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UAE Fashion Industry and Online Shopping Research

The value of clothing sales in the UAE amounted to $12.3 billion in 2018, registering an annual
growth rate of about 4.8 percent, according to new analysis released by Dubai Chamber of
Commerce and Industry. The research also said the apparel retail sector is expected to see
stronger performance over the 2019-2023 period. The analysis identified menswear as the top-
performing category with the segment accounting for $6.2 billion worth of sales last year (53
percent), followed by womens-wear with 34 percent and children’s apparel (7 percent). It
added that the outlook for UAE apparel sales is expected to improve over the next five years as
economic conditions become more favourable and consumer confidence strengthens. The
research also said that online retail sales are witnessing strong growth, a trend expected to put
pressure on prices. Menswear is expected to register a compound annual growth rate (CAGR) of
about 3.8 percent between 2019 and 2023 to reach $7.8 billion in 2023 while womenswear is
expected to see a CAGR of 4.9 percent in sales over the same period to reach $5.2 billion in
2023, largely driven by stable footfall and an increasing in spend on modest fashion.
Meanwhile, children’s apparel sales are projected to register a CAGR of 3.7 percent over the
2019-2023 periods to reach $1 billion by 2023 (Bridge, 2018).

A report from the Dubai Chamber of Commerce reveals clothing sales amounted to about
$12.3bn in the UAE in 2018 – an increase of 4.8 per cent from 2017. The retail fashion sector is
expected to continue to see even stronger growth from 2019 to 2023, according to the report.
The report predicts womenswear will grow at a faster rate than menswear from 2019 to 2023,
at 4.9 per cent compared to 3.8 per cent. Womenswear is expected to be worth $5.2bn in
fashion retail sales by 2023. Menswear is expected to be worth $7.3bn. Childrenswear is also
expected to be worth $1bn by 2023. “The UAE has positioned itself as world-class retail hub
which continues to attract retailers and consumers from around the world, while global fashion
brands still view the country as a preferred entry point for establishing their presence in the
MENA region,” says the report (Mack, 2019). Increase in modest fashion spending, stable
footfall and uptick in online sales highlighted as key trends supporting apparel market’s
outlook. The outlook for UAE apparel sales is expected to improve over the next five years as
economic conditions become more favorable, while consumer confidence strengthen. Despite
the dominance of the store-based retailing sales, online retail sales are witnessing strong
growth as many well-established brands explore Omni-channel retailing, either through third
parties, their own digital storefronts, or both. This trend is expected to put pressure on prices
as the industry become more competitive with traditional retailers expected to offer more
deals to capitalize on consumer demand (Chamber, 2019).

UAE online fashion market is moderately concentrated with the presence of 30-40 online
fashion retailers. Namshi, Souq Fashion, Sivvi.com, Noon.com, eBay, Wadi, Awok, MarkaVIP,
Yoox.com and Landmark Group are the leading companies in the segment. Online fashion
market players witnessed 40% share of orders being received from Abu Dhabi, Sharjah, Ajman
and other cities in 2017. The Internet penetration rate in 2017 was 78.6% and is expected to
reach 80.2% by 2019. Analysts at Ken Research in their latest publication "UAE Online Fashion
MarketOutlook to 2022- by Type (Apparel, Fashion Accessories and Footwear), By Region
(Dubai, Abu Dhabi, Sharjah and Others)" suggested that in next 5-10 years, online fashion
industry will witness significant growth as the industry has all the potential backed by tech
savvy population and entry of expats. In the wake of expected gargantuan growth, the online
fashion players have to concentrate on maintaining the customer and supplier NPS score.
Middle East is always a logistics hub for several nations and hence, the growth in orders which
are placed by overseas residents will continue to grow. New mall announcements and Dubai's
successful Expo 2020 bid have placed the UAE at the epicenter of a global retail revolution. In
the run-up to Expo 2020, the next few years will prove to be critical as regional retailers and
mall owners invest heavily in new technologies and trained manpower to maintain profitability,
according to a leading expert on international retail trends. UAE Online fashion market GMV is
expected to grow at a rapid pace from 2021 to 2022 owing to the rising number of online
market players entering the E-commerce industry with introduction of new business model
such as hybrid model in which the companies will also be running their offline stores where
customer will experience the product and then make a purchase. UAE online fashion retail
market is quite dynamic and is in the early growth phase. The online fashion market has grown
from a GMV of AED ~ million in 2012 to AED ~ million in 2017 at a CAGR of ~%. A phenomenal
growth of ~% in the internet users in the last 5 years and in smart phone users in the country
have acted as drivers for the online fashion market. Growth of the younger population, increase
in purchasing power, convenience to purchase online, easy availability of branded products
online at discount and easy online adoption in Dubai and Abu Dhabi are other major factors
which have augmented the growth of online fashion market in UAE.

Market Segmentation:

1) Apparels, Footwear and Accessories

Apparels witnessed the maximum share contributing ~% followed by the footwear contributing
~% and accessories ~% to the total GMV of the fashion products sold on E-commerce platforms
in 2017. The great exposure of people to social media, availability of international brands and
presence of trending products on online platforms with varied offers and discounts are the
major factors which have driven sales of apparels on E-commerce portals.

In apparel market, women segment has dominated with share of ~% followed by men
contributing ~% and kids ~% in the total GMV generated during the year 2017. Under apparel
category, the top selling categories are tops, dresses and bottoms, jackets, skirts and shorts.

In footwear market, women segment contributed majority to the GMV with share of ~%
followed by men segment which contributed ~% and kids (less than 14 years old) with ~% in
2017. Under Footwear category the top selling categories are Sneakers, Flip-Flops, Sandals and
Boots.

