Online upstarts take on Dubai mega malls in festive battle

Despite growth in online shopping, around 84 percent of UAE residents are expected to do their festive shopping in physical stores and malls, some of which have attractions like aquariums and ski slopes. (Reuters)
Updated 15 December 2017
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Online upstarts take on Dubai mega malls in festive battle

LONDON: Dubai’s world-famous malls are getting ready for the festive rush, but this year they face stiffer competition from online rivals.
Bargain-hunting shoppers across the region are increasingly turning to the Web in a market where the vast air-conditioned mall has long been the heart and soul of the retail trade.
The glittering decorations and lights that drape the region’s biggest shopping centers may be projecting a festive mood — but inside the boardrooms of big retailers the atmosphere is more subdued as the industry tries to respond to the online onslaught.
Amid austerity, the removal of subsidies and faltering economic growth, disposable income has come under pressure for many families across the Gulf — encouraging more people to seek out better value through Web shopping.
“Growth in Internet retailing is disrupting traditional retail practices for malls and bricks and mortar players, resulting in greater efforts to drive footfall through enhancing innovation and increasing sales events across the year,” said Euromonitor analyst Rabia Yasmeen.
Such promotional events are placing pressure on the costs and margins of store-based retailers as well as mall operators in the country, she added.
The biggest new arrival to regional online retailing is Noon.com which launched in October, offering products as diverse as smartphones, clothing and biscuits. Shoppers can make their purchases via an app on their smartphones; the site went live in Saudi Arabia on Tuesday.
The company is a joint venture between Emaar Properties Chairman Mohamed Alabbar, Saudi Arabia’s Public Investment Fund and the Kuwaiti franchise operator MH Alshaya.
Noon was presented as the region’s first Arabic e-commerce platform. Alabbar also acquired, via a fund, the UAE online retailer JadoPado in May this year.
The arrival of Noon followed Amazon’s acquisition of the Dubai-based online platform Souq.com in March, a move that suggests the US-based company sees growth opportunities in the UAE and wider Gulf region’s online shopping sector.
Amazon’s faith in the potential of the Middle East’s online market is echoed by many analysts.
According to BMI Research, the UAE and the wider Middle East e-commerce market holds “tremendous” growth potential.
It forecasted that the Middle East will be the fastest-growing region globally for e-commerce, with sales likely to double to reach $48.8 billion by 2021, according to a note in September.
The UAE dominates the regional online shopping market, said BMI Research, with sales forecast to hit $9.7 billion in 2017. The consultancy predicted e-commerce sales in the UAE will reach $23.3 billion by 2021, recording an average annual growth of more than 25 percent.
Low prices are one of the main motivating factors for buying online, found a PwC report published earlier this year.
According to the consultancy firm’s survey, 40 percent of those questioned in the region stated they were attracted by lower pricing, while 31 percent cited product selection as a factor and just 17 percent saw online as more convenient.
It is becoming an increasingly competitive market, said Yasmeen.
“Online shopping events such as White Friday sales and increased online competition was a key driver to push prices lower on online platforms in the UAE, leading to online being an important avenue for purchases during the year,” she said.
While opportunities to shop online have increased this year, the allure of the shopping malls — complete with cafes, cinemas, ski slopes and aquariums, as in Dubai, is likely to persist, according to analysts.
Online retail currently has just a 3 percent share of the UAE’s total retail market, lagging far behind Europe and the US where retail accounts for 15-20 percent of total retail sales.
Most UAE residents are still more likely to head to the mall to buy their festive presents this year, research from price comparison website Yallacompare found.
Around 84 percent of respondents said they do their festive shopping in malls or other physical retail stores, according to its survey conducted in November.
One of the challenges Middle East online retailers will face in winning over more customers will be improving their distribution capabilities, according to BMI Research.
Online retailers will need to offer next-day or even same-day delivery and currently —  outside of the UAE — this is not always possible due to the lack of required infrastructure and high costs involved, the company said in a research note.
“Malls are still the key retail format in the country,” said Yasmeen. At least for now.


India names Modi demonetization backer as cenbank head

Visitors are seen standing next to a logo of the Reserve Bank of India (RBI) at the bank's head office in Mumbai on December 5, 2018. (AFP)
Updated 12 December 2018
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India names Modi demonetization backer as cenbank head

  • Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization

MUMBAI: Ex-finance ministry official Shaktikanta Das took charge of the Reserve Bank of India on Tuesday, in a swift appointment expected to ease a dispute with the government as it pushes for looser credit rules ahead of a general election.
The announcement by Prime Minister Narendra Modi’s administration came just a day after Urjit Patel resigned from the post, following months of clashes between the two institutions over lending curbs and how to deploy the central bank’s surplus reserves.
Pressure on the RBI to take immediate steps to boost the economy, including a transfer of the excess reserves to the government, could well rise after Modi’s ruling Bharatiya Janata Party (BJP) suffered likely election losses in three key states on Tuesday.
Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization — will serve a three-year term as governor, effective immediately.
RBI watchers said they expected the 61-year-old, who retired last year as secretary of the department of economic affairs having previously served on the RBI’s board, to put relations between the Mumbai-based bank and the finance ministry in New Delhi on a stabler footing.
Investors will also look closely at his ability to hold up against outside influences after recent efforts by the Modi government to gain greater control over the central bank’s regulatory powers.
“The incoming governor will have to work hard to prove that he has his own independent mind,” said Deepak Jasani, head of retail research at Hdfc Securities.
Investors said any openly political appointee with little macro-economic experience, would not sit well with financial markets that already sold off following the BJP’s election setbacks.
But Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai, said he expected India’s debt and currency markets to react positively.
“He is a bureaucrat...We expect the RBI to take a pragmatic approach under him, be pro-growth and change its stance going ahead given that inflation has come off sharply,” he said.
Finance Minister Arun Jaitley told Reuters partner ANI that the government acknowledged the bank’s independence.
“Government will fully support the RBI and coordinate with it in areas where consultations of government are required to make sure India’s economy benefits from both government policy decisions and areas which fall within domain of the RBI,” ANI tweeted, quoting Jaitley.

SWIFT APPOINTMENT
Pronab Sen, India’s former chief statistician, said he was surprised by the speed of Das’s appointment.
“If you have a situation where a position as important as the governor of the RBI is filled within 24 hours of the resignation of the incumbent, that will raise eyebrows,” Sen told Reuters.
“People are going to say, clearly this guy had already been identified. And, the situation was created where Urjit Patel had to quit.”
Das — widely seen as a contender for the top RBI job after Raghuram Rajan’s term ended in 2016 — did not answer calls from Reuters to his mobile phone.
RBI officials who have worked with him closely said Das was likely to be more inclusive in the decision-making process than Patel.
“He has a balanced approach and is good at consensus building,” said a former deputy governor. .”..We have had our fair share of differences. But he has always been solution-centric rather than festering on those differences.”
Das worked in the finance ministry under both Modi’s government and the previous coalition led by the main opposition Congress party and was also involved in drafting the Insolvency and Bankruptcy code aimed at protecting small investors.
He came under fire for his pro-demonetization stance and was the most vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.
Das last year criticized the methodology of global rating agencies and sought a sovereign rating upgrade for India.