Global retailers bet big on Dubai’s soaring consumer confidence

DUBAI: Limited Brands and American Eagle Outfitters are among global retailers seeking a foothold in Dubai as consumer confidence in the emirate reaches a seven-year high.

Sales in Dubai are up about 10% this year, according to store companies such as Rivoli Group, which sells watches from brands including Tissot, Burberry, Gucci and Cartier. U.S. retailers, traditionally reluctant to enter the region, are coming to Dubai as sales in their domestic markets and other fashion capitals remain subdued.

“There are more people in the malls here in Dubai than anywhere else in the world,” said Sheeraz Hasan, founder ‘Millions of Milkshakes,’ which will open its first branch outside the U.S. this year. “We wanted to show the West that Dubai is the place to be.”

Consumer confidence in the United Arab Emirates, the second-biggest Arab economy, is the highest since 2004, according to MasterCard Worldwide Index of Consumer Confidence released Aug.

18. Confidence was 95.6, compared with 73.6 six months ago, exceeding markets such as China and India. The score is calculated with zero as the most pessimistic and 100 as most optimistic. Dubai is the second-most attractive emerging market for retailers after China, in part because high disposable income, according to management consulting firm A.T. Kearney.

Retail accounts for 30% of gross domestic product in the emirate, home to about 40 shopping malls, Standard Chartered Bank Plc estimates. Dubai’s malls feature an indoor ski slope, an aquarium, ice rink, and a ‘dancing’ fountain, similar to the Fountains of Bellagio in Las Vegas.

Williams-Sonoma Inc., the 55-year-old housewares chain that owns Pottery Barn and Pottery Barn Kids, opened the first stores outside of North America and Puerto Rico in the emirate last year. Bloomingdales, owned by Macy’s Inc., also opened its first store outside the U.S. in Dubai in 2010, while Victoria’s Secret and American Eagle Outfitters opened stores in the emirate earlier this year.

REGIONAL UNREST

Visitors from Gulf Arab nations and China are coming to the U.A.E. as political unrest in other Middle Eastern countries diverts tourism. Uprisings in the region this year have toppled governments in Egypt and Tunisia and sparked conflict in Libya, Syria and Yemen. In 2009, the U.A.E. and China signed an agreement to facilitate travel between the two countries which has helped boost Chinese tourist number to the Gulf nation.

The possibility of a “second dip” globally could hurt sales, said Daniel Starta, managing director of A.T. Kearney in the Middle East. However, “only catastrophic drops in oil price or truly fundamental stability issues that challenge both emerging and mature markets would likely have an impact on the regional retail sector,” he said.