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Mon 24 Aug 2020 05:00 PM

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How Covid-19 may have changed the MENA retail landscape forever

More than two-thirds of consumers in the Middle East and North Africa believe that the way they live their lives will significantly change in the long term - research

How Covid-19 may have changed the MENA retail landscape forever

Only 26 percent of MENA consumers say they are comfortable going to a mall.

More than two-thirds of consumers in the Middle East and North Africa (69 percent) believe that the way they live their lives will significantly change in the long term as a result of the COVID-19 pandemic, according to new research.

The EY Future Consumer Index said that 84 percent of consumers declared that they have also changed the products they buy with a greater focus on value for money, and an increased commitment to consume locally made products.

Many consumer segments in the MENA region are adopting such values for the first time, with 68 percent saying that their values have changed, and they look at life differently. This will have implications for what and how they consume in the future.

Consumers said they expect to make deep and lasting changes, with 78 percent saying they will be more aware and cautious about physical health. In addition, 73 percent will be more focused on value for money in the future, with 67 percent planning to decrease the amount they spend on non-essentials.

MENA consumers do plan to remain frugal and keep cutting their spend, far more than global consumers, with only 9 percent planning to “get back to normal” - versus 40 percent globally, the research showed.

While there has been a general ease of restrictions across some countries in the region, many consumers are still uncomfortable returning to their pre-COVID activities, with only 26 percent of MENA consumers saying they are comfortable going to a mall.

Ahmed Reda, MENA Consumer Industry Leader, EY, said: “One of the many things that both organisations and individuals have learned from the shared experience of the pandemic is how resourceful and adaptable they can be. Now attention is turning to what the world might be like once the crisis is behind us. While companies can’t forecast with certainty what consumers will be doing 18 months from now, they will need to anticipate the consumer requirements and values they will be trying to serve.

“As consumers re-evaluate their approach to personal consumption and adopt new habits, preferences, and attitudes for the future, companies will also need to ensure that their products meet expectations to either maintain or brand loyalty. This will have a pivotal impact on consumption patterns and consumer identities over the next few years.”

The EY Future Consumer Index, a monthly poll that tracks consumer sentiment and behaviour across the world, surveyed 1,018 consumers from Saudi Arabia and the United Arab Emirates.

Of the consumers surveyed, 29 percent said that their biggest priority was to protect their health and the health of their family, which will guide the choices that they make. They prefer brands and products that they trust to be safe and will minimize unnecessary risk as much as they can. For example, they would rather shop online than in store because it feels safer. Moreover, 64 percent have increased spend on household products and home hygiene, while 57 percent would pay more for products that promote health and wellness.

The second largest segment of consumers at 25 percent put affordability first as part of their decision making. They focus on living within their means and don’t care much about the brands they buy but that the product delivers what they need. The 74 percent of affordability first consumers have identified price as increasing in importance, while 21 percent think it will take years for their financial stability to reach pre COVID-19 levels.

Ravi Kapoor, MENA Consumer Industry Consulting Leader, EY, added:“Over time, we expect concerns around health and household to diminish as people, communities, and economies recover – but they won’t go away entirely. As consumers let new priorities and circumstances guide their shopping habits, organizations will be required to consider efficiency against the need to keep developing the capabilities that will lead to growth.

“Many organizations responded to the COVID-19 crisis with a degree of speed and innovation they probably wouldn’t have thought possible a few months ago. But they still need to work out how to serve a more health-conscious and value-conscious consumer. While some believe they already have the right portfolio, marketing, and supply chain in place, few are resilient enough to deliver against these heightened expectations. Furthermore, investors and other stakeholders have become much more interested in whether a company’s behavior lives up to its promises, vague assurances will no longer be enough.”

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