The Middle East online retail sector is growing and is gradually catching up with more developed markets across the world, indicating the fast-changing behaviour of customers in the region, according to PricewaterhouseCoopers (PwC).
Although the personal computer is still the main channel for online retail, the use of mobile is growing and taking a larger role in the online shopping process, PwC said in its survey.
“Middle Eastern retail is in revolution and online shoppers in the Middle East are fundamentally disrupting retail,” said the report “Total Retail Middle East 2016”.
Finding increased preference for online retail, it said Middle Eastern consumers are shopping online more frequently than they did a year ago (2014 vs 2015) and the percentage of daily online shoppers doubled from 6% in 2014 to 12% in 2015.
As many as 44% of respondents in the region made their first-ever online purchase less than one year ago compared to 19% globally, it found.
One of the important factors that has an impact on shopping behaviour, and as a result on the retailers themselves, is the payment method as consumers are still wary of online security and have a preference for cash payment, it said, highlighting that 80% of consumers prefer the cash payment method over others, higher than the global average of 75%.
Clothing and footwear were the most frequently purchased product category online (68%), followed by consumer electronics and computers (66%); while groceries was the least purchased product category online (43%).
Besides, social media and personalisation influence consumer shopping behaviour and should therefore be a consideration for retailers with the change and evolution of the sector.
“The Middle East has one of the fastest-growing populations in the world, and one of the youngest: the number of people in the Arab world is set to almost double to 500 million by 2100, and half of these people will be under 24. Because of these demographic shifts, compounded with the other seismic changes provoked by the global megatrends, the Middle Eastern retail sector, is no doubt undergoing a change, a revolution, albeit at a different pace compared to the more developed countries,” according to Norma Taki, Retail and Consumer Partner at PwC Middle East.
Notably, the disruption is happening at the millennials’ level: with more of them living in cities, and more of them using digital technology, it said, adding there are opportunities here for retailers, as well as challenges.
Online shopping is the most obvious example, with even relatively small operators now able to cross borders and reach global buyers, if they do digital marketing well. But increasing urbanisation also offers new and different possibilities for physical stores, and the growing numbers of middle-class consumers in emerging economies have more to spend, and an appetite for brands, it said.
Observing that price is still king and plays a key role in determining shopping behaviour, PwC said Middle Eastern consumers value monetary benefits obtained through loyalty/reward programmes and the social media.