Regional interest in Black Friday declines as pandemic changes consumer habits

Shoppers in the UAE and Saudi Arabia plan to spend less during this year's Black Friday sales extravaganza due to the changing nature of consumer habits, but remain the biggest spenders in the Middle East and above the global average, according to a new study.

The average intended spend per shopper in the UAE and Saudi Arabia is a considerable $380 and $322, respectively, according to research by Simon-Kucher & Partners.

Though the spend is down 3 per cent and 18 per cent, respectively, it is still higher compared to other parts of the world; the US, for example, has an average of $270.

A key reason for this decline is Covid-19. The study revealed that 60 per cent of consumers agreed that the pandemic influenced their shopping behaviour, planning less in advance, having lower budgets and being less interested.

“Retailers should avoid entering price wars on promotions – it is a short-term measure with high long-term cost. Instead, they should adopt a customer-centric pricing approach to address the needs of customers by providing them with the right prices for the right products,” Lovrenc Kessler, managing partner for Mena at Simon-Kucher & Partners, said on Sunday.

Black Friday, the Friday following Thanksgiving in the US, is when retailers offer big discounts at their physical stores, eventually pouring into their online platforms. This has spawned local equivalents – Amazon's White Friday and Noon.com's Yellow Friday, for example – as retailers compete to attract buyers with rock-bottom prices.

The event has started earlier every year, some retailers even running it through November, hoping to cash in on shoppers who don't want to get caught in the holiday rush.

The pandemic has accelerated the rise of e-commerce in the region. Around 80 per cent of young Arabs shop online frequently, compared to 71 per cent in 2019, according to Wamda Capital's research. Additionally, 50 per cent of those aged between 18 and 24 in the Middle East and North Africa have been shopping more online since the pandemic began.

A report by Research and Markets, meanwhile, showed this has also led to an increase in demand for last-mile deliveries, as businesses digitise to keep up with changing consumer habits. The market in Mena is potentially witnessing its revenue growing 18.48 per cent between 2021 and 2028, according to the report.

Covid-19 also brought permanent changes in consumers’ shopping habits, Visa research showed, with 64 per cent in the UAE and 61 per cent in Saudi Arabia reporting an increase in their online spending. Over 87 per cent of respondents in both markets said they will continue to shop online, even when the pandemic is over.

Awareness of Black Friday is extremely high in the GCC, with about 98 per cent of those surveyed in the UAE and Saudi Arabia aware of its occurrence, Simon-Kucher & Partners' study showed. Nearly 72 per cent respondents in the UAE and 71 per cent in Saudi Arabia said they plan to shop for products, higher than the global average of 64 per cent.

Electronics and fashion emerged as the most popular categories – with more than 40 per cent of consumers in the UAE and Saudi Arabia expecting a discount of at least 40 per cent.

And despite the growth of e-commerce, only 27 per cent of UAE respondents said they will shop online, compared to 39 per cent who said they will buy in-store. The only two other countries leaning more towards offline are Norway and Colombia.

Saudi shoppers tend to shop online more (42 per cent against 29 per cent in-store). The global averages are 41 per cent and 24 per cent, respectively.

With the stiff competition, Simon-Kucher & Partners argues that better pricing, optimising the assortment of items, planning promotions smartly, creating up and cross-sell routes and focusing on omnichannel experiences would determine a retailer's success in this shopping season.

“Given high proportions of omnichannel preferences, retailers that successfully enable seamless continuity between online and offline channels, will win this season,” Mr Kessler added.