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Dubai or not to buy? Retail sales are dropping there too

The city-state's annual shopping festival appears to be drawing fewer

February 13, 2009|Raed Rafei

BEIRUT — It has come to this at the annual Dubai Shopping Festival: free makeovers, car and home giveaways, and big discounts on plane tickets and hotel rates.

Authorities and businesses in Dubai, United Arab Emirates, are going the extra mile this year to spur cash-strapped tourists to loosen their purse strings during what has become an iconic fete of conspicuous consumption.

The 32-day sales-fest, which ends Sunday, has coincided this year with the global financial crisis, which has cast a shadow over the once-booming Persian Gulf. Even here, companies are shedding jobs amid lower revenue and tighter credit.

The city-state of Dubai, which prides itself on being the Middle East's highest-profile commercial hub, has seen real estate prices plunge and businesses go under.

"The mood in Dubai has certainly changed," Trevor Lloyd-Jones, managing editor of Business Intelligence Middle East, said in a telephone interview. "Everybody is more cautious in their spending. People are saving for a rainy day. We are in a wait-and-see period."

Amid this gloomy environment, the desert-turned-metropolis in the oil-rich gulf is hosting its annual shop-a-thon, when malls gear up with new products, and public festivities include fashion shows, sports events, gala parties and concerts. This year, the 1980s heavy metal band Iron Maiden and reggae star Shaggy have been among the acts.

Festival organizers are employing new tricks to lure customers, including appealing to lower-brow consumers, as well as non-Western countries where they thought the moneyed class might be less hurt by the financial meltdown, including Russia, Iran, India and China.

Such efforts are mostly in vain, observers say.

Retailers have complained that fewer customers are entering and spending in their shops and that the number of tourists has declined. Shopkeepers informally estimated that their sales are down between 20% and 50%.

The festival's organizers, however, said they had striven to keep sales and visitor levels as high as in previous years despite the crisis, according to Eyad Abdul Rahman, executive director of Dubai's Department of Tourism and Commerce Marketing.

"This year's shopping festival came during a challenging time with the financial crisis," Abdul Rahman said in an e-mail interview. "We are trying our best to maintain at least the same number as last year."

Visitors to the festival jumped from 1.6 million in 1996, the year it was launched, to 3.2 million in 2008. But because of the financial crunch, as well as a somber mood caused by the recent fighting between Israel and Hamas in the Gaza Strip, organizers lowered expectations, slashing the budget for this year's festival by about 13%, to $20 million.

And after years of trying to glamorize Dubai as a haven for free-spending jet-setters, Abdul Rahman said, authorities tried to encourage tourism by pitching competitive prices.

The national carrier, Emirates Airline, and tens of hotels teamed up by offering 15% discounts on airfares and up to 60% off room rates.

"The whole exercise is designed to help the industry in these trying times and ensure a rise in occupancy levels," Abdul Rahman said.

There were a host of other sales gimmicks. The Al Ghurair City mall offered female shoppers free makeovers and beauty tips. "The more discounts there are, the more people are willing to buy," said Mukta Sabharwal, spokeswoman for the mall.

In Jumeirah Beach, an upscale shopping area, restaurants raffled off Lexus and Nissan sedans. In the Global Village mall, prizes were awarded to shoppers who could scream, shout, clap and whistle the loudest, or type the fastest on a computer keyboard using nothing but their nose.

Final numbers aren't in yet. But despite the incentives, the number of tourists coming to Dubai has dropped significantly, Lloyd-Jones said.

"The local spending seems to be steady, but retailers in luxury items and fashion have been more affected . . . as much [fewer] tourists are coming to Dubai," he said.

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Rafei is a special correspondent.

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