The soft retail demand and prudential consumer shopping patterns is causing a lot of concern among majority of the retailers in Dubai on the eve of the emirate's biggest shopping festival.

The latest figures from Datamonitor’s monthly Recovery from Recession consumer survey show that UAE consumers are still doing it tough.

Consumers are particularly unwilling to splash out large ticket luxury items. About 58 per cent of UAE consumers claim to have cut back on big ticket and/or luxury items like cars, designer clothes and holidays and a sub-set simply cannot afford to spend big.

About 20 per cent of ‘non savers’ have exhausted all previous savings while nearly two in every five consumers (39 per cent) consumers claim to be prioritizing debt repayment, the survey said.
 
According to the survey, only five per cent of consumers claim to have increased spending on goods and services over the last six months following an improvement in personal financial circumstances.

Most consumers are still trying to live within their means, are paying down debt, and are taking active measures to control discretionary expenditure, the survey added.

Retailers will need to focus on value-centric marketing, shop layout and atmosphere and in-store merchandising to maximize sales during the shopping event, said experts.

Despite rising share markets, Datamonitor figures show that slightly more than half of UAE consumers (55 per cent) feel that they are significantly (23 per cent) or at least slightly (32 per cent) worse off than they were six months ago while only one third (33 per cent) indicate that they have experienced no material change.

Figures are only marginally better than those observed in Q2 and Q3 2009 when 57 per cent and 59 per cent of consumers respectively indicated feeling worse off than six months previous.

Only a small minority (13 per cent) feel their financial circumstances have improved over the last half of 2009. Meanwhile, economic sentiment has not improved significantly since August, the survey added.

As a result of financial concerns, UAE consumers are not consuming as much as retailers would like, said Datamonitor analyst Richard Adams.

“70 per cent of UAE consumers now claim to be actively taking measures to control expenditure; 40 per cent claim to be consciously making lifestyle changes to save money. Only a minority (11 per cent) feel now is the time to take advantage of weak retail prices,” Adams commented.

According to him, industry players will need to find, and communicate, the value ‘sweet spot’, the point where expectations are exceeded at a given price, if they are to make the most of the DSF.

'About  40 per cent of consumers report currently shopping around for best price all or most of the time so price visibility is relatively high,” he pointed out.

Astute marketing, promotions and product bundling, rather than simple price competition, appear to be key ingredients for DSF success, he added.

According to Adams, the internet should not be overlooked as a medium for communicating value-centric messages.

'While only about 8 to 9 per cent of UAE consumers report consistently buying online to save money, 38 per cent of UAE consumers claim, according to Datamonitor figures, to be regularly using price comparison websites.

“Consumers are turning to the internet to find information about product pricing and to establish formulation credentials” Adams revealed.

“Marketeers should consider utilizing social media sites and incorporating internet-based WoM marketing into [marketing] campaigns. Consumer trust in corporates has been negatively affected by the economic downturn and consumers are much more receptive to peer reviews and consumer generated content in the broad,” he added.

According to Adams, store and channel behaviours have also changed significantly over the last 9 months. “Not only are UAE consumers visiting a broader range of retail destinations, but Recovery from Recession data shows many (55 per cent) have adopted auto-pilot shopping behaviours, only purchasing items on a pre-determined list”.

'In the lead-up to the DSF, shop layout and atmosphere must be as compelling as possible. In-store merchandizing should also be utilized to take advantage of brand-switching behaviours and to stimulate demand more generally,' he added.-TradeArabia News Service