The Impact of Coronavirus On Consumer Goods and Services in the Middle East

July 2020

Coronavirus (COVID-19) has shaken up consumer goods and service industries in the Middle East, putting pressure on supply chains and depressing sales as lockdowns and job losses squeeze discretionary spending. Essential items such as packaged food, and home care products grew due to higher demand as eating and entertainment moved into the home. Acceleration of e-commerce penetration is also occurring throughout the region.

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This report comes in PPT.

Key Findings

Acceleration of e-commerce and home delivery

Catalysed by lockdowns, there is a major acceleration of the trend towards e-commerce and home delivery as well as a rise in smaller shops, which do not have the digital infrastructure, offering home delivery with cash on delivery. There have been many tie-ins between different companies to facilitate home delivery. E-commerce has also led to growth in digital and card payments. 

Trading down

As lockdowns lift, rising unemployment, a decline in spending power and uncertainty about a post-COVID-19 world are impacting sales of premium goods. With less chance to socialise, social status symbols also find less appeal among Middle Eastern consumers. Luxury and premium goods suffer due to consumers’ reluctance to purchase such items online and are compounded by disruption to inbound tourism.

Post-lockdown challenges from expat exodus and job losses

UAE and Saudi Arabia demonstrated relatively good supply chain resilience during lockdown. However, post-lockdown the main challenges will come from an exodus of expats and job losses, VAT increases and the ongoing impact on the travel industry with reduced inbound tourism expected to severely impact other sectors - most prominently retail.

Home becomes the hub for everything

With malls closed, consumers looked to home entertainment during lockdown. There was growth in many categories as social and eating occasions moved into the home. However, cosmetics and apparel suffered from the lack of social occasions. This trend is expected to continue after lockdown is lifted.

Trust and efficacy are key concerns

Cleanliness and hygiene are now key priorities and consumers prefer trusted products. Brands with a high degree of name identification are poised to do well as consumers seek out efficacy and wellness rather than novelty.

Key findings
Macro environment in the Middle East
Impact of COVID-19 by country
Macro indicators by country
Impact on packaged food in Saudi Arabia
Impact on packaged food in the United Arab Emirates
Impact on packaged food in Egypt
Main impacts for Middle East packaged food players
Almarai: successful continuity of product supplies
ADNOC Distribution launches home delivery service
Packaged food prices soften, surprisingly
Impact on beauty and personal care in Saudi Arabia
Impact on beauty and personal care in the United Arab Emirates
Impact on beauty and personal care in Egypt
Implications for Middle East beauty and personal care players
Unilever: benefits from diversified products within mass hygiene
Early evidence of stockpiling replaced by managed supply and demand
Impact on home care in Saudi Arabia
Impact on home care in the United Arab Emirates
Implications for Middle East beauty and personal care players
Reckitt Benckiser: emphasis on consumer awareness
Impact on travel and tourism in the United Arab Emirates
Halted inbound tourism to have wider effects across sectors
Impact on travel and tourism in Saudi Arabia
COVID-19 disrupts Saudi Arabia’s tourism goals
Main impact for Middle East travel and tourism players
Rove Hotels: targets work-from-home segment
Impact on consumer finance in Saudi Arabia
Impact on consumer finance in the United Arab Emirates
Implications for Middle East consumer finance players
Mastercard: increases contactless payment limits in the Middle East
Majid Al Futtaim: a case study in agility
COVID-19 could hamper mall development
Shift online as store-based retailing struggles due to lockdown
Digital readiness becomes key to meet challenges during COVID-19
Industry experts expect increased shopping online to last over long term
Businesses in the Middle East aim to reshape digital strategies
Outlook for consumer goods and services in the Middle East
Mid-term outlook for FMCG in the Middle East
Longer-term outlook

Consumer Finance

This is the aggregation of ATM, charge, credit, debit, e-purse and retail cards. Note that smart cards are not included in financial cards.

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