Shoppers flock to discount retailers amid Covid-19 uncertainty

Among many reactions to the economic clouds brought by the coronavirus pandemic is a growing appetite for better value for money.

Numerous households are keeping a closer eye on budgets amid crimped salaries or the prospect of income shrinkage due to the Covid-19 fall-out.

Donna Sweeney-Simmons is among a growing contingent of UAE residents who admits to appreciating a bargain more than she did.

The mother of four teenage daughters was made redundant during 2020 after a 32-year career in the travel industry.

“I used to buy a lot of things on my travels to the UK or Europe,” says Ms Sweeney-Simmons, 42.

“What with having a large-ish family, my shopping habits had to change and my purse strings tightened.”

This included switching the weekly grocery shop from Spinneys or Waitrose to Carrefour, not least for the latter’s special offers and cash-back reward scheme, and occasionally Lulu.

“I have a household budget in my head and really try and stick to it,” says Ms Sweeney-Simmons, who lives in Abu Dhabi, where she’s in the process of launching a business called AbuDhabiLicious, producing personalised chocolate bars.

The Briton is also among many residents who have been discovering Brands For Less, a UAE chain selling famous names for less than original marked prices.

“There are some absolutely fantastic designer bargains to be had if you have time to rummage, but it does take patience,” she says.

This demand for better value spells good news for retailers operating in the mid-market space, including savvy physical shop chains such as Centrepoint.

Discount fashion, beauty, toys and homeware trader Brands For Less and cut-price supermarket VIVA have both been steadily opening new stores to satisfy a drive towards wiser spending.

Brands For Less recently unveiled new branches in Dubai, including a first on tourist hotspot Jumeirah Beach Residence, and expanded an existing one.

Chief executive Toufic Kreidieh says their concept “believes in the value of good products for everyone … especially in these difficult times in which people are more cautious how they spend their money”.

And it appears to have worked – 2020 was the company’s most successful year in its two-decade history.

The first “off-price” retailer in the Middle East has added 15 stores over the past two years, bringing its total to 67 around the region, with more to follow elsewhere in the GCC as well as expansion plans for Eastern Europe.

When the pandemic forced the temporary closure of physical branches, Brands For Less experienced a 230 per cent increase in online sales.

“Our in-store traffic is now back to normal and we expect to see a surge as conditions improve for people making up for lost time,” says Mr Kreidieh, who highlights the importance of creating a trusted brand and loyal consumer base.

Dubai mum Debbie Steedman is a keen advocate. As co-founder and administrator of Facebook community page Shop Well For Less, she curates numerous daily price-conscious posts.

Ms Steedman believes people generally shop around more now than two years ago and will wait for sales for larger purchases – a trait she says has accelerated during the pandemic.

“People who haven’t lost their jobs or have had wage cuts are still wanting the best deals they can find,” she says. “No one knows what’s round the corner in these uncertain times.”

Deals and recommendations in the SWFL community include shopping advice as well as money-saving posts from 26,800 members all seeking to make their dirhams work harder.

Sometimes advice concerns basic necessities. “When it comes to grocery shopping, you need to be aware of weekly promotions,” she says. “Shop what’s on offer, not what you want; for example, if Carrefour has lamb on promo, that’s your roast for this week.”

Ms Steedman says people from all walks of life are keeping an eye on expenditure.

“This is something I have seen change in the last few years,” she says, suggesting the “one-stop supermarket shopper” is becoming rare as people lessen loyalty to support stores offering better prices on certain items.

SWFL members also tout the benefits of lesser-known pocket-friendly online merchants such as Big Saver Hub, Golden Beans and Food For Less.

However, a recent talking point among wallet-conscious residents was the opening of VIVA in Palm Jumeirah, along with a thrift store, something Ms Steedman says indicates that “everyone has been affected by the current economic climate”.

With many lines that undercut rivals’ prices, the Soho Residence branch is thriving about three years after Landmark Group – Mena’s largest non-food retail group – launched the UAE’s first food discounter.

VIVA now has 40 branches operating under the promise of “fresher, cheaper, better”, selling many private label exclusive products.

“By sourcing directly and operating efficiently, we can pass on the savings and offer highest quality at cheapest prices … to meet the needs of the local community we operate in,” says chief executive Georg Fischer.

And that has proved to be welcome news for many during a pandemic. As more families monitor their spending, without wishing to compromise on lifestyle, it is a fertile time for such chains.

“VIVA worked even harder at the peak of pandemic times in keeping our stores open and ensuring a safe shopping environment for shoppers … we constantly adapted our way of working to the increased demands,” says Mr Fischer.

“We are constantly following our consumer behaviour and adapting business strategies to meet the needs of consumers so as to remain competitive and relevant.

“The demand gives us confidence and ambition to continue our growth journey to all remaining emirates in which we do not have a presence yet.”

Certainly, VIVA and Brands For Less are highly visible among the retailers luring value seekers, and swimming against the e-commerce tide as some struggling names close physical branches.

Justina Eitzinger is chief operating officer of Images Group Middle East, which hosts the Middle East Retail Forum.

She has seen a broader demographic of consumers seeking more value, but says price sensitivity was always present in every market.

“Value retailers have thrived for years, but they did not limit the appetite of aspirational buyers for designer labels and luxury brands,” says Ms Eitzinger.

“Given the uncertainty and the unexpected financial constraints, it was natural for consumers to consider value-for-money brands/goods.”

She notes that e-commerce has aided price comparisons and was accelerated with the pandemic.

“In the process, retailers offering a better price point got more business. We have seen retailers bundle up, offer more discounts,” she continues.

“The pandemic may have given a push for e-commerce for several reasons, including safety in the initial days of the outbreak, but it is in no way going to write off brick and mortar retailing.

“Physical stores offer an experience, a stage, a platform for both the brand to be experienced and expressed.”

Al-Futtaim Malls has also been listening and analysing. It recently announced the launch of its Premium Outlet at Dubai Festival City, opening in 2022. A key goal of the new venue is to provide value to shoppers who will be able to purchase premium brands at discounts of more than 40 per cent.

A recent survey commissioned by Al-Futtaim Malls revealed that 47 per cent of UAE residents are seeking value for money more than before the pandemic and 48 per cent are looking for more offers and deals than before.

Timothy Earnest, group director at Al-Futtaim Malls, says it is responding to the “changing demands of our customers … a direct response to what our customers have told us they want”.

Whatever the future brings post the pandemic, there certainly seems to be more offers out there than there used to be and the era of flash sales could be set to continue.

“People are prepared to wait for deals, especially on high-end items like electricals,” adds Ms Steedman. “They know that there will be a super sale … so they just wait.”

And Ms Sweeney-Simmons, among others, remains emboldened by her newfound shopping frugality, even if she hasn’t worked out exact numbers.

“I am definitely saving and more conscious of what I am buying and ask myself if it’s really necessary, whereas before I just put it in the trolley,” she adds.

“This Covid-19 business has taught me that it’s important to be ahead of the game and not necessarily penny pinch, but to be more aware that you don’t have to compromise on quality so save money.

“I would definitely consider sticking with my newfound shopping habits rather than going back to old [ways].”