Saudi consumer spending to defy regional trend, says AlixPartners

29 February 2024 Consultancy-me.com 3 min. read

The coming year will see resilient consumer spending in Saudi Arabia despite economic uncertainties that are likely to persist globally, according to a study from management consulting firm AlixPartners.

The stable consumer spending in Saudi Arabia contrasts with the broader trend in the EMEA (Europe, the Middle East and Africa) region, where 37% of consumers said that they would spend less in 2024 compared with last year.

It also comes amidst several ongoing destabilizing trends being felt around the world, like stubborn inflation and geopolitical turmoil. Some sectors are even still struggling with their footing after the patchy recovery from the pandemic.

Saudi consumer spending to defy regional trend, says AlixPartners

Source: AlixPartners

“As the persistent effect of inflation continues, consumers will tighten spend and manage costs more effectively. There will be trade-offs with purchases, with either a focus on reducing category or frequency of spend,” according to AlixPartners.

Saudi consumers meanwhile are increasingly keen on making purchases online, with e-commerce becoming increasingly popular in recent years. Saudi e-commerce is mostly = dominated by international companies, but a shift is being witnessed towards homegrown players.

The rise of digital payments is set to continue in KSA. The preference for digital or credit card payment in KSA was on par with Switzerland and even higher than Germany, though other European nationals like France and the UK are much further along than KSA in the journey towards becoming a ‘cashless society’.

The data from the AlixPartners study also showed a growing divergence in spending attitudes depending on level of income. Unsurprisingly, it was the high-income groups that reported they would spend more in 2024, while lower-income respondents will spend less. Younger people were shown to be more likely to increase their spending.

Saudi consumer spending to defy regional trend, says AlixPartners

Source: AlixPartners

Despite stable spending when compared with other regions, KSA consumers followed the general rule of prudent spending. Many projected spending less on non-essentials like electronics and toys, while also noting that they actively seek out promotions to save money. A majority of KSA shoppers (54%) said they would spend more on groceries in 2024.

The retail sector has been no exception to the explosive worldwide popularity of AI tools. Saudi Arabia saw the highest level of usage of AI tools for shopping research. Consumers there have been enthusiastic about innovative shopping solutions like AI researching tools, for example when booking holidays.

The AlixPartners study surveyed over 10,000 consumers in France, Germany, Italy, Saudi Arabia, Switzerland, the UAE, and the UK. The report was conducted in partnerships with YouGov.