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Optimism to drive holiday spending in UAE

Dubai: Many consumers in the UAE will be approaching the end of the year with “cautious optimism”, but retailers overall can expect bumper sales during the holidays, experts told Gulf News.

For many people, December is the time of year when household budgets tend to go overboard. They buy gifts for Christmas, throw parties or travel home for the holidays.

In the United States, a quarter (22 per cent) of consumers have already started buying for Christmas and Nielsen expects that the holiday shopping season will be “marginally stronger than last year”. This despite many Americans (68 per cent) who feel they are still in a recession and 20 per cent of them saying they have no cash to spare.

Things in the UAE are looking better, as residents are bullish about the economy. “In the UAE…consumers are cautiously optimistic about economic progress on certain fronts,” said Arslan Ashraf, Nielsen managing director at Arabian Peninsula.

Ashraf said that although consumers are cautious about the global economic challenges and geo-political situation in the region, they will still open their wallets during the holidays and spend more on new clothes and gadgets.

Research data showed that UAE consumers’ discretionary spending intentions increased across some categories measured in the third quarter of 2013 compared to the previous quarter. More people (27 per cent) plan to buy new clothes and technology products (22 per cent), an increase of 4 percentage points each.

“Being an optimistic nation, it is expected to find UAE consumers planning to increase their spending across some industries measured; retailers should capitalise on this especially during the end-of-year holiday season,” Ashraf told Gulf News.

Colin Beaton, managing director at Limelight Creative Services, noted that the UAE market is different from the US, where the effects of the global economic crisis were much deeper and broader and the economy is still very fragile.

Consumers are generally cautious about inflation and the cost of living, yet many believe in the strength and resilience of the UAE’s platform for growth. “Optimism in the UAE, Dubai in particular, is very strong right now and we believe that holiday spending this year will be strong,” Beaton told Gulf News.

“Predictably, we see more caution from the middle and lower income earners as would be expected, their ability to withstand price shock is lower and their ability to increase their household income is limited,” he added.

An expatriate in the UAE, Rose Manaog, said she has been feeling the financial squeeze recently, so the month ahead is going to be a normal period, as far as spending is concerned. “I don’t think I will be spending more this year compared to last year. Last year, my parents were here in the UAE, so my expenses doubled, but this year, it will just be a normal month for me,” she said.

“I’m feeling a bit tight in terms of finances as I just got back from my annual vacation in August,” she added.