Consumers in Saudi Arabia increasingly open to small businesses, says report

Sixty per cent of shoppers in Saudi Arabia are purchasing products from a greater variety of brands, including small homegrown and local brands, than before the Covid-19 pandemic, according to NielsenIQ’s Brand Balancing Act report.

The report studies how small- and medium-sized business maintain relevance among their consumer basis amid the economy’s inflation.

Fifty-two per cent of respondents regarded smaller brands as more trustworthy and authentic than larger businesses, with 60 per cent willing to purchase their products.

“Despite being largely ‘unfamiliar’ by respondents in terms of notoriety, small and medium brands have a great opportunity in today’s changed consumer landscape,” said Lauren Fernandes, global director of thought leadership at NielsenIQ.

“Our data shows that price pressures and the ongoing pandemic have changed consumer needs and their relative expectations of brands of different sizes.”

Although shoppers recognise that products of small business are priced higher than those of larger businesses, 43 per cent are willing to pay the markup.

However, 62 per cent of customers indicated that products of small business are more difficult to find on shopping shelves.

“With 48 per cent of global respondents saying that they plan to buy more from smaller brands in the future, clearly, the small- and medium-sizes businesses who can understand motivators for purchase in this new landscape will most likely benefit from consumers’ update preferences,” Ms Fernandes added.

“Today’s macroeconomic environment has created a perfect storm for small- and medium-sized businesses to connect with consumers. But that same storm could shadow smaller brands before they can scale.

“They key will be finding the right levers, based on the right consumer data, to innovate in meaningful ways.”

Good value for money and product quality were cited as key priorities when shopping by 88 per cent of respondents.

With inflation causing rises in retail prices, affordability is at the forefront of consumers’ minds.

Saudi Arabia’s retail sector was significantly affected by the Covid-19 pandemic, with headline lease rates falling by between one per cent and five per cent.

The kingdom is forecasted to have an influx of tourists in 2024, with domestic tourism estimated to bring in SAR4.7 billion in retail and international tourism expected to bring in SAR4.4 billion.

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