UAE Retail Sector Report 2024-2028 | Market Trends & Growth Insights

The UAE retail market is one of the largest in the Middle East, driven by strong consumer spending and tourism. In 2023, retail sales exceeded $100 billion, and the market is projected to reach $139 billion by 2028, growing at a CAGR of 5.4%. Key growth drivers include a rising population, high per-capita income, and the UAE’s reputation as a global shopping hub.

Key Market Insights

• Retail Market Size: Estimated at $100 billion in 2023, forecasted to hit $139.1 billion by 2028.
• GDP Contribution: Retail and wholesale trade contributed AED 206 billion (~$56 billion) in 2022, about 12.7% of UAE’s GDP.
• Employment: Over 250,000 jobs in the retail sector, highlighting its role as a major employer.
• E-commerce Growth: Online sales are projected to reach $17.2 billion by 2027 (8.4% CAGR), reflecting the shift to digital shopping.

Retail Market Trends & Consumer Behavior

1. Experiential Retail:

   • Malls are evolving into entertainment destinations, combining shopping, leisure, and dining experiences.
   • Brands are hosting in-store events to drive foot traffic and enhance engagement.

2. Rise of E-commerce & Omni-Channel Shopping:

   • Online shopping is growing rapidly, with retailers integrating digital and in-store experiences.
   • Webrooming (Research Online, Purchase Offline - ROPO) is a key consumer behavior in the UAE.

3. Social Commerce & AI-driven Personalization:

   • Platforms like TikTok Shop & Instagram Shopping are driving sales through influencers.
   • AI-powered dynamic pricing, personalized loyalty programs, and product recommendations are enhancing customer experience.

4. Shift Towards Smaller Stores & Convenience Shopping:

   • Retailers are opening small-format stores and express outlets (e.g., Carrefour) to cater to quick and frequent shopping trips.

5. Luxury & High-End Retail Remains Strong:

   • The UAE remains a prime destination for luxury shopping, attracting high-net-worth individuals and tourists.

Investment & Market Growth

• The UAE government has launched stimulus packages (Dubai’s AED 50 billion plan) and visa reforms to attract tourists and expatriates, boosting retail sales.
• Retail sales in the GCC are expected to reach $386.9 billion by 2028 (4.6% CAGR), with the UAE leading the market.
• Traditional retailers are partnering with digital platforms, and e-commerce giants are acquiring niche players to expand their reach.

Retail Workforce & Talent Challenges

• Skill Shortage & High Turnover:
  • The retail industry faces a lack of skilled workers in digital retail and e-commerce.
  • 51% of luxury retail employees in the GCC plan to leave their jobs, indicating retention challenges.
• Limited Local Workforce Participation:
  • Only 4% of skilled private-sector jobs in retail were held by Emiratis in 2023.
  • The government is pushing Emiratisation policies to increase local workforce participation.

Challenges & Risks

• Tech Adoption Costs: Small retailers may struggle to keep up with AI, AR, and e-commerce innovations.
• Retail Space Saturation: The expansion of malls and shopping centers could lead to oversupply in some areas.
• Shifting Consumer Expectations: More shoppers demand fast, digital, and personalized experiences, requiring continuous investment.

The UAE retail sector is poised for steady growth, driven by tourism, e-commerce expansion, and government incentives. While challenges such as talent shortages, digital transformation costs, and market saturation exist, the sector’s resilience, adaptability, and innovation ensure long-term success.

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