COVID-19 Transforms the Retail Game in Saudi Arabia

Published November 30th, 2020 - 10:00 GMT
COVID-19 Transforms the Retail Game in Saudi Arabia
Amid the Covid-19 outbreak, ecommerce in Saudi Arabia has experienced a rapid spike in growth, with more than half of the population now shopping online. (Shutterstock)

Overall, Saudi consumers expect to increase their spending on essentials, such as food, and decrease their spending on furniture and luxury items.

According to the latest white paper powered by CG-Data, when it comes to future online purchases, 80% of Saudi consumers expect to continue with online shopping due to lower prices (48%), convenience (46%), safety (42%), and habit (31%), although females (116), especially those who belong to older age groups [GenX (110) and BB (120)], stated that they miss the in-store experience and thus are less likely to continue shopping online.

Among those likely to keep shopping online, half are willing to maintain the same shopping habits they developed during the lockdown, while the other half, mainly expats (110) claim they will be more selective in what they purchase online.

Categories consumers expect to keep buying online include electronics and digital-related products (Music & movies, Gaming, Mobile phones, Electronics) as well as Clothing, Sports & Fitness and Beauty & Personal Care products.

Even as economies open up, social distancing remains, and the longer it does, the more we see consumers shift their behaviour to settle into the new situation.

The survey clearly shows that the emergence of the new normal has brought with it new customer concerns and demands. It raised the importance of health and safety above all and made consumers very price sensitive.

The pandemic has permanently widened the pool of e-commerce shoppers. Saudi consumers, once averse to shopping online, overcame key usage barriers and turned to e-commerce for a range of categories for the first time during this crisis.

This is especially true for Groceries, which attracted the most first-timer buyers.

Saudi shoppers will eventually return to stores but shopping online will witness a profound long-term impact after the coronavirus. Consumers anticipate to keep relying on online shopping as long as they experience benefits such as convenience and efficiency.

In order to keep up with their changing customers, brands need not only to embrace digital solutions but also be agile and flexible and prepare for multiple scenarios and possibilities.

The coronavirus pandemic has significantly impacted the retail industry in the Mena region, particularly in the KSA.

As purchases shift online and e-commerce booms, marketers have been left wondering how consumers will adapt to their new reality. This research fielded by CG in July and August, aims to answer marketers’ questions by highlighting the overall changes in attitude, behavior, and habit of KSA Arab consumers.

The study explores how consumers feel, what they are buying, how they are shopping, and what habits are likely to continue in the long term.

The pandemic has completely changed how and where consumers spend their money.

In KSA, essentials such as groceries continue to be the most purchased category (93%) with pharmaceuticals and cleaning products trailing closely behind at 85% and 84% respectively.

Consumers are still buying apparel and shoes (74%), beauty and personal products.

Although the ranking is similar across segments, females tended to have higher shares than the total sample on fashion, beauty, luxury, and pharmaceutical products, as did men on electronics.

Among all categories, furniture and luxury items witnessed the biggest cuts in spending with 71% of consumers stating they are no longer buying them. As for those who continued to buy luxury items, they tend to be females (index 118) and locals (index 113).

Amid the Covid-19 outbreak, ecommerce in Saudi Arabia has experienced a rapid spike in growth, with more than half of the population now shopping online.

25% of online shoppers are new to the experience and started as a result of the pandemic. New online shoppers are more likely to be female (127).

Of the wider majority (75%) that reported having already shopped online before, 20% now shop online more frequently and 32% are buying products they never bought online in the past.

Looking at the split between online there is a high tendency among Saudi consumers to visit physical stores for basic necessities, but to shop for non-essentials like apparel, beauty care products, and home appliances online.

Other less purchased categories bought online include: Music & Movies (92%), Gaming (75%), Sport & Fitness (71%), Books (71%), Luxury items (70%), Electronics (68%) and Mobile Phones (67%).

As for the frequency of shopping online, grocery shopping topped the list with 65% of consumers buying groceries daily or multiple times a week, followed by cleaning and baby products which are bought once a week to 2-3 times per month, and lastly, non-essentials (across categories) which are bought once a month or less often.

Financial concerns seem to play a major role in consumers’ choices, especially during times of uncertainty. When it came to online shopping platform selection criteria, research found that competitive prices were consumers’ top choice (63%), followed by free shipping (53%), fast delivery (45%), and good offers/promotions (44%).

As for the methods of payment, online payment ranked highest among Saudi online shoppers’ preferences [most significantly amongst Arab Expats (111) as well as Middle Socioeconomic Class (117) and Upper Socioeconomic Class (149)].

However, 25% of the population still prefer to pay Cash-On-Delivery (COD), the majority of which are females (139), Gen Z (133), and those with lower income (113), and 16% prefer to pay with cards or using their mobile device.

Among the online shopping platforms available to Saudi consumers, seems to enjoy the highest popularity thanks to its diversity. 1 in 2 people reported

having used the platform in the past 3 months, mainly to buy electronics (58%), but also for fashion (37%), beauty products (31%), and home appliances (29%).

Carrefour (78%) and Talabat (76%) are leading the Grocery industry. For Electronics Jarir is on top (89%), followed by Amazon (64%), Alibaba (62%) and AliExpress (60%).

SHEIN, Namshi and Jollichic are mainly used for fashion while Ikea and Saco are the go-to when it comes to home appliances and furniture.

Although online grocery shopping is on the rise, the majority of consumers in Saudi still rely heavily on in-store grocery shopping. This is mainly driven by the

fact that consumers prefer to pick products such as fruits and vegetables themselves (67%), but also by the fact that more than half believe delivery takes too long (53%). Extra delivery charges (36%) and accuracy issues (35%) were also seen as barriers to online grocery shopping.

Finally, 3 in 10 of online grocery sceptics, especially people aged above 50 (116), cited hygiene and safety as a barrier due to purchased items being touched by multiple people.

Another common alternative to online grocery shopping highly practiced by females (129), locals (122), and those aged 50+ (112) is grocery shopping via phone calls (by calling local shops nearby).

Overall, people in Saudi are likely to resume their regular activities once the virus has been fully contained. This holds especially true for activities associated with high risk (such as traveling abroad and staying in hotels) as well as those associated with indulgences (such as buying luxury items and visiting restaurants).

That said, people have already resumed ordering food delivery, shopping in physical stores, and visiting shopping centres and malls (higher among Arab expats: 113 - 115 - 110).

Copyright 2022 Al Hilal Publishing and Marketing Group

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