The Domino Effect on Consumption Behaviors in the GCC

The Domino Effect on Consumption Behaviors in the GCC

September 22, 2019

If we recap change the past 2 years of those living in the GCC countries, it would summarize through the below verbatims, more or less, as follows:

·      Before 2017: What a great life! Too hot, but super fancy and so many great stuff to buy 😀

·      2017: hmmm, the news indicates something is not right…it seems we’ll follow the rest of the world’s problems soon 🙁

·      January 2018: Now they imposed on us 5% Value Added Tax on anything that comes with a receipt, which is almost everything we buy! :O

·      Starting February 2018: Wasn’t the VAT enough?? Petrol prices now jumped, and now fluctuating on a monthly basis :S

·      Facing the truth Today: My savings are heavily declining, my company is let go many of my colleagues, so is my life almost over in the place I’m financially, if not even personally, super comfortable in? :'(

*Above script is only for the purpose of recapping common verbatims shared by those living in the UAE and KSA

Starting 2017, consumer behaviors in the UAE and KSA changed drastically after a sequential decline resulting from a blend of economic, political, and governmental decisions leading to instability, which led to residents in the UAE and KSA living life off guard for a while now.

How Gulf Consumers Are Affected?

For consumers living in the UAE or KSA, it seems the fortunate days of unthinkable spending is gone for a long while, if not forever. People in the Gulf region have been spending as if there is no tomorrow, but not anymore today.

“I’ve been living in Dubai all my life, and now I can tell you it reached to the peak of charging us for the air we breathe, literally!”

Sandy, 27 YO, works in Advertising industry, Dubai

How the Economic Domino Effect has only begun with the UAE and KSA:

With the automatic increase in expenditure since January 2018, not only are those living in the Gulf region paying 5% more on every purchase that comes with a receipt, but on top of that was added additional sources for extracting more cash such as increasing Toll Stations, adding fees to free parking spots and multiple free services that saved them from stepping outside the boiling whether to fill the gas tank, or wait for a friend in the garage shade without a fee…etc, all of which led to a great change in Gulf consumers’ consumption behaviors.

How Promotions Are Highly Impacting Purchase Choices:

As a result of increasing expenditure, consumers living in the Gulf are now concentrated on purchasing what is discounted, resulting in more price-oriented and less brand loyal individuals across the entire region, who are currently driven by who has the “the better offer.”

“My wife and I created a storage room at home, where we plan to purchase in bulks, only during offer seasons anything that can be stored”

Peter, 34 YO, works in Medical field, Dubai

“At first when entering any hypermarket, I did not really concentrate on the price differences because there were minimal variations within consumer goods I purchased. But after the 5% VAT, we all started to concentrate price differences to compensate for the additional price increase after it entered our lives.”

Mohamed, 39 YO, works in Sales industry, Abu Dhabi

The Effect of Gulf Change on Marketing Teams

Marketing teams in MNCs managing Gulf decisions, see the effect of the market changes on their brand tracker numbers.

According to The Arab Weekly, “Most of the complaints in Saudi Arabia and the UAE come not from the consumers but businesses unsure about how to implement VAT on goods and services”

That means very SOON, Marketing teams will start, if not already started, creating and implementing new pricing strategies meeting the newly defined consumer behaviors.

 

Think you are ready to go beyond promotions and start recreating your pricing strategy?

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