Crisis even tames splurges in Dubai

By Amran Abocar  |   2008-11-21  |     NEWSPAPER EDITION

SOME big Dubai retailers, accustomed to giddy spending, are grappling with a drop in sales as consumers worry about the impact of the global financial crisis on their wallets.

The Gulf has not been as heavily hit by the credit crisis as Europe and the United States, but the contagion has led to stock market routs, tight lending conditions and a range of government and central bank attempts to mitigate its impact.

In the United Arab Emirates, home to the glitzy financial hub of Dubai where shopping is virtually a national sport, a feeling of fear has seeped into consumers' minds.

"Business is 20 percent down in the last week in retail," said Mohi-din Bin Hendi, president of Bin Hendi Enterprises.

"In the beginning, people did not take it seriously. When they start to get their ATM cards refused from the bank, that's when sense comes back, that this is serious."

Bin Hendi, whose retail-based conglomerate operates in the Gulf Arab region and India and offers everything from jewelry to sofas, said his company would take steps to ready for a further decline in consumer spending and purchases and would "cut the desirables, go to the essentials."

Asked whether he would cut jobs, he said: "Absolutely. We have not come to a figure as yet."

"People with wise moves won't suffer as much as those who think this is only a cloudy day and it'll clear up tomorrow. It won't clear up tomorrow that easily. We have to sit tight, cut down our costs and be smart."

Long known for spending excesses - it is home to man-made islands in the shape of palm trees and the world map as well as a ski slope in the desert - Dubai has revelled in its reputation as a top shopping destination. Its annual month-long festival dedicated to shopping, sponsored by Dubai Duty Free, attracts 2 million visitors eager for deals and lavish giveaway prizes.

But consumers have begun to see uncomfortable signs of the credit crisis toll.