In accessories market, women segment has dominated with share of ~% followed by men and
kids together contributing ~% in the total GMV generated during the year 2017. Under
Accessories category the top selling categories are handbags, belts, imitation jewelry and
watches.

2) By Region (Dubai, Abu Dhabi, Sharjah and Others)


Demand for fashion products in Dubai witnessed the maximum share of ~% followed by Abu
Dhabi contributing ~%, Sharjah contributing ~% and other cities like Ajman, Fujairah, Ras Al
Khaimah and Umm Al Quwain contributed ~% in total GMV of the fashion products sold on E-
commerce platforms in 2017.

3) By Price (Economy, Mass, Premium, Elite)

UAE, being a fashion conscious economy witnessed maximum sales arising out of premium
priced fashion products available in online fashion market. Premium segment includes fashion
products that range between AED 86 to AED 170, constituted ~% of the total GMV in the online
apparel and footwear product market for 2017. The other segments like Mass segment
constituted ~%, Economy segment constituted ~% and Elite segment constituted ~%.

4) Competitive Landscape

Souq.com has dominated the market for online fashion in UAE with a GMV share of ~%
reported during 2016. This was followed by Namshi.com which has witnessed second largest
share in online fashion market of UAE with a market share of ~% in 2016. Wadi.com has a ~% of
market share while landmark group and eBay contributed market share of ~% and ~%
respectively. Other major players include Marka VIP, Yoox.com, Awok. Sivvi.com has a ~% of
market share and Noon.com has a ~% of market share for online fashion in UAE. People in UAE
are tech-savvy and are highly fashion and brand conscious so they spend in order to maintain
their style. Other players such as Bershka, Elabelz and various new entrants witnessed an
increase in customer base and revenues (Ken Research, 2018).
Future Outlook to UAE Online Fashion Market

UAE online fashion market is expected to grow at a rapid pace at a CAGR of ~% from 2018 to
2022 owing to the expected rise in number of online players entering the e-commerce industry.
The emerging product category such as maternity wear, plus size wears and sportswear among
the inhabitants of UAE will also augment the market. Existing market players providing different
shopping experience such as try and buy tool would further assist in growth.
The KPMG study observed that the UAE’s population of around 9.5 million is modest, but its
residents’ wallets are worth fighting for. Adjusted for purchasing power, gross domestic
product (GDP) per capita is higher than that of Switzerland, and many UAE residents, 36 per
cent of whom are 20 to 34 years old, enjoy a high disposable income. The UAE consumers are
used to the experience of high-end destination malls migrating this experience to digital sphere
will be a huge challenge, but it will be imperative to get them to spend online, the study said.

Despite challenges, the UAE has the advantage of a growing number of consumers relying on
technology with 67 per cent stating that they see value in harnessing the power of technology.
With 97 per cent receiving their news online and 93 per cent on social media, only the
smartphone-crazy consumers of China and India beat this level of enthusiasm for digital world
innovation.

Technology to play a big role :

Despite recent global data breaches, 78 per cent of UAE consumers feel comfortable sharing
their data with retailers and other institutions, but they would be more likely to do so if they
saw tangible value. When asked about trading their data for personalization or better deals,
UAE consumers were midway between the privacy-conscious Europeans and the more carefree
consumers in China or India, with 22 per cent saying they would not trade their data at all
(Augustine, 2019).

Cheap prices is the biggest motivation factor (55%) for Middle East consumers who prefer
online shopping over in-store shopping followed by Easy to shop (28%) and better product
selection (26%) . Whereas, getting touch and feel of products is the biggest motivation factor
(62%) for Middle East consumers who prefer in-store shopping over online shopping followed
by- able to take items home immediately (49%) and ease to return items (20%) (GO-GULF,
2019).
References:

1) Augustine, B. (2019). Next e-commerce hub: Why there's a huge market for online
shopping in the UAE. [online] Gulfnews.com. Available at:
https://gulfnews.com/business/retail/next-e-commerce-hub-why-theres-a-huge-
market-for-online-shopping-in-the-uae-1.1547098170421
2) Bridge, S. (2018). Revealed: the importance of fashion to the UAE's retail market.
[online] ArabianBusiness.com. Available at:
https://www.arabianbusiness.com/retail/425361-revealed-the-importance-of-fashion-
to-the-uaes-retail-market
3) Chamber, D. (2019). UAE Apparel Sales Reach Over $12 billion in 2018 | Dubai Chamber.
[online] Dubaichamber.com. Available at: http://www.dubaichamber.com/whats-
happening/chamber_news/uae-apparel-sales-reach-over-12-billion-in-2018
4) GO-GULF. (2019). In-store Shopping Vs Online Shopping In Middle East - Statistics and
Trends [Infographic] - GO-GULF. [online] Available at: https://www.go-gulf.com/in-
store-shopping-vs-online-shopping-middle-east/
5) Ken Research (2018). UAE Online Fashion Market, Online Fashion Future UAE, Online
Apparel Website UAE, Men Apparel Online Market UAE, Online Mode of Payment UAE,
Online Apparel Market Sharjah, UAE Online Accessories Revenue, Online Apparel Market
Abu Dhabi - Ken Research. [online] Kenresearch.com. Available at:
https://www.kenresearch.com/technology-and-telecom/it-and-ites/uae-online-fashion-
market/143966-105.html
6) Mack, B. (2019). Revealed: The value of retail fashion in the UAE. [online] Gulf Business.
Available at: https://gulfbusiness.com/revealed-value-retail-fashion-uae/

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