In the face of the COVID-19 pandemic, a new Gulf consumer is emerging, one with shifting financial sentiments and spending habits, says a McKinsey report.
According to its latest Middle East Consumer Sentiment Survey, UAE and Saudi Arabia shoppers are becoming more price sensitive. Twenty-seven percent of UAE respondents earning less than 7,000 dirhams ($1,905) a year reported a preference for trading down in 2021, up from 13% a year earlier. The phenomenal growth in e-commerce usage in the region is also helping consumers compare prices and deals online.
These behavioural shifts present a unique opportunity—as well as an urgent need—for Gulf omnichannel retailers and consumer-packaged-goods manufacturers to rethink their consumer strategy. This change won’t come easy. Before the COVID-19 pandemic, Gulf retailers underinvested in advertising and marketing. But rapid digitization and a growing competitive pool of digital attackers are forcing companies to devise new ways to attract and retain their customer base. See two priority areas that could drive revenue growth for consumer companies in the Gulf region.
McKinsey says these changes should serve as a wake-up call to consumer companies in the Gulf region. Prior to the pandemic, retailers and consumer-packaged-goods (CPG) manufacturers in the region were riding a growth wave fuelled by a strong economy, robust tourism, and ample government infrastructure spending, so there was little impetus to take risks and experiment with new products and services.
In addition, because well-established Gulf companies enjoyed brand loyalty from their customer base, they didn’t feel the need to make big investments in advertising and marketing. Gulf consumer companies have therefore been slower than their US or European counterparts to adapt to transformative trends like digitization and sustainability.
Also published on Medium.
