United Arab Emirates: Reaching the Consumers

Consumer Profile

The increase in the UAE population can be attributed mostly to the high demand of labour in the two main cities of Abu Dhabi and Dubai. Ongoing construction has attracted workers from around the world. The United Arab Emirates’ population will continue to grow exponentially as the country continues to develop its infrastructure. The total population has doubled from 3.7 million in 2005 to 8.4 million in 2010, out of which an estimated 88% were foreign citizens. In 2022, the total population is estimated at 10 million people - of which only 31.1% are women. The median age in the United Arab Emirates is 32.7 years (Data Reportal). As the population of the UAE continues to grow, demand for services such as healthcare and education will increase. The majority of Emiratis fall under the 15-64 age range (83.65%), with men aged 30 to 49 being the most prominent, making them the largest group to contribute to the workforce. Despite the significant increase in the UAE population, household structure remains the same. Couples with children are by far the largest group, accounting for half of all households. They are followed by temporary workers (25% of households) and couples without children (13%). The last category is expected to grow significantly in the years to come, which should be reflected with increasing purchase money, presenting opportunities for higher quality products. Over the past  few years, education has become the top priority in the UAE. The Government of the United Arab Emirates allocates a significant share of the federal budget each year to the development of the education system in order to provide quality education services and improve a knowledge-based economy. In 2022 this reached 26.7% of the federal budget. Nearly 84.2% of the U.A.E. population aged over 25 years old completed at least lower secondary education in 2019; while as for upper secondary education, almost 71.5% managed to complete it (World Bank, latest data available). Despite the government's commitment to the education sector, the gap between men and women in secondary education stands at 5% in favour of men (UNDP). Ambitiously, the government also seeks to improve the UAE’s ranking in the Organisation for Economic Co-operation and Development (OECD) Programme for International Student Assessment (PISA) study, to score among the top 20 countries. A large number of foreign residents work in construction - which pays lower wages - while a big part of Emirati citizens work in the public sector. The sector with the highest number of employees in the country is the extractive industry, which employs 31% of the workforce in the UAE.

Purchasing Power

GDP per capita has been fluctuating for decades in the UAE. According to the latest available data by the World Bank, GDP per capita reached USD 66,771.5 PPP in 2020. Salaries differ among the seven federal emirates. The average monthly household income of UAE residents is estimated at AED 19,600. A person working in Dubai typically earns around 21,000 AED per month, whereas in Al Ain the average salary is 19,800 AED per month (Salary Explorer, 2022). The wealth gap between rich and poor in the UAE is one of the worst in the world, largely due to the amount of welfare and protection afforded to native Emiratis and the amount of neglect of migrant workers. The UAE ranks second in the Middle East for wage equality for similar work, and considerably improved its ranking in the 2021 World Economic Forum's Global Gender Gap Report, climbing at the 72nd position out of 156 countries (compared to 120th out of 144 countries in the 2020). The country has been working towards gender wage equality, and in 2018 a law ensuring women are paid an equal wage to their male colleagues was approved. Immigrants from South Asia, Egypt and Morocco mostly populate the UAE, with expatriates making up 88% of the population. However, this group also makes up the majority of the population living below the poverty line, which is defined by those who earn less than USD 20 a day. Emiratis have the highest standards of living in the country, while immigrants have the lowest.

