How to Set Up a Retail Business in the UAE?
Contributed by Aurion
26 August, 2019
The Dubai Chamber Analysis forecast a 5% growth for the Dubai Retail Business Sector over the next 5 years.
There is also a boost in the e-commerce activities in Dubai with a 19 % growth and AED 5.5 billion worth of sales recorded in 2018.
The robust demand for retail business is fuelled by the international visitors spend, high-frequency of mega-sales, shopping festivals, and growing e-commerce activity.
Despite the implementation of VAT, many hypermarkets have managed to keep competitive pricing and small retailers have enhanced their customer service and extended opening hours.
The app-based delivery services, retail sector expansions, expo 2020, government support, tourist visa easiness, etc., are triggering the retail growth.
Retail remains one of the main contributors to Dubai's economy and one of the most attractive sectors for investment in the emirate.
Options Available to Set Up your Retail Shops in Dubai
1. Retail Shop in Dubai Freezone
Most of the Freezones in UAE offer the recreational and shopping facility to the employees and business visitors. Hence, establishing a retail business in any of the Freezones of Dubai is beneficial as there is an assured footfall.
As the Freezones in Dubai are always high on demand with more and more investors venturing into the UAE region for company formation and indulge in international trade. There is an assured footfall in all the Freezones of Dubai, and hence it is an ideal location for a retail business.
2. Retail Shop in Dubai Mainland
By far the Dubai mainland is the most ideal location for setting up a retail shop. Though the mainland retail shop registration comes with few regulations, it is the most lucrative one to venture into.
6 Steps in Setting Up your Retail Business in UAE
1. Local Sponsor with 51% of Ownership
Get a local sponsor with 51% of shares before establishing a shop in Dubai mainland just like any other business formation in the mainland. Also, get your business registered by all relevant authorities. You will be also needing a commercial license to commence a retail shop business in Dubai.
2. Documentation and Trade License Application
There few documentations to be prepared and submitted to the concerned government authorities. Register your business with the DED, get approval for your Ejari, clearance from the ministry of economy UAE, Dubai Municipality and other departments.
The type of license is important before you set up your shop in the UAE. For example, a restaurant business requires special approvals and clearances from the food department in Dubai.
The DED has a list of more than 2100 activities that you can opt from, also you can get in touch with them to inquire about a specific business activity.
3. Completion of Business Registration and License
The trade license approval and other key certifications from the concerned authorities are to be obtained before running the business in UAE. In Dubai, it is the Department of Economic Development (DED) that issues the permissions to set up a retail shop in Dubai.
4. Know the Jurisdiction for Setting-Up the Retail Shop
There are various jurisdictions in Dubai for you to set up your store. depending on them the policies and regulations will change. Ensure you have the apt shareholding arrangement to demonstrate to the authorities if required.
5. Permissions to get the Shops for Lease
Ensure you have permission from the Dubai Municipality and other associated organizations to run a business in the mainland of UAE.
6. Laws Regarding Hiring Employees
As part of the retail license, you will be eligible to hire an operations manager to supervise your shop operations. Depending on the license type and visa quota you can employee staff for support.
Focus Areas before Setting Up a Retail Shop in Dubai
Below are the key focus areas to consider before obtaining a license for your retail store.
1. Business Plan
A solid business plan with the funds required to set up your business should be in place. It should include all practical calculations and monthly operating costs to manage your store.
A business plan helps in understanding the breakeven amount required for business success and also the finances required for your business to run it smoothly.
2. Overestimating your Expenses
When considering a loan for your business, prepare your cost of operations with always on a higher cap (overestimate costs). It will help in planning ahead for any unexpected rise in operational costs.
3. Fundamental Start-Up Costs
The cost of setting up your retail store is dependent on multiple factors, cost of setup being the primary focus there are a host of other areas where you have to invest to keep your business running.
Again, based on business location, company size and type the business start-up cost varies.
The key cost categories for a new business setup.
- Licensing and Permit Fees
- Initial Inventory
- Store Fixtures
- Equipment and Technology
- Web Hosting
- Services and Supplies
- Business Insurance
- Interior Decor and Aesthetics
- Professional Services
- And more...
Popular Retail Business Locations in Dubai
1. Sheikh Zayed Road
It houses some of the most prominent business ventures and residential areas in Dubai. It is a key road where there is an assured transport flow 24/7.
2. Business Bay
Ideal location for retail business especially supermarkets, department stores, etc., as the area is one of the popular business districts of Dubai
The premium residential location in Dubai with a lot of scope for retail outlets. All prominent hotel chains. healthcare units, businesses have their presence in this region.
4. Al Karama, Bur Dubai, and Deira
Part of the old Dubai and has many historical spots and souks or markets. It houses a lot of real-estate, expat preferred residential location, and consist of large wholesale markets.
5. Al Quoz
IT an industrial and commercial hub of Dubai, it provides businesses with warehouses and other facilities for industrial set-ups within easy reach of Dubai.
It consists of several shopping centers, malls, and labor accommodation zones.
6. Al Qusais
It has a host of industrial units, warehouses, and commercial establishments. It is also a preferred residential area. The area houses educational institutes, medical stores, restaurants, shopping centers, and other retail businesses.
Retail business in the UAE is always a lucrative investment. Despite the growing competition in the space with large Malls taking away the market share from small department stores, there is a lot of opportunities for small retailers to find their audience here in Dubai.
The large audience base made up of travels, business visitors, businesses, expat population, Emiratis, etc., is a potential target for any retail store in Dubai. Gaining the attention of this audience base with innovative product offerings will determine your win as a retailer in Dubai.
For any assistance regarding retail business setup in UAE, feel free to reach out to us anytime!
Contact: Aurion Business Consultants
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