Dubai: UAE retailers are placing early and bulk orders for the end-of-year shopping frenzy that consumers – residents and tourists – are likely to engage in. Because after two years of juggling supply delays during the holiday shopping season, retailers want to remove any possibility of not having enough stock when shoppers call.
There is another factor behind retailers starting their year-end orders now. The word is that many of those who come in and out of the United Arab Emirates to watch the FIFA World Cup in Doha will stay longer in their hotels here even after the matches have finished. This would mean more holiday-related spending for retailers in the UAE.
“Travel agencies and airlines are already telling us that booking demand from mid-November (when the World Cup starts) is unprecedented,” said the CEO of one of the biggest networks of local fashion retailer. “These are high-spending arrivals, and no retailer, F&B, leisure or entertainment service provider can miss them.
“Combined with the usual year-end sales demand from residents and non-World Cup tourist arrivals, December 2022 is going to be exceptionally busy. This is why retailers need to plan their inventory purchases and finalize delivery schedules right now. Delays will hurt.
“We are already seeing this happening with new car sales in the UAE, where the waiting period would still be 3-6 months on most models.
Apple’s way with iPhones
Amidst all the talk of increased spending, there are worries about inflation and what that would mean for the cost of goods. The strategy of brands and retailers is to keep prices roughly constant, as much as possible. Something that Apple followed with its latest iPhone 14 lineup.
“Despite the 14’s additional features, Apple’s pricing is what makes the most sense this year – and iPhone sales are doing well despite tightening consumer spending,” the CEO said. “Retailers and brands in other categories will do well to match this.”
Can retailers absorb the costs?
But can retailers afford not to pass on the higher costs? “We expect inflation to stay with us for some time,” said Baris Oran, chief financial officer of US-headquartered GXO, one of the biggest names in the global space. contract logistics. “More than ever, companies are focusing on reducing risk in their supply chains and looking for strategic, reliable and long-term solutions to optimize their operations.
“The traffic jams we have all seen are mainly due to backups at the port and the difficulty of getting goods to their final destinations. We see more and more companies looking to make more strategic decisions for nearshore products. This can provide them with more predictability and agility in the supply chain.
This is exactly what major retailers in the United Arab Emirates are doing, in collaboration with their partner brands. What no one wants to see is in-demand goods blocked in ports in other countries ahead of the busiest shopping season of the year.
“New car owners might be willing to wait months for delivery – but few other categories can say the same about their customers,” said a Dubai-based retailer. “And certainly not when it comes to fashion.”
Supply chains have been tested like never before, first with the pandemic, the dramatic shift to e-commerce, then labor issues and inflation, and now the situation in Ukraine . These challenges have shaped the future of our industry and they have changed the way we work with our customers.
– Baris Oran, CFO of GXO Logistics, headquartered in the United States
The picture remains mixed when it comes to container availability. While shortages are not as severe as they were during the height of the pandemic phase, especially those from China, there are still other issues that shippers have to deal with.
“Container prices for the remainder of 2022 will be determined by multiple factors – namely rising inflation, consumer confidence, Covid restrictions, labor shortages and/or disruptions, port congestion,” said Rosh Manoli, vice president of freight forwarding at Consolidated Shipping Services. “Shipping rates from Asia to the Middle East have dropped over the past month.
Demand from Western markets is weakening this year, which has significantly reduced shipping rates over the past two months despite some of the ongoing disruptions. Historically during this period there is a peak season surcharge before Chinese national holidays – but there is no sign of an increase being applied this year. »
This brings some relief to retailers in the UAE and, by extension, shoppers as well. If shipping costs are on the slide, it will show up in some form when shoppers look at prices for their year-end indulgences. So, will December 22 be a breakthrough month for consumer spending?
Shipping rates from Asia to the Middle East have dropped over the past month, mainly due to lower bunker charges
– Rosh Manoli of Consolidated Shipping Services