Consumer spending power in the Kingdom of Saudi Arabia remains strong despite concerns about the global macro-economic environment. This is according to local research by leading management consulting firm, Kearney, exploring consumer sentiment and purchasing habits. 79% of those surveyed highlighted concerns about global market volatility and rising inflation, and 72% noted an increase in the prices of goods purchased over the last three months.
Price increases were felt most in food and beverage (76%), restaurants and hotels (67%), clothing and footwear (63%), electronics (61%) and transport including gas prices (57%). However, despite concerns and noticeable price hikes, consumers do not expect their spending to be impacted with almost half (46%) planning on making a major household purchase (SAR 1,000+) in the next six months.
“The Kingdom’s progress over the past five years has contributed greatly in further strengthening its economic foundations. Businesses and individuals have benefitted from favorable policy changes which have given consumers’ confidence in their purchasing power, regardless of the macroeconomic environment. In fact, spending on non-essential items in KSA has increased compared to 2021 (11%) reinforcing this, and we anticipate that this trend will continue into the new year,” commented Debashish Mukherjee, Partner, Kearney Middle East.
Online purchasing remains a popular channel for KSA shoppers, mainly due to the ease of purchase (74%), saving money (58%), variety (51%) and ease of delivery (49%). When it comes to shopping in brick-and-mortar stores, the importance of the in-store experience and convenience increased by 36% and 26% respectively, compared to 2021.
“Many retailers have had to adapt their strategies over the past three years to weather the challenges posed by the pandemic. We saw an increase in the adoption of omnichannel approaches to ensure that the business impact was cushioned. Consumers have also been increasingly shopping online, forcing retailers to think of new ways to build stronger brand connections and offer more engaging in-store experiences.” added Mohammed Dhedhi, Partner, Kearney Middle East.
“Overall, there is a positive, local sentiment when it comes to the retail sector in the Kingdom, despite global macroeconomic headwinds. Key stakeholders can capitalize on this by closely monitoring its evolution and adapting strategies, ensuring that they stay competitive, relevant and engaged with consumer needs,” concluded Mukherjee.
