20% of Saudi consumers ready to pay more for local products: PwC Middle East

ِA grocery store

Almost 20% of Saudi consumers are ready to pay the same or slightly more for local and customized products, compared to 15% globally, PwC Middle East executive partners told Argaam on the sidelines of the Retail Leaders Circle Summit.

The executives highlighted the increasing reliance on digital sources among Saudi consumers for their purchasing decisions.

 For more exclusive interviews

They anticipate a promising future for the Saudi retail sector, driven by evolving consumer behavior prioritizing technology adoption and sustainability.

Fastest growing region

Megan Higgins, Partner – Customer Insights Leader at PwC UK, noted that the Kingdom is the fastest-growing region globally in the retail sector, experiencing a remarkable growth rate of around 39%.

Megan Higgins, Partner – Customer Insights Leader at PwC UK

She expressed optimism about the retail sector's positive outlook in Saudi Arabia, particularly with the expansion of tourist e-visas.

Statistics indicate that a substantial 98% of retail trade in the Kingdom is conducted by Saudis, with tourists contributing only 1% to 2%.

Interestingly, tourists tend to spend two to three times more than local consumers. She forecasts a promising future for the sector if the Kingdom successfully attracts consumption from tourists and maintains local consumption, especially in light of the projected 110% growth in tourism compared to 2019.

Higgins highlighted the Kingdom's advantage as a recent adopter, allowing it to learn from global practices rather than being the first mover.

A surge in e-commerce

Expecting a surge in e-commerce, Higgins predicted an explosion in mobile-commerce in the Kingdom, with a unique blend of virtual and physical worlds that provide distinctive shopping experiences.

She noted Saudi Arabia's expected swift adoption of technologies, surpassing global trends, with Meta Co. reporting the highest number of users on its messaging platforms, WhatsApp and Messenger, indicating a high level of digital connectivity among Saudi consumers.

Norma Taki, Deals Partner and Consumer Markets Leader at PwC Middle East, underlined that 62% of Saudi consumers prefer to check online reviews before making purchases, a significantly higher percentage than the global average of 52%.

Norma Taki, Deals Partner and Consumer Markets Leader at PwC Middle East

She emphasized the importance for retailers, whether online or brick-and-mortar, to ensure smooth customer experiences.

Emerging trends that the Saudi retail sector should embrace

Higgins suggested that the Saudi retail sector must embrace emerging global trends, including leasing, repair services, and sustainability. With the Kingdom opening up to tourists, the retail sector should offer rental services to meet tourists' one-time needs, especially in areas like NEOM and Trojena.

She emphasized the importance of repair services for luxury products, both in retail stores and online, contributing to maintaining product quality and increasing customer loyalty.

Higgins noted a growing consumer focus on sustainability, with an increasing number of consumers willing to pay a higher amount, ranging from 10% to 20%, for products with a sustainable label.

Taki added that young consumers and Saudis are aligned with supporting sustainability and locally-produced goods, actively willing to pay more for such products.

Specifically, 20% of Saudi consumers are ready to pay the same or slightly more for local and customized products, a percentage higher than the global average of 15%, Taki noted.