How Can Brands Lead in a Price-Sensitive Environment?
Driven by price changes, nearly half (43%) customers switch stores to find the best promotional offers. How can brands cope with the competition?
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The retail universe in Saudi Arabia grew by 12% from 2020 to 2024, with over 120,000 retail stores, 60% of which were located in the top four metropolitan cities.
“In an evolving global retail landscape, Saudi Arabia is remarkably resilient. Consumer volume has increased by 1.9% compared to last year in a market valued at SAR 73 billion, explains Pavlos Pavlou, NielsenIQ Managing Director in the Kingdom of Saudi Arabia.
However, only 20% of SKUs contribute to 90% of total FMCG sales in hyper/supermarkets. Credit goes to constantly changing consumer behaviour, where price fluctuation and technological drawbacks can lead to customer churn.
The Retail Spend Barometer by NielsenIQ revealed that 83% of categories in KSA and 74% in the UAE show price increases, impacting consumer buying behaviour.
Why do shoppers in MENA switch to competitors?
Consumers switch to competitors for different reasons. Some do it because of the lure of a competitive pricing offer, while others do it because of unsatisfactory payment experiences. According to a survey from Checkout.com, 33% of shoppers in the MENA region switch to a competitor if they experience a single failed payment.
Another reason is high price sensitivity, where a similar NielsenIQ’s study uncovered that
86% of the consumers are aware of the prices of their regular grocery items and attentive to price changes. Driven by these price changes, nearly half (43%) customers switch stores to find the best promotional offers.
How is innovation driving consumer behaviour in the FMCG and retail sector?
Snap and Kearney revealed that more than 97% of Saudi consumers express a strong desire for technological prowess in both digital and physical retail channels. Of these, 84% prefer omnichannel or exclusively online shopping experiences, presenting an opportunity for retailers to offer interactive and seamless experiences.
Emphasising consumer preferences towards digital retail experiences, Ali Shahid, Principal at Kearney Middle East & Africa – Consumer & Retail Practice, said, “Due to the dynamic nature of the digital landscape in Saudi Arabia, consumers are increasingly turning to platforms like Snapchat for their shopping needs, indicating a fundamental shift towards fully integrated digital retail experiences.”
Furthermore, innovations with AI and AFT (Automated Funds Transfer) are pivotal in facilitating seamless digital commerce experiences in the region.
For instance,
PayTabs partnered with Tabby to introduce Buy Now Pay Later (BNPL) technology for consumers and merchants across Saudi Arabia and the UAE. These initiatives give shoppers flexibility in terms of payment.
Majid Al Futtaim partnered with Checkout.com to enable their 15 million monthly online visitors to Majid Al Futtaim’s platforms to enjoy a seamless one-click checkout experience across the company’s diverse offerings.
Honeywell updated its AI-powered solutions, helping retailers enhance operational efficiency and improve shopping experiences.
In 2023, Ant Group introduced Alipay+ Payment Tech’s digital wallet solution to customers, bringing a comprehensive suite of online and in-store payment components and marketing features. Some good things about the solution were registration bonuses, referrals, direct discounts, vouchers, and sticker collections, which enable e-wallets to provide seamless user experiences, improve user and merchant stickiness, and enhance brand awareness and customer loyalty.
