UAE and KSA consumers become more price sensitive

Consumers have become more price sensitive and there’s been a shift in consumer preferences, according to NielsenIQ Retail Spend Barometer report.

The report found that a decrease or increase in prices of goods affected the consumption rate among consumers.

In the last quarter of 2023, the prices for E-Commerce Fast-Moving Consumer Goods (FMCG) went down by 3 per cent in the UAE and 5 per cent in Saudi Arabia.

After the price drop, the consumer’s consumption of this category in the e-commerce channel went up by 28 per cent in the UAE and 16 per cent in the KSA.

Price increase also led to the variation in consumption trends,primarily within the Baby Care category in KSA and the Personal Care category in the UAE.

The e-commerce sector has shown remarkable resilience and dynamism, points out Andrey Dvoychenkov, NielsenIQ APP General Manager and explains that this phenomenon underscores a robust consumer demand within the digital marketplace, which appears undeterred by the financial challenges presented by rising costs.

“The continued expansion of e-commerce under these conditions suggests a significant shift in consumer purchasing behavior, with a growing preference for the convenience, variety, and often competitive pricing that online shopping platforms offer.

“This trend may also reflect the increasing confidence of consumers and their willingness to engage with e-commerce platforms. The strong growth rates in e-commerce amidst price hikes indicate not only the sector’s resilience but also its potential to thrive and adapt in varying economic landscapes.

“By recognising and leveraging these trends, organisations have the potential to reinforce their market presence and capitalise on the sector’s expansion,”says Dvoychenkov.

Traditional trade smaller-scale outlets and independent businesses in KSA and UAE have witnessed average price increase of 1-2 per cent.

83 per cent of categories in KSA and 74 per cent of categories in the UAE have shown an increase in average prices in the last 3 months versus last year.

“Consumers in both regions feel the pinch of the price increase,” said the report.

KSA consumption growth and price changes are supporting growth in the region while consumption decreases are hindering growth in UAE.

 “For both FMCG and T&D sectors, adopting an omnichannel strategy is a fantastic opportunity for businesses and crucial for success due to the intense competition in pricing and market presence.

“Moreover, the adoption of E-Commerce across the consumer product spectrum highlights the importance of convenience and a broad product selection as principal factors influencing consumer preference and behavior”, concludes Dvoychenkov.