Consumer sentiment in UAE and Saudi Arabia optimistic, McKinsey study finds

This optimism is well above the 30 percent global average as 74 percent of UAE residents and 72 percent of Saudi residents responded that they are optimistic the economy will recover and become as strong as or stronger than pre-coronavirus days.

However consumer spending has shifted over the past year with consumers indicating an increased interest in saving their money and spending on less expensive products (49 percent of UAE consumers and 42 percent of Saudis).

Consumer spending on essential items, such as groceries or household items, is still at or above pre-Covid-19 levels but spending on discretionary categories, including fashion retail and hotel stays, was dropped by as much as 45 percent in UAE and 40 percent in Saudi Arabia on average.

The adoption of e-commerce and online spending was accelerated by the coronavirus related lockdown measures last year but has become a habit among Saudi and UAE consumers with 45 percent of them indicating they will continue to spend online even post Covid-19.

Among the digital commerce categories, restaurant and grocery delivery were the fastest growing habits with 45 to 55 percent of respondents mentioning that they have started using these services more since the onset of Covid-19.

Abdellah Iftahy, Partner at McKinsey & Company.

Brand loyalty has been negatively impacted by coronavirus as 95 percent of consumers have changed stores, brands or the way they shop since the pandemic started. Convenience and value for money were the most cited key drivers of this change in spending habit.

“Value and convenience are the primary reason for consumers to spend and try new brands as well as new places to shop,” said Abdellah Iftahy, Partner at McKinsey & Company, who led the research on the sentiment survey.

“Quality and purpose are also often cited when choosing new brands,” he continued.