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Online retail sales in UAE strengthen in March

Online retail sales across the UAE witnessed a significant growth, as the country continues to tackle the challenges caused by the ongoing Covid-19, KPMG has said in its latest report.
However, luxury and fashion retailers saw their sales taking a hit, as a result of malls being closed for several weeks. KPMG's 'Navigating the pandemic' report showed that online retail, particularly groceries, have witnessed significant growth. Grocery retailers witnessed a 20-40 per cent increase in sales during the first half of March, compared to the same period last year. Online marketplaces also saw surging demand, particularly for laptops/tablets, which are online learning and remote working requirements, as well as gym equipment, which saw a surge due to the closure of gyms and fitness centres.
On the other hand, sales at most luxury and fashion retailers declined by 20-50 per cent in the first half of March. Across F&B concepts, sales have been down by 30-80 per cent. Several prominent non-food retail businesses, which have been seeing a decline since February, indicated that sales in the first half of March were down by as much as 50-60 per cent compared to the same period last year. Subdued consumer sentiment and volatility in gold prices contributed to declining sales in the jewellery and watch segment.
Anurag Bajpai, partner and head of Retail at KPMG Lower Gulf, said: "The Covid-19 outbreak has reshaped the UAE's consumer landscape, disrupting businesses and impacting socio-economic health. With no end to the current crisis in sight, businesses that are agile and already thinking of various future scenarios are better positioned to survive and potentially thrive."
Business continuity is a key near-term challenge for retailers right now, as operational costs are being incurred against low revenues, straining cash flows. Retailers are working with banks to defer payments, roll over lines of credit and activate additional ones, while also renegotiating business terms with suppliers. The UAE government has already announced a substantial stimulus package to support the national economy and ensure business continuity, while various mall operators have offered rent relief.
For UAE consumer and retail businesses to weather the Covid-19 storm, KPMG advises managing demand fluctuations, evaluating current cash positions and assessing the liquidity profile and potential changes in working capital dynamics. Retailers must have a plan for the health and safety of their employees and consider managing their workforce under evolving scenarios. While it would be difficult to predict recovery, businesses are relatively more upbeat about the last quarter of the year. Retailers that have been slow to digitalise will now need to swiftly develop an omni-channel strategy.
- rohma@khaleejtimes.com