Despite inflation concerns, Saudi and UAE consumer spending power remains high: Poll
January 11 , 2023
Consumers in Saudi Arabia and the United Arab Emirates are concerned about rising inflation and global market volatility, but their spending power remains strong going into 2023, a survey found.
The survey, conducted by Kearney Middle East, found that 80 percent of Saudi residents and 90 percent of UAE residents were concerned about these macro-economic challenges. While price increases have been noted across most retail categories, 16 percent of UAE consumers and 11 percent of Saudi consumers reported an increase in spending since 2021.
Despite concerns, the consumers’ spending power is not expected to decline over the next six months, the management consulting firm revealed in its findings on Tuesday.
“The Kingdom’s progress over the past five years has contributed greatly in further strengthening its economic foundations. Businesses and individuals have benefitted from favorable policy changes which have given consumers’ confidence in their purchasing power, regardless of the macroeconomic environment,” Debashish Mukherjee, Partner, Kearney Middle East, said in a statement on Tuesday.
“In fact, spending on non-essential items in KSA has increased compared to 2021 reinforcing this, and we anticipate that this trend will continue into the new year,” he added.
Online purchasing remains a popular channel for shoppers in Saudi Arabia, mainly due to the ease of purchase (74 percent), saving money (58 percent), variety (51 percent) and ease of delivery (49 percent).
“Many retailers have had to adapt their strategies over the past three years to weather the challenges posed by the pandemic. We saw an increase in the adoption of omnichannel approaches to ensure that the business impact was cushioned,” added Mohammed Dhedhi, Partner, Kearney Middle East.
“Consumers have also been increasingly shopping online, forcing retailers to think of new ways to build stronger brand connections and offer more engaging in-store experiences.”
Commenting on the UAE’s situation, Mukherjee said that the country’s overall “strong economic foundation and continued favorable policy changes towards business and individuals have given consumers the confidence in their purchasing power, regardless of the macroeconomic environment.”
Online shopping also remained a popular channel for UAE shoppers, due to the ease of purchase (66 percent), saving money (62 percent), variety (51 percent) and ease of delivery (48 percent).
“With online shopping also on a steady rise, retailers [in the UAE] now more than ever need to build stronger brand connections and offer new, more engaging in-store experiences,” Dhedhi added.