Will Tourists shift from shopping in Dubai

8/9/2019 Will Tourists shift from shopping in Dubai

1/5

Tourism and Retail: Will the Priorities of Tourists Shift from Shopping inDubai?

A couple of questions have challenged me for the past couple of years what is thesustainability of the tourism driven retail boom? And how does one factor the influence

of tourism while developing retail strategy? Not ordinary tourism, where contribution oftourist purchases is a small percentage of domestic retail business, but the Dubai scale oftourism, where a city of just over 1.2 million inhabitants attracts over 6 million tourists,and where shopping by tourists is a significant proportion of total retail sales of mostretailers. This question assumed greater importance for me over the past few weeks basedupon three incidents. One, I chanced upon the Dubai Municipality map of the major cityprojects (http://www.gis.gov.ae), and realized that the physical area of the city will nearlytriple over the next ten years whereas Dubais resident population to expected to doubleover the next five years. Two, the launch of Bawadi, the Las Vegas clone (minus thegambling) in Dubai contiguous with Dubailand, which will, by adding 28,000 hotelrooms, double the supply of hotel rooms in Dubai in a short 15 kilometer strip, to cater to

the 10-12 million expected tourists beyond 2010. Three, an understanding of theDubailand project, gleaned from news reports, which purports to be the largest leisureand entertainment destination ever created.

In this article I attempt to understand the influence of tourism on different aspects of theretail business. Table 1 captures the evolution of Dubai and its impact on retail. Inretrospect the Dubai Government has had a major role to play in the growth of Dubai -first in the form of specific initiatives to first signal change, and usually followed byappropriate legal changes to stabilize the growth trajectory. The Diera City Center andBurjuman triggered the conversion of the re-export wholesale industry into retail. Theincrease of the tourist inflow was driven by the Dubai Shopping Festival (later by the

Dubai Summer Surprises) which led to the brand oriented retail boom. The creation offree zone service industry clusters (Internet, Media, Finance, Commodity, etc.) drove thespread of the city and in the increase in resident population of higher income knowledgeworkers, continually fueling the retail boom. The expatriate ownership of real estate andthe social and demographic change amongst UAE nationals (educated, employed, andliving in nuclear families) has also driven the spread of the city, reflected in emergence ofnew residential areas and the dispersion of malls away from the city center. The mallsthat have come until 2005, and those are currently under implementation, are designedprimarily for shopping with a relatively small (increased space in the newer malls)portion of their space allocated to leisure and entertainment (e.g. the indoor ski slope, thelargest indoor aquarium in the world, the geographic architecture, nature and type of food

outlets, etc.).

This is going to change going forward. The new destinations, Dubailand and Bawardi,will be designed primarily for leisure and entertainment. Shopping will be an adjunct.Are these two projects going to trigger the next transformation of retail business inDubai? Will these developments change the type of tourists visiting the city? And what,if any, will be the impact of tourist expenditure on retail business?
http://www.gis.gov.ae/http://www.gis.gov.ae/


2/5

Table 1 Evolution of Dubai

Year Govt. initiative Legal changes Business responseNature of retail

business

Until 1995 The portJebel Ali Free

ZoneRe-export

Trading hub retail is primarily

re-export

1995-2000

Dubai Shopping Festival andDubai Summer Surprises,Worldwide marketing of

Dubai (Golf, Tennis, etc.),Numerous Emirates Airline

initiatives etc.

Airport FreeZone

Re-export declinesand malls drive

retail

Brand driven retailbased upon the

tourist

2001-2005

Dubai Internet City, DubaiMedia City, Dubai Marina,Burj Al Arab, and the realestate developments that

followed including the iconicPalm developments.

100 %business

ownership atmany locationsand expatriate

real estateownership

The geographicspread of the cityand increase in

number of malls tonearly 45

Brand driven retailnow includes the

domestic residents

2006 -beyond

The commodity and stockexchanges, the leisuredevelopments and the

geographic spread of the city

Same as above

Huge privateinvestments in

mixed useresidential, leisure,entertainment and

retail developments

?

Role of shopping as a motivation for selecting a tourist destination

Shopping is integral constituent of tourist behavior the world over. Sometimes it isculturally influenced as in the case of the Japanese (see inset).We sense shopping as an important activity

for tourists who travel to Dubai. For residentconsumers of a region of the world, wheretemperature extremes have created the needfor large American style malls, going to amall for shopping or browsing is a goodsubstitute for leisure or entertainingoutdoor activities. The mall developmentsare a manifestation of this. But is quality ofshopping in Dubai an important consumermotive in selecting Dubai as a destination totravel to? Cross border tourism ispredominantly driven by four motives easy accessibility to products and brands notavailable in the home country, price arbitrage or difference in prices that makes the trippay for itself (implicit tangible value of travel), the leisure, entertainment or culturalexperiences, or socializing. Tourists from different parts of the world prioritize thesemotives differently. This is reflected in the difference in the positioning of Dubai as adestination. In the UK or Europe, Dubai is marketed in as a leisure destination with sun,sea, and unique cultural experience. In the immediate GCC region it is a place for family

The customs of senbetsu-omiyage, and kinen

influence the shopping behavior of Japaneseshopping abroad. When a Japanese traveler isgoing to travel abroad, he/she is given a farewellparty, where members of the family along withclose friends and colleagues give money aspresents (senbetsu) and wish him/her a pleasantvacation. The tourist is obliged to reciprocate thisby buying return gifts presents overseas ofapproximately similar value. This custom isknown as omiyage. Furthermore, Japanesetravelers also like to purchase souvenirs (kinen) tocommemorate their visit to tourist destinations.


