The retail industry mechanism involves obtaining goods in large quantities directly from manufacturers or wholesalers and then reselling the products in smaller quantities to customers through retail outlets, bazaars or online. Consumer spending is crucial for the viability of any economy, be it developed or emerging one. Therefore, the health of the retail industry is an important economic factor in a country’s development.
The retail industry in UAE has a long-term potential as the local consumer market is constantly growing. Figures from Dubai’ Statistic Canter alone state that the city’s population is now crossing the 2,2 million mark, while the UAE population is estimated at about 8 million. Yet, despite the positive economy growth of 3.3% projected for 2013, there are short-term concerns about the impact of the UAE economic outlook in terms of weak credit growth. Lenders are still not very much favorable towards businesses and therefore constraining their expansion.
On the other hand, risk for investments persists and not much guarantees are offered to investors. The UAE retail market has yet to find the best way to maximize returns and minimize investment risk at same time.
Another major issue is the sluggish export sector affected by the widespread global crisis and its impact over the Dubai consumer. Basically that is the ability of producers and exporters to realize profit in the short term. A large portion of the exports to the Euro Zone, for example, disappeared during the past five years. Meanwhile, trade with Iran was sanctioned by international powers, causing a contraction in exports from UAE.
Forecast point that among all UAE retail categories, pharmaceuticals will be the top performer in terms of growth during 2013-2016 period. Pharmaceutical sales are expected to climb from $0.30bn to $0.40bn up by almost 33%. These projections are based on more retail industry opportunities brought by new population and healthcare spending data.
Elsewhere, the Euro Zone, the shaken economic situation got even worse after the release of a recent report focused on the region’s retail sector. The latest numbers from retail purchasing managers’ index PMI showed that the downturn in this key industry gained momentum in March. The acceleration came in respond to the pressure fallen over companies across the 17 countries in the union. This is a serious tendency seen in the retail industry over the course of the first quarter of 2013. In matter of fact it was the second-weakest since the corresponding three-month period four years ago. This downside trend was mostly on the back of the latest decline was the fact France’s retail sector. The country faced its worst month on record. At the same time Germany and Italy also stayed on the negative side.
The retail industry is ranks second among all US industries from a growth perspective. Hence it employs massive overall workforce. The yearly retail sales profit of the industry is more than 12% of the total trade volume of all US businesses. Also it accounts for over 11% of total employment in the states.
By now the broader markets have given signs of a better recovery pace. In respect, analysts started hoping that the economic scenario could improve even better. Recently the US Census Bureau posted its retail industry numbers for February. For a month period the US retail and food services sales climbed by 1.1% in February. On a year over year basis, sales raised to $421.4 billion in the same month. According to latest domestic retail sales data points this is a 4th consecutive rise on a monthly basis. In addition it is the first highest monthly rate since September last year.
