Robust domestic spending, a thriving tourism industry and a growing number of expatriates have been key drivers for the UAE’s post‑pandemic retail market growth. One of the first places in the world to reopen its borders since the start of the Covid-19 pandemic, the UAE saw its consumer spending exceed pre‑pandemic levels by 4.5% in 2021, according to a report from the shopping mall, retail and leisure group Majid Al Futtaim.[1] In the first nine months of 2022, the UAE retail sector carried forward its strong momentum from the previous year, expanding by an estimated 15 % year‑on‑year.[2]
As businesses and governments start to rethink and upgrade their service provisions, one sector with vibrant post‑pandemic prospects is that of digital and automated business solutions. With government initiatives such as the UAE Digital Government Strategy 2025 in place alongside private investments and innovations, demand for integrated business solutions in the UAE has grown considerably in recent years.
HKTDC Research interviewed Ashish Panjabi, the Chief Operating Officer of Jacky’s Group of Companies, about the latest developments and trends in the UAE retail and business solutions sectors, as well as the emerging opportunities in this fast‑growing market.
Robust domestic spending, a thriving tourism industry and a growing number of expatriates have been key drivers for the UAE’s post‑pandemic retail market growth. One of the first places in the world to reopen its borders since the start of the Covid-19 pandemic, the UAE saw its consumer spending exceed pre‑pandemic levels by 4.5% in 2021, according to a report from the shopping mall, retail and leisure group Majid Al Futtaim.[1] In the first nine months of 2022, the UAE retail sector carried forward its strong momentum from the previous year, expanding by an estimated 15% year‑on‑year.[2]
As businesses and governments start to rethink and upgrade their service provisions, one sector with vibrant post‑pandemic prospects is that of digital and automated business solutions. With government initiatives such as the UAE Digital Government Strategy 2025 in place alongside private investments and innovations, demand for integrated business solutions in the UAE has grown considerably in recent years.
HKTDC Research interviewed Ashish Panjabi, the Chief Operating Officer of Jacky’s Group of Companies, about the latest developments and trends in the UAE retail and business solutions sectors, as well as the emerging opportunities in this fast‑growing market.
Expansion into Dubai
Jacky’s Group of Companies was established in Hong Kong in 1970 as a mail order business. In 1985, as opportunities emerged in the fast‑growing Middle East, Africa and South Asia markets, Jacky’s established a presence in Dubai as a secondary sourcing and trading centre. Over the years, the Dubai business has grown to the point where it is now Jacky’s main management and distribution hub for its conglomerate business, with over 600 employees.
Jacky’s operations currently cover the electronics retail, business solutions, distribution, logistics and organic food sectors, spanning regions including the UAE, Hong Kong, Singapore, Kenya, Tanzania and Uganda.
Jacky’s has been in the electronics retail business in Dubai since 1988. As well as running its own branded stores, which feature a wide range of consumer electronics, Jacky’s also operates Samsung Brand Shops in the UAE.
While Covid-19 dealt a heavy blow to retail worldwide, Panjabi observed that the pandemic also boosted demand for certain devices and appliances, saying: “When the world suddenly moved to work and study from home, we saw a boom in demand for products like laptops, tablets and headsets. As people spent more time at home, many renovated their houses as well, so home appliances like televisions, coffee makers, air fryers and vacuum cleaners became a lot more popular as well.”
Importance of branding
Panjabi highlighted the increasing importance of branding in the electronics retail market in Dubai, which boasts one of the most affluent populations in the region. Indicating that there has been a marked rise in market concentration across various product categories, he said: “In Jacky’s stores ten years ago, for example, we would have at least seven or eight brands for televisions, with a mix of various prices and quality. Today, it’s largely down to three or four higher‑end brands. We see the same with many other appliances and devices like cameras and laptops, with consumers gravitating towards certain brands and placing a higher value on these established brand names. It’s a similar pattern in our Samsung stores. In many other markets, their mid‑market appliances and devices tend to sell, but it is the premium segment that posts the biggest numbers in our stores.”
The gadgets and accessories segment, on the contrary, has become more fragmented. Panjabi pointed to the way a greater emphasis on functionality and value for money has made room for a wider variety of brands and products, saying: “Apple and Samsung, for example, no longer include chargers with their smartphones. The market for third‑party charging devices has grown because consumers realised that a charger is a charger. They focus on practical features such as wattage and the number of USB‑C slots, and they are willing to try newer brands they haven’t heard of before. We see this in other accessories, like dongles, headsets, wearables and Bluetooth devices, especially for work and study, where users often prioritise price and function over brand name.”
Future of retail
Although the rapid growth of e‑commerce has attracted much attention in recent years, Panjabi noted that physical retail remains the main driver of Jacky’s sales growth, saying: “Our retail sales continued to grow year on year throughout 2020 to 2022. Online sales increased exponentially, but they still only account for a single‑digit percentage of our revenue, because physical retail also grew quite a lot in the same period.”
