5 behaviour shifts in new Middle East Consumer Sentiment Survey: report

McKinsey & Company surveys 2,000 consumers in the UAE and KSA

5 behaviour shifts in new Middle East Consumer Sentiment Survey: report
  • Analysis of findings sees brand loyalty impacted by high-levels of uncertainty around job security
  • McKinsey highlights 5 shifts in consumer behavior and identifies two core building blocks for companies to succeed in this new normal

Dubai: Consumers in the Middle East are changing their buying behavior, spending less while expecting more convenience, according to a report published today by McKinsey & Company.

The report entitled, ‘Navigating a perfect storm in the Middle East’s consumer sector’, surveyed 2,000 consumers in two of the region’s largest economies, the Kingdom of Saudi Arabia and the United Arab Emirates, in September 2018.

The report highlights five main shifts in consumer behavior.

  • Fear of unemployment is on the rise with 80 percent of survey respondents in the UAE (up from 75 percent three years ago) and 72 percent in the KSA (up from 62 percent three years ago) worried about losing their jobs. In both countries, more than 40 percent of respondents said they’re cutting down on spending and paying closer attention to prices.
  • Consumers are also less brand loyal with at least 15 percent of consumers in the UAE and KSA reporting trading down to less expensive brands - whereas trade-down rates three years ago were only about 10 percent.
  • E-commerce is catching on and consumers are increasingly looking for speed and convenience – with 62% of UAE consumers citing convenience as the top factor for shifting to online channels.
  • Health and wellness are becoming increasingly important factors in purchasing preferences with more than 50% of consumers in every age group in the UAE saying that having “all natural ingredients” is either “always” or “usually” an important consideration when buying packaged foods.
  • And finally, demand for local goods to support local businesses is growing, especially among younger generations.

Against this backdrop, retailers and consumer-goods companies will need to adopt a new strategy that consists of two core building blocks: a new and distinctive consumer value proposition and a relentless productivity push. To meet the needs of increasingly price-sensitive and demanding consumers, companies will need to tailor and finetune their marketing strategies and consider ramping up their e-commerce presence. In particular, personalization will differentiate those that yield successful results. Simultaneously, companies will have to fundamentally rethink their cost structure and find ways to keep prices low and extract enough value from their current business to finance new initiatives without compromising margins or the customer experience.  

Abdellah Iftahy, partner at McKinsey Middle East and co-author of the report, said: “Firms in the Middle East are still adjusting to the new normal, which is no easy task. But by keeping up to date with changing consumer trends - as well as freeing up funds through a focus on productivity and building new capabilities in digital, analytics, and M&A - retailers and consumer-packaged-goods manufacturers can deliver exactly what consumers want, regardless of whatever direction consumer sentiment takes in the coming years.”  

The report goes on to explain that new and cutting-edge capabilities in digital, analytics, and M&A will enable and enhance both consumer value proposition and a stronger e-commerce strategy. Digital and analytical skills are already benefiting retailers, with companies having seen uplifts of between 2 and 10 percent in sales and two and three percentage points in profit. Embedding data analytics into decision-making processes and providing incentives for the use of digital technologies in daily work will be especially important for companies to succeed.

The full report is available at: https://mck.co/2IUgWa8


About McKinsey & Company
McKinsey & Company is a global management consulting firm. We are the trusted advisor to the world's leading businesses, governments, and institutions. Since 1957, we have helped the Middle East region unlock growth and development, build champions in major industries, and nurture the talent of the next generation. The work of all eight of our locations—Abu Dhabi, Cairo, Doha, Dubai, Karachi, Kuwait, Manama, and Riyadh—is underpinned by our deep local roots, global reach, and investment in knowledge. The Middle East Office is committed to making a difference in the communities we serve. Through client work, dedicated social impact programs, and pro-bono initiatives, we are working to address some of the region’s most pressing social and economic challenges. With more than 600 colleagues and over 60 nationalities represented, we are proud to be one of the most diverse offices in the Firm globally.


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