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.
This report comes in PPT.
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.
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.
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.
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.
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.
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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