Looking ahead, Panjabi believes that the retail industry’s shift towards an omnichannel future will lead to a changing, yet still crucial, role for the brick‑and‑mortar store. Illustrating what that role might be, he said: “E‑commerce will replace many things that used to happen in stores, but I believe the purpose of the retail store is to provide consumers with the experience they want in terms of branding and service. This was part of the reason why we took up the single‑brand concept for our Samsung stores – if a consumer wants a particular brand, they want to be treated with the right level of respect and see the brand’s full range of products in the store, without being distracted by other products and promotions. Jacky’s also places an emphasis on the service element of retail, having set up service desks in all our stores for repairs, maintenance and other enquiries, to offer a more fulfilling shopping experience to our customers.”
Panjabi added that in the UAE, the role of the shopping mall is evolving, saying: “On top of it being a place for shopping, the mall is becoming much more important as a location for entertainment as well. In the UAE, where the outdoor temperature often exceeds 40°C, people spend lots of time indoors. So apart from the usual cinemas, food courts and play areas, we are seeing a much more diverse range of experiences being offered in shopping malls here in recent years, be it VR experiences, roller coasters or even ski slopes. Malls have become incredibly popular for locals and tourists alike, and moving forward, the integration of retail and entertainment is a trend that is likely to continue.”
Panjabi believes that Dubai’s retail industry will continue to benefit greatly from tourism. Highlighting opportunities from the increasing number and scale of major international events held in the region, he said: “We definitely saw the impact of the Dubai Expo 2020 last year[3] in terms of spending and visitor numbers. Even for the recent FIFA World Cup 2022 in Qatar, hundreds of thousands tourists stopped by Dubai, with many basing their stay in Dubai and taking flights each matchday to watch a game in Qatar. Dubai certainly has the capacity to welcome international visitors in terms of infrastructure, hotels, flights, shopping malls, attractions and so on, and it’s benefitting from that fact. In one of Jacky’s busiest stores in the UAE, for example, as much as 30‑40% of sales come from tourists.”
Delivering business solutions
Jacky’s has expanded and diversified over the past few decades, establishing a strong foothold in the business solutions sector, supplying equipment such as 3D printers, cleaning and food delivery robotics, queuing systems and other product solutions to both public and private sector clients in Dubai. Panjabi outlined Jacky’s approach to adding value in their service provision, saying: “We make use of an ecosystem of partners in the region, where we can source various hardware and software solutions globally, while offering customised applications and customer support such as maintenance and repairs locally.”
Jacky’s has more than 20 years’ experience in providing specialised hardware solutions for governments, banks and enterprises. Outlining some of the key developments in the industry during that time, Panjabi said: “We started with queue management systems that issued paper tickets, and as technology evolved, we introduced screens and digital signage as well. Then, it became about collecting and integrating data from these systems, for instance the number of visitors, services they request, service times, customer satisfaction ratings and so on. There is a great emphasis on service quality in Dubai, especially for our government clients, so these indicators are important for ensuring that standards are met.”
Panjabi believes that, in Dubai, government initiatives play a key role in driving innovation and technological progress in the industry. Explaining how this process works, he said: “In many cases the [Dubai] government is actually more innovative and moves at a much quicker pace than the private sector. For example, the Dubai government had already gone paperless in December 2021, at a time where many private banks and enterprises had yet to move in that direction. For us providing the queueing system, this meant that we had to shift from paper ticket systems to digital ones like SMS or apps. With the government taking the lead to move onto digital platforms, we are seeing the private sector catch up too.”
Panjabi noted that the private sector has become more responsive towards digital trends since the Covid-19 pandemic, saying: “The simple QR code, for example, had existed for years on restaurant menus, but only when people had to avoid touching printed menus did the use of QR code systems become normal practice. Consumers and employees have opened up a lot more towards the digital space since the pandemic.”
Sustainability trends
Pointing out that the increase in consumer and government awareness towards environmental issues is noticeable from Jacky’s electronics retail business, Panjabi said: “People, particularly the younger generation, are asking more questions about considerations like trade‑in services, whether devices are recycled or resold, how electronic waste is disposed of and so on. The Dubai government is also doing a lot on environment issues, introducing a plastic bag levy this year, for example.”
Tapping into the market opportunities that spring from this increased environmental and health awareness, Jacky’s recently ventured into the packaged organic foods trade in the UAE. Explaining the decision, Panjabi said: “Many organic food brands in the Middle East target the premium segment, so the expensive prices make these products less appealing to the mass market. We try to offer organic products at a more affordable price for the average consumer. Much of our sourcing focuses on staples like oils, sweeteners and grains that people here consume every day, but don’t instinctively think of as an option for organic food. It’s different from what Jacky’s has been doing, but we see good potential in the market, and it’s exciting when you’re able to do something a little boring in a different way.”
Notes:
[1] Majid Al Futtaim, State of the Retail Economy: A Perspective Based on Q4 2021 and Full Year Market Data and Consumer Behaviour
[2] Majid Al Futtaim, State of the Retail Economy: A Perspective Based on Q3 2022 Market Data and Consumer Behaviour
[3] The Expo 2020 was a World Expo held in Dubai, UAE from 1 October 2021 to 31 March 2022, after being postponed due to the Covid-19 pandemic.