cater to the fashion conscious consumers, and are setting sights on regional growth after getting a feel of the Middle East fashion taste and needs through their presence in Dubai.

Dubai Chamber expects positive consumer confidence and increased tourist spending to continue to drive growth for Dubai’s retail activity in the medium term. It said in the report that sales of apparel and footwear in the emirate are expected to reach $13.5 billion this year, and is set to enjoy growth at a CAGR of 6.6% until 2020, when sales are forecast to hit $17 billion.

Sales under the apparel sub-segment are forecast to keep expanding at a faster pace of 6.9% annually to exceed $14 billion by 2020; whereas modest growth will be seen in the sales of footwear and sportswear, which are forecast to expand by CAGR of 5% and 5.6%, to reach $3 billion and $1.3 billion, respectively, by the end of the forecast period.

Consumer electronics

According to the report, sales of consumer electronics in Dubai are estimated to be worth $2.4 billion after expanding at a CAGR of 8.9% during the past five years. Portable consumer electronics was worth $930 million; computers and peripherals worth $902 million; in-home consumer electronics $621 million; and in-car entertainment worth $22 million.

The market for consumer electronics is gradually shifting towards more compact and multifunctional devices, particularly those offering internet connectivity. As a result, items such as tablets and smartphones are enjoying solid growth in sales. Significantly, the increasing quality, processing power and range of applications offered by these devices are taking market share from many other items, such as digital cameras, portable mp3 players, DVD players, laptops and desktops.

The report forecasts that Dubai consumer electronics market size will grow at 4.7% over the next five years to exceed $3 billion by 2020. The portable consumer electronics sub-category is expected to keep its lead with a 2020 sales forecast of $1.27 billion. Computers and peripherals sub-category is forecast to retain its size at $937 million. While in-home consumer electronics are expected to gain some traction to reach $900 million, no growth will take place under in-car entertainment sub-category with a sales forecast of $23 million.

In terms of future growth, in-home consumer electronics is forecast to lead the four sub-categories with a CAGR of 7.6% between 2015 and 2020, and portable consumer electronics is forecast to follow with a CAGR of 6.4%. Growth is set to cool off in the computer and peripherals category with a forecast CAGR of 0.9%, while in-car entertainment is only expected to retain its size with a CAGR of 0.7% over the forecast period.

Consumer appliances

Dubai’s market for consumer appliances is estimated to have grown at a CAGR of 8.2% from $390 million back in 2010 to reach an estimated $585 million in 2015.  The Dubai Chamber report said that the strong growth seen in sales volume of consumer appliances is driven by two major trends – a gradual move from renting to home ownership as well as a shift from unfurnished to semi-furnished property sales. The rising population in the country is also contributing to growth; and demand for certain product types receives strong support from tourism as well.

Sales of consumer appliances in Dubai are expected to grow at steady CAGR of 4.4% to hit $725 million by 2020. The growth in sales of major appliances is expected to outpace that of small appliances at a CAGR of 6.13% against CAGR of 2.83% for the latter, which have historically held a larger share in total sales value. Sales of small appliances sub-segment made up almost 53% of total consumer appliances sales in Dubai; however, this share is forecast to drop to 49% by the end of the forecast period.

Beauty and personal care

The report values Dubai’s beauty and personal care market at $1.2 billion, with 51% of this figure coming from the mass beauty and personal care sub-category, which generated $616.8 million in sales in 2015. Premium beauty and personal care is another large contributor to this market, with sales reaching $449 million in 2015, effectively making up 37% of the category’s total.

The report stated that the beauty and personal care market size is forecast to grow at 10% over the next four years to reach $1.7 billion by 2019. The mass beauty and personal care sub-category will retain its lead with sales forecast to hit the $900 million-mark by 2019, after growing at an expected CAGR of 9.9%.

In terms of future growth, colour cosmetics followed by deodorants are set to expand at the fastest rates of 14.9% and 14.3%, respectively, to reach $215.9 million and $108 million in sales by 2019. Meanwhile, the premium beauty and personal care sub-category is expected to boast robust growth at a CAGR of 10.9%, as sales are forecast to reach $678 million by 2019.

Home and garden market

The report points out that Dubai home and garden market has seen a relatively steady annual growth of 4.6% over the past five years, and is currently estimated to be worth $1.5 billion. The home furnishing sub-segment contributes around 80% of revenues for the entire category. Estimated at $1.2 billion in 2015, it has realised a steady 4.7% growth annually since 2010.

The home and garden market in Dubai is expected to grow at a steady 6.9% annually to hit $1.9 billion by 2019. Home furnishings sub-segment is expected to keep its dominance in the category with a forecast market value of $1.5 billion by 2019, which represents an effective CAGR of around 7%.

Homewares sub-segment is forecast to grow at CAGR of 5.8% and is set to surpass $199 million in value by 2019. Home improvement sub-segment is forecast to grow at CAGR of 6.5% and hit $150 million in sales by 2019. Gardening sub-segment is forecast to reach $33 million by 2019 after growing at CAGR of 5.5%.

Personal accessories

Dubai personal accessories market has enjoyed double-digit annual growth with CAGR of 10.3% over the past five years, and is currently estimated to be worth $4.1 billion. Over 53% of the market is in the form of jewellery sales, which generated over $2.1 billion in 2015, effectively realising a strong CAGR of 9.8% during the previous five years.

Sales of watches, valued at $1.2 billion, hold the second highest share at 31% of the total market. This sub-segment has also enjoyed healthy annual growth of 9.6% since 2010. Bags and luggage sales happen to be the third largest contributor with sales estimated at $581 million, making up 14% of the total market. This sub-segment has enjoyed the fastest growth pace in the entire category at a CAGR of 14.6%. Dubai writing instruments sales have been growing at a more modest, yet steady rate of 5.1% to reach $76 million in 2015.

Sales of personal accessories in Dubai are expected to grow at a strong CAGR of 12.9% to hit $7.4 billion by 2020. Growth is expected to take place in all four sub-segments with CAGR in the range of 7-to-16%.

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