Young Saudi Arabia Consumers Bring Spending Back, 88% Ready to Embrace Pre-pandemic

Sitecore®, the global digital experience management software leader, released its Holiday Shopping Trends 2021 report exploring how Saudi Arabian consumers were looking to celebrate the National Holiday.

Saudi Arabia’s residents are eager to resume their normal lives and make up for last year’s Covid-controlled holiday, with 88% of those aged 25-34 saying they are ready to embrace pre-pandemic shopping, travel, and holiday experiences.

About four-fifths (79%) of Saudi Arabia consumers surveyed plan to make bigger and more mindful holiday purchases this year, fueled in part by the fact that 76% of consumers say they have more savings set aside this year compared to last year.

In the first half of this year, 28,000m² and 57,000m² of new retail space were delivered in Riyadh and Makkah

Sitecore’s Holiday Shopping Trends 2021 report features insights from consumers around holiday shopping, gift-giving, spending, and sentiment. The data arms marketers in categories like retail, travel, automotive, and others with the intelligence they need to deliver winning experiences that satisfy consumers’ evolving tastes and demands.

“As 88% of consumers in Saudi Arabia are very clearly ready to move on from the pandemic, they are looking at Holiday 2021 as the beginning of the rest of their lives,” said Mohammed Alkhotani, Area Vice President – Middle East and Africa, Sitecore.

“Our research shows pent-up demand and more savings than usual will result in younger consumers splurging on self-care and big-ticket items at the register, which is great news for those in retail, travel, and hospitality. It’s also heartening to see that 69% of Saudi Arabia consumers want to support their local community, including locally-owned businesses. The industry will need to respond with more offerings from these businesses.”

Saudi Arabia’s Shift in Perspective:

• 73% of consumers would prefer experience gifts to ‘more stuff’
• 85% of consumers are now planning ‘the trip of a lifetime’
• 73% of consumers under the age of 44 said they are now more spontaneous, more social, and enjoying life more

Young Saudi Arabia consumers bringing spending back:

• 87% of those under the age of 44 stated that following their experiences during the pandemic, they now value travel and appreciate other cultures more

Saudi retailers could support more locally-owned businesses:

• 95% of consumers believe it is essential that retailers offer more products from locally-owned businesses, but only 66% report seeing more locally-owned products when shopping 

Buying local and being mindful with purchases is a priority for Saudi Arabia:

• 69% of consumers are willing to pay more for locally made gifts
• 59% of consumers are annoyed when they find a purchase was made in China when they thought it was a local purchase
• 93% of consumers stated that the pandemic has made them think more carefully about how they spend their money

In Saudi Arabia, self-care now includes self-gifting:

• 46% of those buying a gift for themselves cite ‘therapy’ as the main reason

Sitecore’s Holiday Shopping Trends 2021 report shows 79% of Saudi Arabia consumers buying bigger gifts and 85% planning trips of a lifetime

New Retail Supply

However, there are still challenges in the marketplace. In the first half of this year, 28,000m² and 57,000m² of new retail space were delivered in Riyadh and Makkah, respectively. Jeddah and the Dammam Metropolitan Area saw an extra 53,000m² and 12,000m² added. The additional supply has put downward pressure on rental levels, with average year-on-year rates for super malls in Riyadh falling by 8% and smaller regional malls falling by 2%. Makkah was the hardest hit, with rental levels in large malls plummeting 24% year-on-year.

Looking ahead, the retail property market is likely to continue to favour tenants as new retail supply enters the market, such as Riyadh Avenue and Mall of Saudi in Riyadh.

So, while according to a new survey, Saudi Arabia’s retail sector has experienced a revival in sales at physical stores, landlords are still under pressure as rents dip amid new space coming onto the market, despite the increased footfall.

“The point-of-sale transactions have been increasing over the past few weeks and almost doubled compared to the same period last year,” said the report from real estate consultancy firm JLL, based on data from the Saudi Central Bank. “This indicates that, despite the change in consumer behaviors and the shift to e-commerce, many customers prefer the ‘physical experience.”