Predictions for 2022: 6 key consumer trends in the UAE

But the pandemic, accompanied by supply chain disruptions and the uptick in the use of digital services, has changed the dynamics. Following the pandemic cycles, lingering uncertainties, and uneven recovery in 2021, consumers are now heading into the new year with an upbeat sentiment. 

While the pandemic seems far from over due to emerging variants, the UAE government’s successful crisis management in previous years offers room for optimism.

Consumers, for their part, have assimilated to the “new normal”, slowly learning to live with Covid-19. And businesses, particularly retailers, in the UAE are adapting to evolving circumstances through flexible operating models. In 2022, these transformations are collectively shaping the following trends.

Consumer spending is set to grow steadily

Globally, consumer spending has plummeted to historic lows on the back of the pandemic. Conversely, in the UAE, the spending has remained buoyant. In fact, according to retail conglomerate Majid Al Futtaim Group’s Q3 2021 economic report, consumer confidence in Dubai reached its highest level in ten years. Supported by rising wages, the country’s effective crisis response, and the world-leading vaccination rate, consumer spending is expected to grow steadily in 2022.

The World Expo, resumption of tourism and travel sectors, and improving oil economics, too, are adding to consumer confidence in the country. As a result, experts are forecasting spending to grow at 3.6 percent this year — which is in the ballpark of pre-pandemic growth rates.

Brick-and-mortar retail and e-commerce are not at odds

Retail is a zero-sum game, where one’s loss is another’s gain. Needless to say, the growth of e-commerce has come at the expense of traditional, brick-and-mortar retailers. However, in 2022, both segments are set to grow as part of the larger economic recovery. Unlike previous years when intermittent lockdowns created cyclicality in how consumers choose between both, 2022 could witness greater stability.

Majid Al Futtaim Group’s findings from Q3 substantiate this claim: E-commerce sales grew 34 percent year-over-year and store footfalls improved 18 percent year-over-year. While e-commerce is poised for greater growth due to its apparent advantages and increasing digitalisation, physical stores will witness their fair share of consumers who cannot wait to re-experience the joys of going out after prolonged downtime. 

Customer loyalty is up for grabs

The great reset has, true to its name, disrupted the traditional notions of customer loyalty. During the lockdowns and amid an uptake of digital services, customers have enriched their understanding of various options available to them and what constitutes true “value”. Many entrants are capitalising on this reset that has essentially democratised commerce. Many handicraft businesses, independent labels, and niche retailers are adding to options.

In Dubai, such small and medium enterprises (SMEs) account for 99 percent of businesses. This is to say, customers are spoilt for choices — which makes their retention a tall order for retailers. Yet, brands cannot ignore it because, as it turns out, 89 percent of loyal customers in the UAE were found to be recommending their favourite brands to friends and family. 

Technology will be the cornerstone

In previous years, retailers invested disproportionate focus on technology adoption and business recovery. In 2022, they are set to emphasise unlocking benefits from technologies. CRM, loyalty technologies, AI analytics, ML will find greater application as retailers analyse every bit of data pertaining to shoppers’ online behaviour and hyper-personalise engagement.

Full-suite clienteling solutions that consolidate omnichannel customer data points and deliver contextualised insights for hyper-personalisation will enable both brick-and-mortar and e-commerce retailers to optimise a range of functions. Concurrently, the UAE’s increasing data regulations means that customers’ interests are safeguarded. 

Compassion, not conversion, takes precedence

We are in the empathy economy, where compassion is the prerequisite to good customer engagement. So, in 2022, businesses will align their messaging accordingly, hoping to strike the right chord with customers.

And customers could engage more with brands that resonate with their value system. This is to say, brands’ loyalty programs or marketing campaigns must not be merely transactional but go beyond. Progressive brands are rewarding customers’ non-transactional behaviour, donating to charities of their choice, churning content that is sensitive to people’s concerns and needs.

As opposed to conventional conversion-driven marketing, this approach leads with compassion. Also, empathy is being institutionalised in the UAE by the government and innovative campaigns. The world’s first global organisational empathy platform, launched recently by Dubai-based author Mimi Nicklin, is a good case in point. 

Time to walk the sustainability talk

There is a heightened awareness of the environmental consequences of extreme consumerism. This awareness took sustainability to the mainstream last year. However, consumers, particularly millennials and Gen Z, are aware that the consensus has not translated to visible actions.

In fact, many brands have faced backlash for “greenwashing” and failing to substantiate their efforts with proof. In 2022, the onus is on businesses across sectors to align with the larger sustainability drive and sociocultural evolution through demonstrable CSR actions and transparent reporting of outcomes. Consumers’ increasing penchant for socially and environmentally responsible businesses will have a direct bearing on product/service development. 

Sajid Azmi, founder and CEO of Yegertek.