Consumer Behaviour

Consumers in the UAE are some of the most diverse across the Gulf countries, as only 12% of the population is Emirati and the majority of the population consists of immigrants - mainly from South Asia, Iran, East Asia and the West - with significantly different levels of income. Retailing in the UAE is closely tied to social habits. Shopping malls dominate the retail landscape because they provide a source of entertainment, a social experience, and - just as important - air conditioning. For that reason, e-commerce only accounts for 11% of the retail sector, despite the UAE being one of the most digitally connected nations in the world (Majid Al Futtaim). The COVID-19 crisis and the implications of the lockdowns have accelerated the levels of adoption of e-commerce transactions by UAE residents, as e-commerce accounted for only 5% of retail trade before the crisis (Majid Al Futtaim). Retail e-commerce is projected to grow 60% to more than USD 8 billion by 2025 from 2021 (EZDubai and Euromonitor). Offline shopping remains relevant in the UAE for cultural and geographic reasons, however, as the online and offline channels converge more and more, the market is increasingly competitive, challenging the e-commerce operators already present in the region and bringing more benefits to consumers.
UAE consumers have high expectations and are hard to impress. They expect excellent customer experience and personalised service, and when it comes to online shopping, they prefer single-brand websites because buyers believe they provide the best customer service. The UAE is an attractive market for luxury brands, with Dubai accounting for 30% of the Middle East’s luxury market, and Emiratis spending around 30% of their monthly salaries on luxury goods. Additionally, even though around 30% of the population is female, women influence 80% of all purchases in Dubai alone. Female Emirati citizens spend more than 40% of their income on fashion shopping – triple that of the expat population. And a third of these Emirati women spend over 60% of their monthly income on shopping.
When it comes to food, even though Emiratis still prefer traditional Gulf dishes, the combination of so many foreigners within the UAE and the affluence of a number of Emirati residents has created a country with an international palate, demanding a wide range of international foods.
Consumers in the UAE tended to be big spenders and loyal to their favourite brands. However, the covid-19 crisis has led consumers to rethink their habits. According to Mckinsey & Company, they now tend to plan their shopping, to test new brands, and shop online. Consumers still expect to decrease spending across categories with the exception of groceries, home and entertainment; the keywords are value and convenience.
The Emirate has a relatively young population with the increased demand for affordable hotels, and Airbnb is getting good acceptance and the demand is expected to grow.

Consumer Recourse to Credit

According to a survey carried out in 2017, nearly half of the residents of the UAE were in debt, and 12.8% of people were actively looking for a loan. The most common large purchase that people in the UAE are borrowing for is the acquisition of a house, followed by starting a business, going on holiday, and having a wedding. In 2018, the central bank lifted its benchmark interest to 2.50%. While Islamic banks do not compound the profit rates, conventional banks makes in the UAE do charge compounded interest. For many people in the UAE, cash is dying. Consumers are increasingly living in a cashless world and abandoning bills and coins in favour of debit and credit cards. In 2018, almost half of all purchases made in the country were paid using cards, which is more than all the other payment types combined.

Growing Sectors

Information Technology, innovative technology and finance, engineering, construction, real estate, healthcare and pharma industry, oil and gas, advertising, media and entertainment, trading, logistics, water treatment and desalination, food manufacturing, and tourism.

Consumers Associations

Department of Economic Development , Consumer Protection Division
Department of Economic Development , Abu Dhabi Consumer Protection Manual

Population in Figures

Total Population:

9,441,129

Urban Population:

87.5%

Rural Population:

12.5%

Density of Population:

132 Inhab./km²

Men (in %)

68.0%

Women (in %)

30.6%

Natural increase:

0.81%

Medium Age:

30.0

Ethnic Origins:

Only 11.5% Emirati compared to 88,5% of non-Emirati, mostly Asians (Bangladeshis, Pakistanis, Sri Lankans, Indians, Filipinos and Iranians) and Western expatriates. (Federal Competitiveness and Statistics Centre)

Population of main cities

Source: Citypopulation.de, Latest available data.

Age of the Population

Source: World Bank, Latest data available.

Consumption Expenditure

Media in Which to Advertise

Television

Television remains an important source of entertainment and news, but is losing ground to the Internet. Nonetheless, daily viewing has increased between 2014 and 2016 as 70% of Emiratis say they watch TV every day (65% in 2014 - Mideast Media Survey). The UAE is headquarters to more than 72 TV channels, third highest in the Arab region, including the pan-Arab channels MBC, Al-Arabiya and Sky News Arabiya. TV advertising expenditure has traditionally lagged behind outdoor, print and radio, and accounted for a mere 7% of total advertising spending in 2017 with AED 488 million, down by 23% compared to 2016 (AED 631 million).

Main Televisions
Dubai TV
Sharjah TV
MBC
Al Arabiya

Press

Self-censorship is prevalent and publications must be licensed and follow official guidelines on reporting, as in most other countries in the region. United Arab Emirates has the largest advertising market and newspaper advertising expenditure among GCC countries, however, the market has been shrinking due to declining readership figures (Only 25% of Emiratis read newspapers every day -  Mideast Media Survey) and the regional economic recession. The UAE advertising market reached AED 6.7 billion in 2017, accounting for 48% of total advertising expenditure across the Gulf region. Within the Emirati market, newspaper advertising expenditure accounted for 33% of the total advertising spending (AED 2.2 billion, second highest after outdoor marketing). English-languge dailies are just as popular as are Arabic-language dailies. In fact, Gulf News, an English-language daily, is the top newspaper in the country.

