Feeling the pinch

UAE grocery sales growth slumps in 2009

The growth of mass grocery sales (MGR) in the UAE has slowed dramatically in 2009 as consumers cut back amid the impact of the global economic crisis, a new report has revealed.

Following years of double-digit growth to 2008, Business Monitor International's UAE Food and Drink Report for Q1 2010 said it saw growth this year at just 3.3 percent.

"The year so far has been a humbling one for some of the country's leadings retailers, as consumers have been forced to rein in spending," the report said.

BMI added that leading hypermarket and supermarket retailers like EMKE Group and Spinneys Dubai have had to review their pricing by
placing a greater emphasis on value.

But the research company said that both remained well placed to capitalise on a forecast 33 percent increase in headline MGR sales to AED7.28bn ($1.98bn) through to 2014.

"While consumers have undoubtedly lost some of their appetite for premium products, the downturn has not curbed the structural development of the MGR industry, which is still less developed than most comparably high income states," BMI added.

Through to 2014, BMI said it expected industry wide convenience
store sales to outperform wider MGR sales, strengthening 54.5 percent to AED0.43bn.

"Despite weaker near-term demand for premium products, a strong forecast recovery (we expect GDP growth to register 3.6 percent in 2010) and untapped multi segment store launch potential continues to provide opportunities to existing retailers," the BMI report added.

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