COVID-19 Impact: Market Assessment of the Changing FMCG Industry in the GCC Region
As the coronavirus pandemic hits the world, we can expect ginormous changes in consumer buying behavior. This will have a severe impact on retailers globally. Market assessment experts at Infiniti Research have closely monitored the changing FMCG industry patterns, this article outlines the specific challenges that the coronavirus outbreak could have on the FMCG sector […]
As the coronavirus pandemic hits the world, we can expect ginormous changes in consumer buying behavior. This will have a severe impact on retailers globally. Market assessment experts at Infiniti Research have closely monitored the changing FMCG industry patterns, this article outlines the specific challenges that the coronavirus outbreak could have on the FMCG sector in middle eastern and GCC countries.
GCC countries are already faced with a bleak economic growth pattern and several other economic challenges including sluggish GDP growth, declining oil prices, and regional turbulence. As the governments in countries such as the United Arab Emirates (UAE) and Saudi Arabia prepare to undertake measures to contain COVID-19, several businesses may be at risk. Retail industry experts at Infiniti Research have identified that there will be a huge surge in the demand for industries that fall in the ‘essentials’ bracket including packaged goods, consumer health and personal well-being, and home care products. For several other sectors, the situation could prove to be extremely tough. Infiniti Research has identified some key strategies for companies in GCC and other middle eastern countries to mitigate the adverse effects of COVID-19 on their business.
Companies in the FMCG industry that are more agile and responsive to the changing consumer demands are in a stronger position to recover faster from the existing crisis. Request a free proposal for deeper insights on how COVID-19 could impact your company and key strategies to prevent the crisis from turning catastrophic for your business.
How coronavirus will impact the FMCG industry in the middle east
Prices to remain stable
It is a known fact that middle eastern countries rely heavily on imported goods. From a consumer point of view, there is an increasing worry that retailers may choose to price gauge essential goods due to the current situation where market demand is much greater than the supply. However, governments have ruled this worry as unfounded and have urged retailers across the region to undertake measures to increase supply to meet the heightening demand. Furthermore, since there has been a sudden strengthening of the US dollar, and as several GCC countries are pegged on to it, the chances for prices in the FMCG industry to skyrocket are highly unlikely. However, in the long run, this may be largely dependent on the availability and adequate supply of goods.
Shift towards local production
Consumers are increasingly buying products that have longer shelf life fearing a global manufacturing and supply slowdown. As a result, in countries like UAE, apart from products such as pasta and rice that have a longer shelf life, the snacks and savories category in the FMCG industry has been witnessing steady growth. In response to rising concerns, some of the top packaged food companies in the middle east have taken to social media to alleviate such growing consumer anxiety relating to product shortage.
‘Cashless’ to become a prominent trend
The rising panic over coronavirus spread could result in consumers moving towards cashless payments and further stem digital connectivity in the region. This trend could intensify as a greater number of people are staying indoors and the rise in the number of online prepaid orders. As a result, contactless payment gateways in the middle east can expect a surge in demand.
Single brand and luxury retailers at high risk
Coronavirus spread is expected to impact the sales of single brand and luxury retailers. Entertainment and leisure sectors are also expected to suffer dramatically as consumers will be less likely to purchase expensive tickets and the declining tourism will add on to the woes of companies in this sector. On the contrary, bricks-and-clicks stores like Sephora are likely to benefit from the reduced footfalls in shopping outlets and malls.
Want more insights on how to prepare your business to survive for the impact of the coronavirus outbreak. Get in touch with our market intelligence experts for comprehensive insights.