Main Newspapers
Gulf News
Khaleej Times
Al Khaleej
Al Ittihad

Mail

Publications and Publishing Law regulates direct advertising by mail as it states, "No one is allowed to sell, or distribute publications on the main road or in any public place, even temporarily, unless he obtains permission from the property authority at the ministry". It also requires all direct mail publishers to register with the Ministry. Direct mail advertising remains a cost-effective marketing tool and various services are offered both by the National Postal Services and private companies.

In Transportation Venues

Out-of-home (OOH) advertising has been one of the backbones of the Emirati advertising industry, however high expenditure does not necessarily translate into revenue for advertisers. In fact, outdoor advertising expenditure accounted for the lion's share in 2017 with AED 2.5 billion (USD 680 million), overtaking newspaper advertising expenditure and representing 33% of the total advertising market. Nonetheless, the net advertising revenues of OOH companies stood at a mere USD 15 million largely behind companies in Kuwait (USD 160 million) (Outdoor Advertising Association of America).

Market Leaders:
BackLite
Hills Advertising
JCDecaux

Radio

UAE has the most vibrant radio market across the GCC region and new radio stations, broadcasting in the languages of India, emerged in 2017. The country has more than 40 stations and only 14 of those broadcast in Arabic. As Emirati residents spend more time commuting, radio offers an instant and effective form of advertising. 78% of the population listen to radio daily and spend on average of four hours and 22 minutes (IPSOS survey). Radio is also a major source of information for Emiratis as 57% of the population get news via this medium (highest rate in MENA, Mideast Media Survey). After a dip in 2016, radio advertising expenditure grew by 14% in 2017 to AED 1.2 billion (the only form of advertising to grow in 2017), accounting for 18% of the total advertising spending (third highest after outdoor and print advertising).

Main Radios
Abu Dhabi Media Company
Radio Asia
Arabian Radio Network

Web

Digital advertising fails to take off despite Emiratis being one of the most digitally connected in the region. Internet penetration is over 90% while smartphone penetration is at 99%. Nonetheless, digital advertising spending is not fully regulated and not included in the total advertising expenditure. This form of advertising is expected to grow in 2018 as advertisers now move towards more sophisticated categories such as programmatic advertising, mobile, native and content.

Market Leaders:
Traffic Digital
Kenz
Scarlet Media

Main Advertising Agencies

Tonic International
Watermelon
Publinet
Face to Face
Prism Advertising

Main Principles of Advertising Regulations

Beverages/Alcohol

The Advertising Standards explicitly prohibit all forms of advertising for alcoholic beverages for the general public. Advertising in the specialised regional press and in publications that are only directed at professionals as well as promotion booklets in sales outlets are tolerated.

Cigarettes

Federal Law No.15 of 2009 regarding Tobacco Control prohibits all forms of tobacco advertising, including point-of-sale. Some point-of-sale product display and tobacco product brand stretching are allowed.

Pharmaceuticals/Drugs

Healthcare Advertisement Regulation sets forth several restrictions regarding pharmaceutical advertising. As such, medicinal products that are not issued a registration certificate by the Drug Department of the Ministry of Health cannot be advertised. Furthermore, all forms of pharmaceutical advertising need prior approval by the Ministry of Health. Article 4 of the Healthcare Advertisement Regulation sets out a guideline regarding the content of pharmaceutical advertising, which bans, among others, all promotional material that may contradict UAE customs and traditions as well as Islamic principles or that are addressed to minors. The Regulation does not make a distinction between prescription and over-the-counter medicine.

Other Rules

Advertising content must not offend UAE customs and traditions as well as Islamic principles or contain words and images that breach public morals.

Use of Foreign Languages in Advertisement

There are no laws that regulate the use of language in advertising. Advertisements both in English and Arabic are quite common owing to the multicultural composition of the country. While English-only advertising is acceptable, promotional materials in both language prove to be more successful.

Organizations Regulating Advertising

National Media Council
Ministry of Health and Prevention