3/5

vacation in an Arab cultural milieu. For South Asia (and other countries with high importduties) it is a shopping destination.

The importance of shopping has been researched as a potential influencing factor whenconsumers are making holiday choice destinations, and shopping has not usually emerged

as an important criteria in destination choice. On the other hand when tourists are askedabout their activities while on holiday, it is not unusual to find over 55 to 65 % touristsengage in some type of shopping or another.

Predicting tourist shopping behavior

So what should a retailer do to predict tourist shopping behavior? This is a challenge. Ourknowledge of tourists is limited to their country of origin. Little is known about theirexpectations from the holiday, and actual behavior when at the destination, and much lessabout what actually influences their preferences and behaviors while on vacation. But wecan safely say that tourist shopping behavior is different from normal day-to-day

shopping. One, vacation is a time when individuals are not working, and therefore notjuggling different priorities like work, family, and home, etc. The focus of the holidaycould be the family, relaxation, a relationship, or just an escape from routine. It is also atime when the consumer is usually not thrifty. Vacations are usually planned, eitherformally or informally, with expenditure in mind. Tourists juggle the expenditure duringvacation in three broad categories travel, board and lodging, and holiday activities.

The allocation of the holiday activities expenditure occurs across a competing set ofactivities (Table 2). The priority of tourist expenditure allocation is influenced by theorientation of the tourist (Table 3) i.e. what is the tourist seeking from the vacation at adestination? If a tourist is an active outdoor type then it can be expected that theexpenditure will be skewed towards activities like mountain climbing or camping orfishing in the Gulf. Note that the best predictor of shopping is the urban entertainmentoriented shopper; a tourist who considers spending time in a city shopping area asentertainment. Whereas the active outdoor oriented tourist stays away from city centersand predictably spends less on shopping. Take a tourist family that comes and stays inTable 3 Tourist orientation

Tourist orientation Tourist behaviorPriority of activities /

consumptionPredictor of shopping

Escape from routine andpeople oriented

Leisure activities Services Low predictor

Urban entertainment Shopping, foodShopping as

entertainmentVery good

Active outdoor

Outdoor physical

activities Outdoor activities Lowest predictor

History and cultureVisiting museums,

heritage village, uniquecuisine

Souvenirs, artifacts,dhow cruise, desert

safariLow predictor

Socialize with friendsMove around with

friendsFood and entertainment Good predictor

Relax with familyDifferent activities for

different familymembers

Rides, Ski slopes, themeparks, Wild Wadi

Average predictor


4/5

Table 2 Activities competing for the tourist budget

Shopping productsHandbags

Designer clothingWatches

Gold / Jewelry shoppingShoes

Crystal / ChinaHome furnishings

Bab Al Shams to experience the Arab way of life or at abeach resort to escape from routine. This family isgoing to allocate a major part of the holiday budget to

the experience / leisure and may not be inclined to visitshopping malls.

Influence of the leisure and entertainment developmentsElectronicsCultural productsArabian artifacts Retail in Dubai has capitalized upon the preponderance

of the urban entertainment oriented tourists. Even forthe other categories (e.g. relax with family (whenfamily comes visiting), or socialize with friends orhistory and culture) the tourists have spent time in theshopping environment, and contributed to the retail

boom. The mall environments in Dubai provide anenvironment that is stimulating and different fromordinary shopping settings. Even when a tourists visit alarge mall they are consuming the place as a leisureactivity. Shopping also occurs because of the settings,choice of stores, attractive nature of stores, and overallmall ambience.

Carpets

ServicesTours Into the desert

Tour buslf-guided tour

Visiting heritage sites

Leisure activitiesSwim / spend time on a beachScuba diving

Boating / water scoterParasailing

GolfOther sportsHealth Spa

Sports event

In the years ahead as large scale entertainment centricoptions start functioning I believe that they will absorban increased share of the tourist activities budget

leaving a relatively smaller portion for shopping. Sincethe entertainment options are a few years away, theconcepts and pricing strategies unclear, it is difficult to

judge the attractiveness of the entertainment options and their perceived value. It is,therefore, difficult to hazard a guess about the degree of impact of entertainment onretailing. Impact it will, by how much, time will tell. Retailers need to gear up forcompetition between entertainment and retail.

Hiking and camping

EntertainmentDinner dhow cruise

Fine diningCasual dining

Major change Dubailand /Bawardi

Retailers will also, over the next few years, need to take forward positions on retail spacein the entertainment developments. This requires a great degree of speculation; most ofthe leisure and entertainment facilities are on the outskirts of the present Dubai, both the

developments and developers are new, and retail developments in mixed use projectsmay often be secondary.

Conclusions

In the last decade the tourist inflow into Dubai has been driven by the shopping orientedmarketing. This is beginning to show signs of fatigue. In the last six months, start of theMall of the Emirates has sent a clear signal that retail sales growth will start to slowly


5/5

plateau as customers get divided amongst malls. In the next decade of developmentsplanned for Dubai, the tourist offering is expected to change dramatically because of thenearly US $ 25 billion of potential investment in entertainment oriented developments. Isthis the re-invention of Dubai for the next stage of its economic growth? It certainly willbe if the variety, positioning, and price of the entertainment offerings are correct. The

difference between a Disney development and the Dubai developments is that Disney is asingle owner who overseas development, product-mix, complementariness, pricing andmarketing. And even they struggled in Paris, Tokyo and are struggling in Hong Kong.But it is clear that the tourist of the future will evaluate a cluster of attractions, of whichshopping will be just one. Retailers need to base their growth decisions in next few yearstaking cognizance of this potential threat.

Manoj Nakra 2006

Will Tourists shift from shopping in Dubai

Documents

Transcript of Will Tourists shift from shopping in Dubai