A significant slowdown in market growth and global rise in raw materials and transportation prices have led to an intense fight among players to gain market share. Due to changes in customers’ needs, the business model once proven for the region is no longer relevant
Riyadh, Kingdom of Saudi Arabia – Announcing the launch of its comprehensive new report, written in collaboration with NielsenIQ, an Advent International portfolio company, Bain & Company Middle East highlights how companies operating in the Gulf Cooperating Council (GCC) have been facing unprecedented challenges in recent years. A significant slowdown in market growth has led to an intense fight among players to gain market share. The global rise in raw materials and transportation prices, in addition to a structural increase in the cost of doing business in the region, has put Fast-moving Consumer Goods (FMCG) companies’ margins under significant pressure.
Moreover, the research conducted by Bain & Company and NielsenIQ last year shows that trends in GCC consumer behaviors are broadly similar to the United States. Consumers in the region care about health, affordability, and taste; they are though more satisfied by convenience and e-commerce but less satisfied with taste and freshness. The research looks at the type of conversations consumers are having online. This is based on data that categorized 1.4 billion posts over the last three-year period across Twitter, online forums, reviews, and blogs: covering the US, Saudi Arabia, UAE, and Egypt.
“Customers in the region have changed: conscious consumers are optimizing their budgets without compromising on quality. Moreover, according to our research, more than 60% in the United Arab Emirates and Saudi Arabia are willing to put a premium for quality. It is undeniable that the pandemic has made convenience paramount that shoppers are willing to pay extra for it,” said Faisal Sheikh, a partner in Bain & Company Middle East’s Consumer Products and Retail Practices.
As customers continue to evolve, digital is playing a key role in influencing consumer behavior and changing purchasing habits, with more buyers preferring to shop online and at their convenience.
“The pandemic has accelerated the rise of digital beyond merely looking for information. The FMCG e-commerce market has nearly doubled in the past three years. Nearly 50% of shoppers in the UAE have visited an e-commerce site in the past seven days, a significant increase from last year,” said Cyrille Fabre, Head of Bain & Company Middle East’s Consumer Products and Retail Practices.
With today’s customers willing to put a premium for quality and convenience, it is imperative that companies recognize and understand these changes and adapt approaches to maximize opportunities in this new environment.
“Companies are accelerating to meet the changing needs of consumers in the region,” said Mike Gerousis, an analytics leader for Saudi Arabia, Africa & Levant at NielsenIQ.“Those that make the best-informed decisions and take a systematic and rigorous approach to turning the flow of data into profitable growth, will be the ones that outperform.”