Majority of Middle East consumers plan to spend more this year

Customers in the region favour convenience and outpace global trends in online food delivery, new PwC survey finds

FILE - In this Sept. 22, 2017, file photo, customers look at iPhone 8 and iPhone 8 Plus phones at an Apple Store in San Francisco. Retailers are taking back some control of the store experience with smart phone app features that let customers do things like scan and pay and download digital maps. It marks a big difference from just a few years ago when retailers viewed the smart phone as their enemy - customers often whipped out their device to compare prices online and walked out of the store to buy elsewhere. (AP Photo/Jeff Chiu, File)
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Three in five consumers in the Middle East plan to spend more this year than in 2019, higher than the global average, a survey by PwC has found.

Sixty-three per cent of respondents from the UAE, Saudi Arabia and Egypt said they would spend more in the next 12 months, compared with 46 per cent of global consumers, reports the 2020 Global Consumer Insights Survey released by the consultancy on Tuesday.

Convenience is key to Middle East consumers and they are willing to spend to get it.

The survey, unveiled at the Retail Leaders Circle Mena summit in Riyadh, covers 19,000 consumers in 29 countries.

“Consumers and businesses in the region are resilient,” said Norma Taki, PwC Middle East consumer markets leader. “In every city we covered this was the case – moving from a period of uncertainty to a more stable environment and a new ‘norm’.”

This was particularly the case in Cairo, where 75 per cent of consumers plan to spend more over the next year. Dubai followed at 64 per cent, trailed by Riyadh at 63 per cent, Jeddah at 57 per cent and Abu Dhabi at 55 per cent.

“This year’s most positive consumer is the consumer in Cairo, due to easing inflation and more economic stabilisation,” Ms Taki said.

Inflation in Egypt decreased to 4.8 per cent in September, its lowest level in almost seven years, on the back of economic reforms tied to a three-year $12 billion (Dh44bn) loan programme with the International Monetary Fund. Although inflation came in at 7.2 per cent in January, it is still low compared with the 33 per cent annual inflation rate the country recorded in 2017.

Egypt’s economy is projected to expand by 5.9 per cent in 2020, the IMF said. The UAE’s economy is expected to grow 2.5 per cent and Saudi Arabia by 1.9 per cent.

Consumers in the region are outpacing the global appetite in food delivery, with 64 per cent ordering in at least once a week, compared to 40 per cent of global consumers, PwC said.

Close to half of regional consumers, compared with 35 per cent of global consumers, use an online grocery delivery service.

“Convenience is key to Middle East consumers and they are willing to spend to get it,” Ms Taki said. “This is reflected by the reliance on food delivery apps, willingness to pay for super-quick delivery and use of mobile payment platforms.”

Online food delivery is particularly popular in Dubai, where only 7 per cent of respondents said they never use food delivery apps.

Middle East consumers still lead on using mobile payments, with 40 per cent paying for purchases through an in-store app, compared with 26 per cent globally.

In general, regional consumers are keeping up with global trends in digital shopping. About a third shop on mobile smartphones, 27 per cent on personal computers and a quarter on tablets, very similar to the global figures.

Shopping physically at shops continues to be the top channel for Middle East consumers at 50 per cent. But it fell to 54 per cent in 2019 for the first time after steadily increasing from 37 per cent in 2014. Globally, the figure is 47 per cent.

E-commerce in the Middle East is growing at about 30 per cent year-on-year, Abdellah Iftahy, partner and leader of the consumer and retail practice at McKinsey Middle East, told The National.

A yet to be released McKinsey study of 1,000 consumers in the UAE and Saudi Arabia found overall sentiment is improving. About 49 per cent of people in the kingdom are optimistic about the country’s economy, compared with 39 per cent in 2019. In the UAE, the figure is 46 per cent, compared with 40 per cent last year.

“The big shift this year versus the previous year … is the consumer sentiment is actually improving for the first time since 2015,” Mr Iftahy said.