A direct correlation exists between the gross domestic product of a country and the relationship to the success of business in general in that country. When the GDP of a country improves, the welfare of the country improves. GDP isone of the most important indicators used to analyse the health of an economy.
The International Monetary Fund projected UAE GDP growth in 2017 to be 1.3 per cent, which is modest; the last year of such modest growth was in 2010. In 2018, however, the IMF has forecasted a growth of 3.4 per cent.
A doubling in the UAE’s economic activity in 2018 is forecasted by the IMF. This increase is attributed to a more stable pricing of West Texas Intermediate oil oil in the range of $60 per barrel. Additionally, growth of the UAE’s non-oil sectors and the region will contribute to the acceleration of investment for projects such as Expo 2020 Dubai, infrastructure projects, increased global trade, increased tourism and peace in the region.
The retail industry in the UAE will be one of the leading industries to benefit from the increase in GDP forecasted by the IMF. The retail infrastructure in the UAE includes some of the most sophisticated shopping environments in the world. The local population in the UAE and tourists visiting here have the best choices available globally for selection, quality of offering and highest level of execution for many of the retail environments. When the population in the UAE believes that their financial future will be brighter and more secure today and tomorrow, then these shoppers will feel inclined to purchase more retail goods. Given the IMF’s forecasted growth, the retail industry is set to flourish again in 2018.
Other factors aside from the anticipated growth in GDP are also at play, giving rise to greater optimism for retail sales in 2018, says McKinsey & Company in their latest report on the global fashion industry released at the end of November 2017 delivered in conjunction with the Business of Fashion.
A primary shift in the retail industry in 2018 will herald the end of the era for North American and European dominance of retail sales for apparel. Given the power of Asian retail markets, with more than half the global online retail sales and with over 65 per cent of the world’s e-commerce leaders such as Alibaba, Asia has taken the lead in retail. The North American and Western European dominance of retail globally will wane in 2018. Asian players in the retail industry will continue to assert their leadership on a global scale through investment and expansion going forward.
The top 20 per cent of retailers globally provides nearly 150 per cent of the economic profit of the world’s retail industry. Inditex, Walmart, Amazon, Alibaba, Carrefour, Metro Group, Tesco and Costco are a few of the leading retailers globally providing the majority of the economic profit. The largest retailers are forecasted to control an even larger stake in the global economic profits in 2018 through their scale and dominance.
Greater personalisation by retailers, both online and in bricks and mortar retail, will occur in 2018. Consumer values will be understood by artificial intelligence; AI will then be used to tailor recommendations, engage purchasers, influence and personalise purchasing decisions. In the year ahead more data on each of us will be used to create a purchasing experience custom-tailored to our expectations, likely without our knowledge.
Online platforms will become the consumer’s obsession before stepping out of their home to make any purchase. The decisions we make as consumers will be made and will take place on our mobile technology. In 2018, mobile technology will become even more important to consumers for both online and brick-and-mortar retail businesses. In 2018, the changing retail industry will continue to be unpredictable, which is now the new normal. The good news is that we see our economic cycle improving in the region and look forward to solid sustained growth in the retail industry in 2018.