What can Overcome Heightened Price Sensitivity?

Around 83% of categories in KSA and 74% of categories in the UAE show price increases, impacting consumer buying behaviour.

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  • Amidst shifting consumer preferences and heightened price sensitivity, emerges fluctuation in consumption trends across different channels and product categories. The Retail Spend Barometer by NielsenIQ revealed that nearly 63% of FMCG categories in KSA and 88% in the UAE saw price hikes of up to 10% in the last quarter of 2023. Consequently, this has impacted user consumption. Here are a few key takeaways from the survey. 

    How does price swing impact consumer preferences?

    Price rises and drops have significantly impacted consumption trends among customers across the UAE and KSA. For instance, in the final quarter of 2023, a decrease in prices for  ecommerce Fast-Moving Consumer Goods categories by 3-5%, increased consumption by 16-28% in the UAE and KSA. 

    On the other hand, traditional trade of smaller-scale outlets and independent businesses in KSA and UAE witnessed 2.1% and 1.9% average price increases, respectively, in the last quarter of 2023. Around 83% of categories in KSA and 74% of categories in the UAE show price increases, which impact consumer buying behaviour. 

    With snacking at the highest price-increasing basket in both KSA and UAE,  KSA consumption growth and price changes are supporting TT growth while consumption drops are causing value decline in UAE.

    Also Read: How to Improve the Customer Experience Using Omnichannel Touchpoints

    Omnichannel strategy changes the marketing game

    This discrepancy in pricing between KSA and UAE underscores varying market dynamics prompting marketers to adopt innovative strategies for defying economic challenges. The ecommerce sector has shown remarkable resilience and dynamism.

    Underscoring a robust consumer demand within the digital marketplace, which appears undeterred by the financial challenges presented by rising costs, Andrey Dvoychenkov, NielsenIQ APP General Manager, said, “The continued expansion of ecommerce under these conditions suggests a significant shift in consumer purchasing behaviour, with a growing preference for the convenience, variety, and often competitive pricing that online shopping platforms offer.”

    “For both FMCG and T&D sectors, adopting an omnichannel strategy is a fantastic opportunity for businesses and crucial for success due to the intense competition in pricing and market presence. Moreover, the adoption of ecommerce across the consumer product spectrum highlights the importance of convenience and a broad product selection as principal factors influencing consumer preference and behaviour,” added Dvoychenkov.

    The strong growth rates in ecommerce amidst price hikes indicate not only the sector’s resilience but also its potential to thrive and adapt in varying economic landscapes. “By recognising and leveraging these trends, organisations have the potential to reinforce their market presence and capitalise on the sector’s expansion.”


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