UAE/SAUDI ARABIA – A report by consumer intelligence company NielsenIQ revealed a modest recovery of 0.5% in FMCG consumption in the UAE and Saudi Arabia during the last quarter of 2023.
This recovery is largely attributed to heightened price sensitivity and shifts in customer preferences.
Notably, e-commerce FMCG consumption significantly improved in the reported quarter, driven by a decrease in the prices of goods sold online.
NielsenIQ noted, “In the final quarter of 2023, we observed a decrease in prices for e-commerce Fast-Moving Consumer Goods (FMCG) categories, with a reduction of approximately 3% in the UAE and 5% in Saudi Arabia.”
This price drop spurred a 16% increase in FMCG consumption in Saudi Arabia and a 28% increase in the UAE.
Conversely, non-digital FMCG categories experienced price increases of at least 10% for 88% of products in Saudi Arabia and 63% in the UAE during 2023. Consequently, overall FMCG consumption beyond e-commerce platforms decreased by 3% in the reported quarter.
These price variations between e-commerce and non-digital platforms led to shifts in consumer trends, particularly in the personal care category in the UAE and the baby care category in Saudi Arabia.
These trends underscore the resilience of the e-commerce market, which has shown robust dynamics and consumer demand despite price challenges.
Andrey Dvoychenkov, NielsenIQ APP General Manager, commented, “The continued expansion of e-commerce under these conditions suggests a significant shift in consumer purchasing behavior, with a growing preference for the convenience, variety, and often competitive pricing that online shopping platforms offer.”
The report also indicates increased consumer confidence in e-commerce in both countries, highlighting the sector’s potential to adapt and thrive under varying economic conditions.
Dvoychenkov added, “By recognizing and leveraging these trends, organizations have the potential to reinforce their market presence and capitalize on the sector’s expansion.”
The e-commerce sector is projected to grow significantly over the next few years. At the time of the report’s release, the UAE e-commerce market was valued at US$7.5 billion and is expected to reach US$13 billion by 2028.
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