A holiday discount: the economics of the global celebration

Ramadan, the Muslim’s month of quiet contemplation and fasting, is also one of the busiest for retailers selling anything from gold to cars – and there are similar celebrations acting as incentives to shoppers all over the world

For Fred Kakoun, sales consultant at Al Naboodah Automobiles for Volkswagen (VW) cars, this Ramadan has been the best in its history in the region.

“Demand for Volkswagen cars is at more than any other year in history, as far as the Ramadan offer goes,” said Kakoun. So far into the month, sales are up about 20 per cent compared to the previous year. Kakoun projects they could increase as much as 30 per cent when Ramadan concludes.

According to a recent YouGov study of 3,288 consumers across the Middle East and North Africa (MENA) region, 60 per cent spend nearly a quarter more money during Ramadan. Top purchases amongst respondents who spend more include food and groceries and clothing.

To prepare for the increase in demand during Ramadan, C.V. Ravin, Mitsubishi brand manager at Al Habtoor Motors, starts planning six months in advance.

“During Ramadan there are plenty of offers given by dealers so people wait for this period to buy cars,” he said. “We gear up with our stock because we know the spike that occurs during this period, so we plan well in advance because our shipment comes from Japan and needs two to three weeks.”

“We have definitely seen a growth over last year and we foresee it will be about 10 per cent increase in sales this Ramadan compared to last year’s,” said Ravin.

Banks are also contributing to Ramadan offers. Abu Dhabi Islamic Bank is giving away AED10 million in cash prizes in daily draws of AED500,000 throughout the month for anyone with a certain type of savings account.

Al Habtoor Motors
Al Habtoor Motors starts planning six months in advance for the influx of buyers during the holiday

When it comes to hospitality, the biggest spike in revenue comes from hotels’ food outlets, which offer Iftar and Suhour meals to individuals and corporations. Jumeirah Group, the hotelier behind the luxurious Burj Al Arab hotel, the Madinat Jumeirah and Emirates Towers, operates eight properties in Dubai and is enjoying a surge in demand.

“While there is always a slight softening of occupancy during the holy month of Ramadan, there is a significant leap in demand for our restaurants and especially the iftars and suhours that are hosted in our spectacular Ramadan tents,” said Piers Schreiber, Group VP of Corporate Communications & Public Affairs at Jumeirah Group.

Jewellers are also luring in buyers with different offers, ranging from holiday deals, gold to fancy cars. Sales typically increase prior to Eid holidays, which mark the end of the fasting month. A number of jewellers are giving away luxury cars and kilos of gold, as customers get coupons and participate in draws.

These kinds of holiday special offers are not limited to Ramadan, having different variations worldwide. The day after Thanksgiving in the US, known as Black Friday, is renowned for its often-chaotic scenes, as shoppers fight to get the best deals. As Thanksgiving falls on a Thursday, most Americans have the following Friday off, leaving them to hit the shops.

Prices are slashed at enormous rates, making it routinely the busiest shopping day of the year. Some stores, such as Target and K-Mart, bring in items that they would not usually stock to match customer demand.

We gear up with our stock because we know the spike that occurs during [Ramadan]

Fred Kakoun, Sales consultant, Al Naboodah Automobiles

Across the Atlantic, the annual Boxing Day sales attract equally large crowds, with discounts reaching as high as 84 percent. In order to make room for New Year stock, British high street stores habitually cut prices the day after Christmas, and an estimated 8 million people head to the streets to take advantage.

Holiday shopping events are also popular in China during Chinese New Year, where the customary tradition of gifting money for the celebration has led to a spike in shopping habits.

Likewise, back in Dubai, Jumeirah Group is gearing up for the busy Eid season when GCC nationals flock to the emirate for shopping and entertainment.

“The Eid holiday is a peak period for all the hotels and residences. Of course, Dubai is a major shopping destination, as well as a venue for luxury hospitality, so we are able to cater for both through the quality of our hotels and service; and through the provision of regular shuttle services and private transport to the nearby malls,” said Schreiber.

The trend between cultural events or holidays and an increased interest in retail offers continues unabated worldwide. During times of celebration, part of the general public’s enjoyment of these events involves their heading out to shops, malls and restaurants – all of which are rushing to provide rewarding incentives to customers as they, in turn, enjoy increased revenue.