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Consumer Confidence Index Falls for Third Time

DUBAI - The effects of the credit crunch are being felt by residents in the UAE with Consumer Confidence Index (CCI) dropping by 3.4 index points.

According to a recent research conducted by Bayt.com in conjunction with research specialists YouGovSiraj, consumer confidence dropped for the third consecutive time this year. While not the biggest drop recorded this year, the dip follows from continually waning levels of consumer confidence in the UAE throughout 2008.

CCI is a measure of consumer expectations, purchasing pattern, job opportunities, cost of living, the retail and sales sector respectively.

Khaleej Times contacted some leading retailers to see how the consumer confidence shows in the retail business.

“It will be wrong to say that everything is flowing smoothly and according to the budget. Obviously there’s decline in the sales, especially gift items and other consumer electronics, compared to household items where the sales have proved to be positive,” said Ajai Dayal, GM Retail and Marketing, Esa Al Saleh Al Gurg, Group, the various brand dealer including Better Life and Idesign.

Likewise, Jay Raj Roddam, CEO, Jashanmal, puts in, “The retail sales including wholesales is doing well, but anything linked with luxury commodity, is definitely affected by the ongoing credit crunch and the sales for these items has declined from five to 10 per cent. Its business as usual for the sales of household appliances and essential commodities, he disclosed.

“Times of economic instability have a marked effect on residents in a particular country, and it is very important to find out how people are really feeling about the current business and economic climate by gauging their opinions,” explained. Bayt.com’s Regional Manager, Amer Zureikat.

“Although the indicator will not predict economic performance, it does provide a very insightful look into how consumers are truly feeling. The fact that the numbers have dropped in terms of willingness to spend suggests that consumers are exercising caution during this period of instability. This data will help marketers and other companies to sell their products during this time, as those brands that offer excellent value to consumers when they need it most, will be winners during these challenging times,” said Nassim Ghrayeb, CEO, YouGovSiraj.

Data for the October/November 2008 Consumer Confidence Index Survey was collected online between the period of October 27 and November 24, 2008, with 13,733 respondents from across the UAE, KSA, Qatar, Oman, Kuwait, Bahrain, Syria, Jordan, Lebanon, Egypt, Morocco, Tunisia and Algeria. Males and females aged between 20 and 62, of all nationalities, were included in the survey.

Of the surveyed countries, Bahrain, followed by Oman, recorded the greatest decreases in the propensity to consume index, dropping 18.3 and 17.6 points.

The UAE fared little better, dropping by 8.0 points, while the Levant countries of Lebanon, Syria and Jordan again showed improvements from the previous wave, most notably in Lebanon, which moved up 19.8 points. The data suggests a continuing wave of economic stability in these countries. Employee confidence in the local job market and their attitudes towards their work form an important part of the CCI. The most significant drop occurred in the UAE, which moved down 12.0 index points.

· aneela@khaleejtimes.com