While some may look at 2018 as a slow year in terms of UAE retail card spending, actual data collated by Mashreq bank’s merchant acquiring business shows otherwise. Consumer card spends recorded a 6% growth in 2018, compared to 2017. The biggest winner was e-commerce, which saw spending increase by 48% compared to 2017.
In terms of sector-wise performance, growth was driven by food and beverage, which increased by 20%, followed by a 16% growth in supermarket spends. Hospitality continued growing with a modest increase of 2%.
The retail segment comprising clothing, shoes and bags showed a growth of 3%, although specialty perfumers revealed a decline of 6%. Among sectors that remained unchanged was jewellery, shares Pankaj Kundra, SVP, head of payments at Mashreq Bank.
Sectors facing negative growth included electronics and automobiles, which fell by 15% and 9%, respectively. These sectors typically have a very high price per transaction, which indicates that customers have shied away from large ticket purchases.
According to Kundra, 2018 was also a breakthrough year for contactless payments with a quarter of all UAE transactions being contact-less. This was driven primarily by both the increased penetration of contact-less cards and usage of digital wallets.
Commenting on the strong growth in e-commerce, he adds, while brick-and-mortar merchants have already expanded their product offering into the e-commerce space, this expansion may be at the cost of the cannibalization of their traditional business, through the equivalent growth in their e-commerce channel. However, merchants who have been unable to expand their offering into the e-commerce space can expect to lose business to innovative and multi-channel competitors. The growth of e-commerce marketplaces, such as SOUQ and noon, is encouraging increased confidence in buying online, which in turn is driving this growth. The UAE is also seeing a rapid rise in the use of e-commerce service providers like ride aggregators, who have delivered growth of 12%, and food delivery services have seen a growth of over 100%.
Further, there was a sharp jump in the daily average sales volumes during November’s White Friday sale. The volumes during the period were 79% higher than the daily average for the rest of the month. The highest volume categories during the period were apparel, dining, services, department stores and jewellery. The spending was high for both e-commerce merchants and across shopping malls.
Growth was seen in international spends too – 25% of card spending in the UAE is made by international travellers. This international spending grew by 6% during 2017. In 2018, visitors from Saudi Arabia accounted for 20% of overall international spending followed by China, the US, the UK, Kuwait, Russia and India.
“For 2019, as we gear up towards Expo 2020, we are very optimistic about sustained growth in payments volume in the UAE,” Kundra states. “We have identified four key trends that we anticipate will drive transaction volumes – continued e-commerce growth, contactless gaining more traction via increased usage of digital wallets, cash-to-card conversion in segments like B2B payments, education, government, real estate and sustained increase in international spends.”
The first two days of the 25th edition of Beautyworld Middle EastOctober 6, 2021 | By RetailME Bureau
Words by Farimah Moeini, Snapchat Head of Industry – Retail and Travel TheJuly 5, 2021 | By RetailME Bureau
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