The UAE’s retail sector could see an e-commerce explosion within the next few years, according to industry experts that attended a thought leadership forum at London Business School last week. They also predict that, although online shopping enjoyed a slow start in the country, all of that is about to change dramatically.
Ahmed Galal Ismail, CEO of Majid Al Futtaim Ventures and an alumnus of LBS, says: “When compared with other emerging retail markets, Dubai has, so far, seen the lowest e-commerce penetration. In 2013, only nine per cent of shoppers we surveyed said that they have made online purchases in the past 12 months.”
He adds: “Today’s young shoppers have grown up with smartphones as their first screens. The UAE has some of the highest mobile and smartphone penetration rates in the world and studies have shown that, as people use the internet more and more for product research, transactions will inevitably be driven online.”
Even consumers that are not shopping online are increasingly using the internet to research different product offerings and compare prices. According to recent studies, Ismail points out that as much as 83 per cent of internet users in the Mena region logs on to the internet daily and 53 per cent searches for products online.
Euromonitor and Goldman Sachs estimate that 19 per cent of total apparel retail in the Mena region will be online by 2030. In fact, online retailers, such as NET-A-PORTER.COM, already cite the UAE and Qatar as two of their top world markets.
Local retail players are responding to these changing trends by following global brands online. According to Nisreen Shocair, president of Virgin Megastore and a former student of LBS, online retailers are gaining market interest and will eventually take market share from traditional retailers.
“Traditional retailers are giving online retailing more importance today than they did one or two years ago,” says Shocair. “This is a positive change, since the online channel provides another opportunity to service existing customers.”
Ismail concludes: “As the local market matures, we expect to see online retailers, such as eBay and Amazon, open windows to the UAE and the GCC region. This would contribute significantly to the growth of e-commerce in the region.”