It’s boom time for discount stores in the land of luxury

In a country known for its love of the lavish and luxurious, discount stores are making a surprising impact on the UAE’s retail sector, with a spike in consumer spending during the past few months.

As the region has been rocked by salary cuts and job losses as a result of the coronavirus pandemic, insights from credit card company Visa reveal that, in non-food categories, discount stores, home improvement stores and pharmacies are the three categories with the largest growth in sales since lockdown measures were introduced.

At the same time, higher ticket value categories, such as apparel, accessories, electronics and department stores, saw double-digit drops in spending, according to Visa’s data.

This change in consumer spending habits can be partially attributed to the economic slowdown brought on by Covid-19, the company said, adding that the trends have been echoed in Saudi Arabia and Pakistan.

“We are seeing that the health crisis, income pressure, and more time at home is driving up pharmacies, discount stores and home improvement,” said Akshay Chopra, vice president of innovation and design for Central and Eastern Europe, Middle East and Africa at Visa.

Chopra was speaking at the Future Retail Experiences media virtual webinar when Visa shared its data to support the retail sector in navigating the “new normal” where both the online and brick and mortar retail channels need to be seamlessly integrated.

Brands for Less co-founder Yasser Beydoun recently revealed that the company’s online business increased by 50 percent during the coronavirus crisis.

Increased spending on home improvement is also unusual in the Arab region, where ease of access to cheap handymen and repair people tends to make consumers snub retail outlets.

“Home improvement is very interesting because people are now spending so much more time at home that they are finally getting around to fixing thing they haven’t had the time to before. Also, they are less comfortable in bringing in outside help so DIY rules in this situation,” said Chopra.

Tighter household budgets could be a reason behind the rise in spending on home improvement as consumers save money by honing their DIY skills.

In its quarterly review earlier this month, the UAE’s central bank indicated that the country’s economy will suffer a deeper contraction this year than first estimated, dragged down by disruptions caused by the coronavirus pandemic.

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