Covid-19 permanently changed consumers' shopping habits, Visa says

More than six in 10 consumers in the UAE and Saudi Arabia are now shopping online more compared to pre-pandemic levels, payments company says

More than 87 per cent of respondents in the UAE and Saudi Arabia said they will continue to shop online even when the pandemic is over. Reem Mohammed / The National

The Covid-19 pandemic, which upended many industries worldwide, accelerated the online shopping trend in the Middle East and brought permanent changes in consumers’ shopping habits, a survey by global FinTech company Visa has found.

More than six in 10 consumers in the UAE and Saudi Arabia – the Arab world’s biggest economies – are now shopping online more compared to the pre-pandemic levels, it found.

Nearly 64 per cent of those surveyed in the UAE and 61 per cent in the kingdom reported an increase in their online spending. More than 87 per cent of respondents in both markets said they will continue to shop online even when the pandemic is over.

Digital payments remained the preferred mode for transactions, with consumers favouring contactless solutions such as debit or credit cards, digital wallets and mobile payments, the report said.

“Covid-19 pandemic has transformed the way the region’s consumers spend their money … with many of these significant behavioural changes likely to continue after the pandemic is over,” Shahebaz Khan, Visa’s general manager for the UAE, said.

More than 60 per cent of respondents in the UAE and Saudi Arabia reported an increase in the usage of mobile payments, Visa said.

The study, which surveyed 1,263 and 1,259 banked consumers in Saudi Arabia and the UAE, respectively, was commissioned by Visa and conducted by an independent market research agency 4Sight Consulting.

In the UAE and Saudi Arabia, where vaccination rates are high, consumers are optimistic about a speedy economic recovery. There is a positive shift in consumers’ opinions towards income, spending and savings.

“The urgency in controlling savings and budgeting has somewhat waned compared to the onset of the pandemic,” the report said. Consumers have “largely resumed shopping, dining, entertainment and travel, albeit with hygiene precautions in place”.

Nearly 64 per cent of consumers in the UAE, against the 61 per cent in Saudi Arabia, said they now shop for groceries online. These attitudes also prevail for luxury retail and fashion shopping, with 84 per cent in the UAE and 90 per cent in the kingdom choosing digital shopping channels and home delivery for “convenience, safety and a more seamless shopping experience”.

The pandemic has also prompted consumers to change the way they manage their finances, with an increased number of people opting for credit terms and instalments.

In the UAE and Saudi Arabia, only 28 per cent and 25 per cent of those surveyed, respectively, said they prefer to borrow from friends or family, or use bank loans. About 62 per cent in both markets admitted that they would instead use deferred payments through credit card instalments.

“While consumers remain cautious about their spending and saving … [they] are slowly returning to their pre-pandemic habits and the increase in saving and budgeting that was witnessed at the start of the pandemic had declined,” the report said.

“As online shopping and contactless payments become the new normal, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience, which is increasingly seen as a safer and more seamless alternative to cash,” said Mr Khan.

While Covid-19 severely affected consumers’ overall travel expenditure, the industry is beginning to rebound, with local destinations likely to see a boost in business over the coming months, the report said.

In the UAE, 22 per cent of consumers said they prefer short-haul trips over long-distance destinations, while 33 per cent said that will opt for local tourism over international travel. In the kingdom, 33 per cent of respondents favoured short-haul trips and 41 per cent chose local tourism.

Close to half of those polled in the UAE and Saudi Arabia see cryptocurrencies as a viable alternative to cash, Visa said.

There also has been a noticeable increase in consumer knowledge of cryptocurrencies, with 84 per cent of consumers in the UAE and 76 per cent in Saudi Arabia reporting awareness.