The Changing UAE Consumer Behavior

31 Aug 2021   |  UAE

As the COVID-19 spread eases and countries gradually emerge from lockdowns, the UAE expects the economic recovery to lie on the global rebound demand of oil, increasing travel traffic, and productive consumer behavior.

In 2020, the businesses in the UAE had adapted their game plan to cater to the changing consumer trends. While consumer behavior shifted to digital services over the years, the COVID-19 pandemic became urgent for digital transformation.

Shoppers in the UAE have shown signs of price-conscious tendency, seeking ways to save money through discounts, promo, or limit their spendings. Moreover, UAE citizens seem hesitant to go back to their routine before the pandemic despite the region being one of the world's fastest vaccine inoculations globally.

Digital Transformation

Digital Transformation in UAE

The shift in the UAE consumer behavior forced companies to ride the wave of digital transformation and emphasize the importance of innovation to implement a seamless economy. E-commerce and digital transformation change the way people transact and allow them to research before shopping. As a result, people become more reliant on social media to make informed decisions before purchasing online.

The UAE internet users mainly discover newly-found brands through search engines, social media ads, and retail websites to direct them to the brands' profiles on the channels. Hootsuite's study found that 52.1 percent of internet users in the region prefer to research brands through social media.

Albeit a new phenomenon, the UAE consumer spending has reached over USD 1.68 billion on fashion and beauty products during 2020, followed by USD 1.52 billion on hobbies and USD 1.27 billion on mobility and accommodation. Moreover, 65.7 percent of internet users opt for shopping through retail apps on their mobile phones.

The Rise of Fintech

The rise of e-commerce in the UAE has brought forth a specific fintech product's popularity: buy now, pay later. The product provides flexibility through zero-interest installment payments and acts as the UAE's most preferred payment method, Cash on Delivery.

The Buy Now, Pay Later popularity was due to the concerns of transmitting the COVID-19 virus through cash transactions. Other mobile payment platforms such as Google Wallet and other similar products have also risen during the wake of the pandemic, helping the UAE consumers to simplified payment processes while ensuring security measures in e-commerce activities.

As the UAE consumers become more reliant on online retail channels, businesses need to install data analytics systems to leverage consumer intelligence and provide services suited to the changing consumer demands. However, businesses still hesitate to completely shift to digital, as no one could predict whether traditional retail models are still needed.

The COVID-19 pandemic has disrupted global supply chain activities, forcing businesses to pause and postpone their regular trade and eventually changing consumer preferences from global products to local brands, especially for perishable food products.

The awaking popularity of local products has encouraged UAE's businesses to take vast measures to capture the digital-savvy consumers and create a competitive edge to survive in the era of a competitive market in e-commerce. Brands that are quick to adapt to the needs of the UAE consumers in terms of product quality, digital services, and accessible payment methods would be much more capable of reaching scalable success during the post-pandemic era.

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