Consumers are spending more, but their mix is changing for good

23 November 2021 4 min. read
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Consumer spending in both the UAE and Saudi Arabia is on the rise again, as consumers regain faith in the economy’s re-opening and rebound. Spending patterns however are emerging from the pandemic with a different flavour, according to a new report by AlixPartners.

For its ‘Post-Pandemic Consumer Behaviour’ report, the global management consulting firm canvassed the views of more than 7,000 consumers globally, including over 1,000 respondents in the United Arab Emirates and Saudi Arabia. 

The analysis found that overall, consumers in the two Middle East countries are more optimistic about their country’s vaccination programmes compared to their global counterparts. Optimism among residents of the UAE stands at 83%, compared with 65% globally, while Saudi residents enjoy an even higher optimism score of 85%.

COVID Vaccination Optimism

This optimism is not surprisingly cascading into more expansive spending behaviour. The immediate response to the Covid-19 pandemic was to cut back (heavily) on non-essentials, as consumers tight their belt in anticipation of potentially tougher times. The survey found that over the past months, consumers have been reducing their level of cutback, spending more on things such as restaurants, entertainment and travel. 

In the UAE, the development is similar, although there the increase in spending over the past months has been more pronounced. 

KSA Share of Consumers Spending Net ‘More’

The post-pandemic shopper is however different to the pre-pandemic one. Both in the UAE and Saudi Arabia, over one-third of consumers told AlixPartners that their buying habits have “changed for good”. 

There are a number of reasons for this change, with concern about finances (people are soberer in their spending) and fear of contamination (people are turning to the online channel or delivery) the top two. “These vulnerabilities will cause many of the new behaviours being seen to outlast the pandemic, and drive consumer behaviour in the future,” said Karl Nader, a Managing Director at AlixPartners

Grocery shopping behaviours in UAE

Noting grocery shoppers as an example, the AlixPartners study highlighted that more people are on the look-out for discounts and value for money, a larger share of people are ordering their groceries online for home delivery. 

Meanwhile, growing health and wellbeing consciousness is another trend emerging from the pandemic, and in the UAE and Saudi Arabia this is no different. In the UAE, 35% of consumers said that they more inclined to buy healthy foods compared to their lifestyle pre-pandemic. 

Consumers are in addition increasingly environmentally conscious, through both reducing consumption and supporting sustainable products. In the UAE, consumers are more likely to purchase eco-friendly products that are sustainable, compostable or recycled (53%). Other environmental factors influencing buying decisions are the reduction of single-use plastic (42%), reusable packaging (35%) and water and energy conservation (32%).

Retail habits shifting

For food and non-food retailers, the lesson is to understand what’s changing and how they can respond. “The pandemic has fast-tracked the evolution of consumer trends and behaviour and as it continues to change, it is imperative for consumer-facing companies to understand what is causing these changes and how to adapt to them,” explained Nader. 

“Retailers must embrace the change and adapt their business models to encompass a seamless omnichannel experience, where in-person shopping and online offerings bring together the best of both worlds,” added Hisham Abdul Khalek, a Director at AlixPartners. 

On the need to optimize the omnichannel approach, Abdul Khalek added: “Retailers must invest in omni stores of the future, with more attention to in-store experience built around curated offering, digitization, and social experience; whilst optimizing operational levers in terms of space, labour, inventory allocation, and delivery.”