Retailers prepare for record online sales during Ramadan

13 April 2021 Consultancy-me.com 4 min. read
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Today Ramadan kicks off, and retailers are set to benefit from the festive optimism unfolding across the UAE and Saudi Arabia. This is according to a new RedSeer Consulting report, which identifies online as the bright spot this year. 

A period of reflection, fasting, social bonding and spirituality, the holy month of Ramadan is also a time of feasting and presents – usually sparking high levels of consumer activity in the Middle East. According to the RedSeer Consulting analysis, the period is getting more lucrative each year. 

Where other religious landmarks such as Christmas, Diwali and Chinese New Year are celebrated for two to three weeks at most, Ramadan festivities last a remarkable 7 weeks in the lead up to the holy Islamic festival of Eid – an enticing prospect for retailers in the region. 

Purchasing Excitement for Ramadan Across Categories

Despite the Covid-19 outbreak, purchasing excitement across categories during Ramadan jumped by a staggering 40% between 2019 and 2020, and another 20% increase is expected in 2021. Managing partner of RedSeer in Dubai Sandeep Ganediwala noted how “Ramadan continues to be a source of optimism as consumers show a high level of excitement despite the effects of the pandemic.”

A significant driving force in this steady uptick amid challenging conditions is the rapid shift to online consumption in the Middle East. During lockdown last year, everything from daily groceries to luxury purchases moved online – taking ecommerce in the region to new heights. 

E-tail GMV During Ramadan - UAE & KSA

Adoption ballooned, infrastructure matured, trust increased, and the online user base expanded – building a solid foundation to sustain festive sales. As a result, more than $2 billion in gross merchandise value (GMV) of this year’s Ramadan sales will unfold online per the report – twice the ecommerce GMV for the same period in 2019. 

Much of the regular festive haul can be found online – across consumer segments. “We find that the Apparel & Footwear category is what consumers are most excited about purchasing this Ramadan season,” explained Ganediwala. “Traditionally this has been a strong category during Ramadan as consumers consider it to be the appropriate category to purchase gifts for friends and family.” 

Ramadan Exitement UAE - Intent to Purchase by Category

“We also find a high level of excitement for Jewellery for similar reasons and a high level of excitement for Grocery owing to Iftar preparations,” he said, highlighting how different segments fall into the spotlight at different times during the period: pre-Ramadan, Ramadan and post-Ramadan.

“Sectors such as grocery are more active pre-Ramadan when consumers buy these items in preparation for the festival. Other sectors such as fashion start during the Ramadan period.”As it happens, ecommerce platforms in Dubai and Saudi Arabia can support most of these product segments – adding value through all seven weeks. 

E-tail GMV Splits During Ramadan

An outlier here is electronics, which tends not to fall in the top consumer excitement categories for Ramadan but occupies a healthy share of online activity. In fact, electronics and fashion combined account for 60% of the total online GMV during Ramadan. Other segments such as personal care, groceries and home appliances dominate the remaining market share.

Booming ecommerce combined with a sense of optimism in the Middle East should deliver a positive Ramadan for consumers and retailers alike. In the backdrop, the UAE’s Ministry of Economy has announced sizeable discounts on several basic rations – particularly Ramadan necessities – across nearly 900 stores through the country. 

Brands will be keen to get a boost from this spending drive. News outlet Arabian Business reports that 40% of the Middle East’s total ad budget is spent during Ramadan, as retailers scramble for their share of the pie.