Skip links

How is Coronavirus Changing the Retail Landscape in the Middle East?

UAE’s luxury retailers felt the pinch way before the response to contain the novel coronavirus has crippled several businesses in the region. The virus outbreak in Wuhan led to a drastic reduction in big-spending as travel restrictions and lockdowns in different cities of China kept Chinese people from visiting UAE.

The local retailers were expecting a high number of tourists from the mainland in a bid to celebrate Chinese New Year on January 25th. Unfortunately, it never happened. While there is no official data to affirm the exact number of visitors in 2020, industry sources believe that countless tours have been canceled owing to the COVID-19 outbreak.

Together, Chinese buyers make up 40% of the international market for luxury goods. So even if just 5% of that takes place in the UAE stores that’s a substantial amount, said senior personnel of a leading luxury group in Dubai.

According to the retail sector sources, the drop in sales was between 40 to 50% compared to the same period last year.

However, Dubai’s fabled gold market didn’t experience much disruption as buying from Indian tourists made up for the Chinese drop, stated a jewelry retailer. But that was before the governments throughout the GCC region took stringent measures to contain the virus.

How Consumers in UAE & KSA Responded to the COVID-19?

Here’s how the mobility declined when the UAE and Saudi Arabia closed their borders and urged people to self-isolate.

Clearly, these figures show that many people are afraid to go out in crowded places. It has put many businesses at risk. For instance, the beauty and personal care market that worth AED8,398 million in the UAE and SAR19,635 million in KSA back in 2019 has greatly suffered due to the decline in mobility.

Which Businesses are at Great Risk during Coronavirus Spread?

Consumers in the GCC prefer spending on experiences than things. This has changed dramatically ever since the virus has found its way in the region as entertainment sites are now under complete lockdown. However, retailers with a broad set of offerings remained less affected as compared to mono-brand shops. For example, cinemas, hotels, and airlines are badly hurt by the outbreak.

Similarly, luxury brands across the Middle Eastern countries are suffering big time in the wake of this crisis. Why? Luxury consumers are less likely to purchase high-priced products online. So things aren’t going to get better until the borders remain closed, and tourism stays feeble.

Can Brick and Mortar Stores Survive COVID-19?

Brick and mortar establishments that have lost traffic needs to embrace a slightly long term strategy to survive COVID-19. It would be to draw consumers back into stores with an enticing sale once the risk subsides. This is something that has been tried and tested in Singapore after the SARS diminished.

However, in the short-run, you can come up with a website or mobile app to take your offerings online and reach a wider audience.