Consumers in the UAE and Saudi Arabia are the most optimistic globally about an economic recovery from Covid-19, followed by China, India and the US, a new survey from global consultancy McKinsey found.
However, consumers in most European countries as well as South Korea and Japan are pessimistic about an economic recovery, according to the survey that measured consumer sentiment around the world during the coronavirus crisis.
The results from the survey, which was conducted in 45 countries between March and June, were released on Monday. A total of 516 consumers were surveyed in the UAE.
Sixty-one per cent of UAE consumers are optimistic that the economy will rebound within two to three months and “grow just as strong or stronger than before the outbreak”, the survey said.
"The UAE consumers' optimism reflects their overall confidence in the government and system in terms of their interventions and management of the current situation," Abdellah Iftahy, a partner and leader of McKinsey's consumer and retail practice in the Middle East, told The National.
He added that though UAE consumers are optimistic, they are “turning more value-centric”.
“Consumers pulled back on spending except on essentials. The biggest winners are groceries, household products as well as digital entertainment services,” said Mr Iftahy. “All other categories are suffering, either because consumers are not spending or these sectors are not ripe enough from the perspective of digital engagement.”
The survey also focused on consumer behaviour, shopping trends and changes in both household income, spending and savings during the height of the Covid-19 movement restrictions from March to June.
In the UAE, 88 per cent of consumers believe their finances will be impacted for more than two months due to Covid-19, the survey said.
In terms of household income, 38 per cent of UAE consumers said it has either reduced slightly or reduced a lot, 52 per cent said it remained the same and 10 per cent said it increased slightly, while 44 per cent said household spending remained the same and 36 per cent said it dropped. Household savings also declined for 48 per cent of UAE respondents. However, 36 per cent said it remained the same.
“UAE consumers are now more mindful of how they spend money. They are adopting new habits such as making lists, researching brands, comparing prices and waiting for promotions before making a purchase,” Mr Iftahy said.
The UAE and Saudi Arabia, followed by the US and Europe, have seen the maximum growth in consumers who intend to continue using online channels even after the crisis ends, according to McKinsey.
“The digital revolution is being perpetuated in equal measure by technology companies, consumers and governments,” Joydeep Sengupta, a senior partner and leader of McKinsey’s digital and analytics practice in Eastern Europe, Middle East and North Africa, said.
“Despite the benefits of technology such as cost-efficiencies and the move to a knowledge economy, its challenges include the effect on employment, mental well-being, etc. We need to minimise the inadvertent negative effects of this technology revolution.”
Although the brick-and-mortar retail sector has taken a hit because of the shift to e-commerce, when consumers decide to shop in-store, their key priorities include cleanliness and sanitisation, masks and barriers, physical distancing and no-contact purchases.
Other notable trends during the course of the pandemic have been a shift in brand loyalties and the rise of the "homebody" economy, in which most consumers are not yet fully comfortable returning to regular, out-of-home activities.
The UAE (90 per cent) and Saudi Arabia (94 per cent) have the highest rates of people not regularly engaging in out-of-home activities. This compares with a global average of more than 70 per cent, the McKinsey report added.