UAE, Saudi shoppers eyeing more savings, becoming less brand loyal
New survey shows that consumers in region are rapidly shifting purchasing behaviours
Gulf shoppers are becoming more cost-conscious, less brand-loyal and rapidly shifting purchasing behaviours, according to a new survey.
The 2018 Middle East Sentiment Survey by McKinsey & Company revealed that 55 percent of consumers are now actively looking for savings across markets, with those in Saudi Arabia leading the pack.
They are finding creative ways to spend less and more actively considering alternative brands than in previous years, the survey said.
Among the survey’s findings, almost 35 percent of consumers now look to buy their preferred brands at any cost instead of trying out alternative brands at cheaper prices. This is down from almost 45 percent in April 2017.
The survey also revealed that 78 percent of consumers in the region changed their buying habits to save money. Multichannel shoppers have cut spending in all channels and increasingly favour discount formats and chain grocery stores.
Saudi and UAE consumers felt they were forced, over the last two years, to make adjustments to their spending habits and now feel more confident about spending disposable income, in order to regain some of their lost purchasing power.
In Saudi Arabia, 34 percent of consumers are looking to buy their preferred brands at any price point, compared to 42 percent in April 2017. In UAE, this number was 34 percent compared to 41 percent in 2017.
“Interestingly, consumers in UAE and Saudi Arabia responded similarly to most questions that were put to them and despite fluctuating financial sentiment, they believe they are saving and delaying purchases less than in Spring 2017,” said Gemma D’Auria, leader of the retail practice in McKinsey’s Middle East office.
Globally, more consumers traded up to more expensive brands, while fewer consumers traded down to cheaper options. Although the overall consumer sentiment illustrates a shift towards cost consciousness, the market remains fragmented with a consistent and sizeable number of consumers still willing to trade up to higher value or luxury brands.
In the Middle East, almost 16 percent traded down and 11 percent traded up in this year’s survey. In the UAE, 14 percent traded down and 12 percent traded up while in Saudi Arabia 16 percent traded down and 11 percent traded up.
Approximately 54 percent of Middle East consumers who have opted to trade down were happy with this decision with 46 percent admitting a desire to return to their old brands.
“People are becoming less brand loyal. Earlier, they were looking more for preferred brands in cheaper channels, now they are more inclined to try and stick with lower cost brands – a shift which we attribute to an increase in the perceived and real quality of private label and lower tier brands,” added D’Auria.
The survey also revealed that the shift to e-commerce is happening faster than it was last year. It’s seen not only among affluent consumers but across all income tiers and the regional trend is in line with the rest of the world.
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