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The new retail landscape: The consumers’ voice

Key findings

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Online retail is growing

Across the world, online shopping has changed the face of retail, and some segments – like books and music – now have a drastically reduced presence in physical stores in many markets. The Middle East has been slower to take to online shopping than some other regions, but the pace of take-up is now accelerating: the percentage of daily shoppers doubled in 2015, compared to 2014 (12% versus 6%). And while this number is now higher than the global average, the percentage of weekly and monthly shoppers lags behind.

As many as 44% of respondents in the region made their first ever online purchase less than one year ago, compared to 19% globally

12% of respondents shop online daily (compared to 6% in 2014)

Online retail is growing

Preference for online shopping varies significantly amongst products

In other respects, the Middle East broadly mirrors the rest of the world. For example, clothing and footwear are the most frequently purchased categories online (68%), followed by consumer electronics and computers (66%), and books and music (64%); the top three categories globally are books and music, consumer electronics, and clothing and footwear. 

The top online categories in the Middle East are also those shoppers are most likely to buy from international retailers online. Both price and choice are likely to be the big factors here. The least purchased category online is groceries (43%). This tallies with the global average.

Which of the following have you bought online in the last 12 months?

Which of the following you bought online

Consumers value price and monetary benefits

In the Middle East, price is important, but less so than it is in other parts of the world:

49% of customers in the region choose their online shopping sites based on price, compared to 60% globally

* Other is less than a percent

Likewise 56% of customers in the region like the member only discounts offered by loyalty schemes, and value these more than other types of benefits, but that compares to a global figure of 70%:

56% in the region like the member only discounts offered by loyalty schemes

PC is the main channel, but mobile is gaining ground

Mobile technology is disrupting almost every aspect of modern life, but in the Middle East mobile shopping is taking off rather more slowly than some had expected. Despite this, shopping by mobile in the region increased from 61% in 2014 to 70% in 2015, while both tablet and PC-based shopping declined slightly (92% to 89% by PC, and 66% to 64% by tablet).

How often do you shop using these different channels?

PC is top, but mobile is gaining

People are using their mobiles more and more to browse and research before they buy, and 46% expect their mobiles to be their main purchasing channel in the future, but security concerns are still preventing many of them from doing that right now. Confidence is growing, from survey to survey, but we’re not there yet.

70% Shopping by mobile in the region increased from 61% in 2014 to 70% in 2015

What retailers say:

Our mobile sales went up from 25% of our online revenue last year to 60% in the current year

Preference for cash, concerns over online payment

Consumers in the Middle East are more worried about shopping on mobile than those elsewhere.

65% of the Middle East survey respondents are worried about the safety of their personal financial information if they shop on the move. This may be one reason why as many as 30% have never shopped on mobile, and many brand owners have found it hard to find or set up secure online payment services. On the other hand, some of the most advanced players in the market have already set up successful mobile applications that accept online payments.

How strongly do you agree or disagree with the following statements?
Preference for cash

Social media impacts shopping behaviour

Mobile may not be growing as fast as expected, but social media now has real momentum. Younger 'digital natives' have grown up interacting this way, and they do it with their favourite brands and retailers too. Other consumer groups are catching up, attracted by special deals, exclusive offers, and previews of new products. This is the new reality of retail, and the sector has to catch up with the trend, otherwise there is a risk they will become redundant.

In some respects, social media is the surprise story of the survey from a Middle East perspective. Although the region has been slower to take to online shopping, its consumers are avid for social interaction. In this year’s survey, 52% of shoppers in the region say that receiving promotional offers through social media influences their shopping decisions (compared to 44% globally), and 63% think more highly of their favourite brands after engaging with them on social media (43% globally).

According to a report by the We Are Social agency published in January 2016, in the UAE there were 6.3 million people active on social media at that date (68% of the population), in Saudi Arabia 11 million (35%), and in Egypt 28 million (30%).

Do you value a brand more after interacting on social media?

Social media impacts shopping behaviour

Shoppers value service, flexibility and personalisation

An interesting trend that has emerged with this year’s new set of results is personalisation. Digital technology is making this possible for a wide range of consumer goods, but it’s also a big opportunity for the physical store. By remembering their customers, and tailoring their service to their specific needs, local stores can seize a vital competitive advantage over their online peers. Shoppers in the Middle East value real time personalised offers in-store even more than those elsewhere (34%, compared to 25% globally).

Shoppers in the Middle East value real time personalised offers in-store even more than those elsewhere (34%, compared to 25% globally).

Which of the following would improve your in-store experience?

What shoppers value

What retailers say:

Online retail hasn’t yet got to the point where it’s cannibalising bricks-and-mortar sales. Most retailers see it as a value-adding opportunity and very few people yet consider it as a threat or a challenge to the region’s malls.

Contact us

Norma Taki

Transaction Services Partner and Consumer Markets Leader, PwC Middle East

Tel: +971 4 304 3100

Leo Vera

CF Managing Director, PwC Middle East

Tel: +971 (0)50 900 3582

Rand Shuqair

Manager, PwC Middle East

Tel: +971 (0)4304 3788

Imad Matar

Middle East Transaction Services Leader, PwC Middle East

Tel: +966 (11) 211 0400 (ext 1501)

Roy Hintze

Partner, Middle East Consumer Markets, PwC Middle East

Tel: +971 56 682 0528

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