RIYADH, Saudi Arabia, July 31, 2023–(BUSINESS WIRE)–The aftershocks of the COVID-19 pandemic and the resultant shifts within the Saudi Arabian retail area, in addition to meals inflation, have generated a pullback on promotions, coupled with worth will increase. This has created a difficult atmosphere for Saudi Arabian consumers who’ve tailored shortly by shifting in direction of comfort and important merchandise.
This was the view of Andrey Dvoychenkov, NielsenIQ Center East Basic Supervisor, as an introduction to the very first Saudi Meals Present held in Riyadh and attended by a bunch of native and worldwide retail professionals. His NielsenIQ presentation entitled Navigating Disruption Throughout Occasions of Change offered the most recent insights into the Saudi Arabian Quick Transferring Client Items (FMCG) sector.
Dvoychenkov stated; “The Saudi market has not too long ago been pushed by worth will increase, with some costs raised by 10 to fifteen% through the 12 months, which is generally because of the rising value of uncooked supplies.” Dvoychenkov additionally highlighted the distinctiveness of the Saudi Arabian market “the place the vast majority of merchandise and uncooked supplies are imported, making it important for business gamers to navigate provide chain disruptions and take into account native substitutes to create extra stability.”
Dvoychenkov reported that consequently shoppers in Saudi Arabia are scaling again on spending and optimising their budgets resulting from varied way of life adjustments. These adjustments embrace cooking at dwelling extra usually, minimizing waste and spending much less on clothes and grooming.
An fascinating dynamic is that regardless of their intention to curtail spending, Saudi consumers appear to care deeply about high quality. The premium product section is rising forward of the economic system section for native and worldwide manufacturers in meals, with 65% of Saudi consumers saying they’re prepared to pay extra for high quality merchandise.
By way of their response to the present difficult situations they face, ways that customers are using embrace weighing up the attributes that matter most, procuring on-line to get the perfect offers, and stopping shopping for sure classes of merchandise. Curiously, regardless of these adjustments and turbulent occasions, shoppers in Saudi Arabia have the bottom share globally in perceiving themselves to be in a recession.
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Dvoychenkov indicated that Saudi consumers primarily spend their procuring time in hypermarkets and supermarkets, however there’s a noticeable development of quicker progress in smaller format shops, similar to grocery and comfort shops. The value enhance in groceries can be considerably decrease in these smaller format shops in comparison with conventional supermarkets.
The essence of “necessities” for contemporary consumers
In the case of alternative and product choice, 77% of Saudi consumers really feel that meals costs have elevated and are solely prepared to purchase necessities. Concerning the definition of “necessities” for contemporary consumers, Dvoychenkov emphasised the have to be cautious in how this time period is perceived. To at present’s consumers, important merchandise embrace staple objects like bread with well being advantages, like gluten-free flour that provide intrinsic advantages.
As well as, the NielsenIQ evaluation highlighted the rising significance of well being and wellness in shoppers’ minds, with many consumers in Saudi Arabia prepared to pay extra for merchandise containing wholesome dietary supplements, supporting the immune system, and made with pure components.
The hovering rise of e-commerce and comfort codecs
The presentation additionally revealed a big 45% progress in on-line gross sales (Q1, 2023 vs. a 12 months in the past), with e-commerce enjoying an more and more vital position within the area. Dvoychenkov defined, “e-commerce progress is pushed not solely by comfort but in addition by an urge for food for reductions. On-line platforms supply a variety of merchandise, together with ready-to-eat meals and meals catering to numerous client preferences.”
He added, “Comfort codecs are additionally on the rise, with retailers like Viva, Gala, and Tamimi Categorical actively driving the growth of those codecs, providing on a regular basis low costs and tailor-made assortments to satisfy shoppers’ convenience-seeking wants.”
The retailers’ and producers’ problem
With the altering market dynamics, retailers and producers must adapt their methods to satisfy evolving client calls for. For Saleem Iftikhar*, Nation Chief for NielsenIQ in Saudi Arabia: “Value matching, direct price-cutting campaigns, and loyalty-building initiatives are a few of the propositions retailers are adopting to cater to price-conscious shoppers whereas offering a nice procuring expertise.”
The NielsenIQ research lastly emphasizes the significance of providing a well-organized retailer with a nice atmosphere, in addition to glorious customer support. “Shoppers are more and more searching for worth and promotion-related saving methods, and though promo effectivity has seen a slight decline, our evaluation highlights the necessity for retailers to have interaction clients by means of varied parts, together with worth and leisure,” concludes Dvoychenkov.
* Saleem Iftikhar led a panel dialogue with Chris Abboud, PepsiCo, and Shehim Mohammed, Lulu Group, on the primary day of Saudi Meals Summit – “Mitigating uncertainty, volatility and price hikes in Meals & Beverage business.”
About NIQ
NIQ is the world’s main client intelligence firm, delivering essentially the most full understanding of client shopping for behaviour and revealing new pathways to progress. In 2023, NIQ mixed with GfK, bringing collectively the 2 business leaders with unparalleled international attain. With a holistic retail learn and essentially the most complete client insights – delivered with superior analytics by means of state-of-the-art platforms – NIQ delivers the Full View (TM).
NIQ is an Creation Worldwide portfolio firm, with operations in 100+ markets, masking greater than 90% of the world’s inhabitants. For extra info, go to www.NIQ.com.
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Melina Mammidou (Melina.Mammidou@nielseniq.com)
