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Consumer confidence in the Kingdom of Saudi Arabia stays upbeat, with 52% of consumers feeling positive about their job prospects and 59% feeling secure about their personal finances, the general trend depicting the confidence level of consumers shows a cautiously optimistic approach, the Conference Board Global Consumer Confidence Survey (TCB Global CCI) findings for Q3 of 2018 revealed.
“Despite the current marginal declines, the index is stronger compared to the outset of the year, bolstered by future spending intent that is well ahead of the AME regional average (48% vs. 36%). The sentiment is further fueled by recoveries in the economy, which benefited from recent increases in oil production and prices. The FMCG basket has, however, been adversely affected by the Sugar Sin Tax and growing expatriate departures.” said Andrey Dvoychenkov, Managing Director Nielsen, Arabian Peninsula & Pakistan (APP). He further added, “Our Shopper Trends survey found that 80% of Saudi consumers claim to be aware of grocery prices and 30% change brands for promotions. The usual stock-up behavior seems to be fading; however, there are still some pockets of growth seen in certain categories or products that meet consumers’ needs even the premium-priced items. These changing dynamics call for new tactics from both brands and retailers in order to manage the evolving promotional dependency, before it becomes further entrenched and entices non-essential categories to be perceived in this way”.
The most confident country in the region is Pakistan—ranking fifth globally, followed by the UAE and Saudi Arabia. However, while confidence further increased in Pakistan, it declined marginally in Saudi Arabia and more so in the UAE. Consumers in the remaining countries are cautiously optimistic, though an even less positive attitude prevails in Morocco.
This is coupled with consumers displaying a more restrained approach toward how they channel their spare cash by cutting down on discretionary spending such as new clothing (from 26% to 22%), holidays/vacations (22% to 20%), and new technology products (17% to 16%) etc. The confidence index declined by a point from the previous quarter and dropped to an index score of 106 in Q3 of 2018. The marginal decrease in confidence along with moderate expectations regarding GDP growth, and several other headwinds, seem to have translated into a more cautious consumer attitude towards spending.
The findings highlighted that the slight decline in consumer confidence from the second quarter of 2018 was due to marginal decrease in positivity about job prospects, and personal finances. It also depicted a downward trend in spending intentions which shows that 48% consumers (down 2% from Q2’18) think that it is the right time to buy. Overall, consumers’ concern about job security declined from 39% to 38%, highlighting that they feel more secure about their current financial situation to a certain extent.
The region remains somewhat pessimistic about jobs and spending, but optimistic about personal finances. However, there are differences across countries, with consumers in Egypt, Morocco, and South Africa more pessimistic about job prospects than in Pakistan. Moroccan consumers are more pessimistic about personal finances, but even here we have recently seen improvements. Consumers in the region are increasingly cautious about spending, except for those in Pakistan and Saudi Arabia.
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