Is COVID-19-driven shift in MENA consumer behavior here to stay?

According to a Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025.  AFP
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According to a Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025. AFP
The shift in consumer habits is not the only change the region is experiencing. E-commerce growth has also accelerated the use of digital payments. (AFP)
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The shift in consumer habits is not the only change the region is experiencing. E-commerce growth has also accelerated the use of digital payments. (AFP)
According to a Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025.  AFP
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According to a Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025. AFP
Women and children shop at a mall in the Saudi capital Riyadh. (AFP file photo)
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Women and children shop at a mall in the Saudi capital Riyadh. (AFP file photo)
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Updated 24 July 2021

Is COVID-19-driven shift in MENA consumer behavior here to stay?

Is COVID-19-driven shift in MENA consumer behavior here to stay?
  • Online shopping platforms have witnessed unprecedented growth since the onset of the pandemic
  • In the GCC alone, e-commerce grew from $5 billion in 2015 to about $24 billion in 2020

CAIRO: Businesses of all sizes may have been hit by pandemic lockdowns, but online shopping platforms have witnessed unprecedented growth in the region, with e-commerce growing from $5 billion in 2015 to about $24 billion in 2020 in the GCC alone, according to a Middle East report by global management consultancy Kearney.

“People who used to go to stores and supermarkets moved to buying from apps. They now see the convenience and experience the ease of online shopping,” said Fahim Al-Zubaidi, CEO and co-founder of Akshaak, an e-commerce platform aimed at home-based businesses and individual projects.

While this shift in behavior may have been heightened during lockdowns, Al-Zubaidi believes it is here to stay.

“People will not stop going to shopping malls, but some of the products, particularly groceries and electronics, will move from shops to e-commerce platforms,” he said. 




While people may not stop going to shopping malls, many people who have good experience shopping online during the pandemic may prefer continue doing that. (AFP)

Another person who expects this shift in consumer behavior to persist long after the pandemic ends is Mahdi Al-Olabi, founder and CEO of R2S, a tech company that provides logistic solutions for e-commerce firms in Egypt.

“During the months of the lockdown, we experienced a huge spike in business, about 40 percent to 60 percent increase in deliveries,” he said.

“We’ve seen a shift in consumer culture, particularly when it comes to buying electronics, grooming products and workout equipment. While the buying calmed down a bit after lockdown, there has been a significant consumer culture change to the concept of shopping online. I don’t think that is ever going to go away.”

These predictions seem to be in line with projected e-commerce growth trends in the Middle East. According to the Kearney Middle East report, MENA e-commerce is estimated to reach $50 billion by 2025.

However, the shift in consumer habits is not the only change the region is experiencing. E-commerce growth has also accelerated the use of digital payments. The Middle East, traditionally dominated by cash transactions, now has more online shoppers preferring to use digital payments, according to a study from London-based Checkout.com.

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$50 billion - Projected MENA e-commerce volume in 2025

The report reveals that 53 percent of the region’s consumers now most often use digital payments for their online purchases. Al-Olabi anticipates an even brighter future for e-commerce if this trend continues.

“Once people become comfortable using digital payments, it will be reflected in the growth of e-commerce,” he said. “They’re directly correlated. The more a country moves toward becoming a digital society, the more people will be apt to use e-commerce.”

Lydia Schoonderbeek, founder of Egypt-based beauty products e-tailer Source Beauty, said that although cash on delivery is still the preferred payment method for her customers, she sees an uptick in credit card transactions.

“Cash on delivery makes up 80 percent of our payments, but credit cards are slowly coming into the spectrum,” she said. “In one particular month, it was up to about 30 percent. People are starting to feel more confident not dealing with cash.”

While e-commerce may be growing in the region, the industry still has some catching up to do. According to Schoonderbeek, online payment systems need to be more user-friendly.

“Sometimes you’re asked to put an OTP code, and if you get preoccupied with something and don’t put the code in on time, you have to start the whole shopping experience again. The likelihood of you abandoning that whole experience is high. This needs to be fine-tuned.”

Providing the option to pay in instalments is another feature that should be made available to online shoppers, Schoonderbeek says. “People are price-sensitive; they should have the option of paying in instalments. This is not here yet, maybe because e-commerce in Egypt is still very much in its infancy.”

Meanwhile, Al-Zubaidi is concerned that the rapid growth of e-commerce in the region will affect service quality.

“With an increased number of e-commerce sites, we will have an issue with quality. Now everyone wants to open an e-commerce site. They think they will be successful, but they’re just copying other e-commerce startups. If they don’t have the right strategy, they will close down.”

However, he is optimistic about the future, adding: “It will take time, but the market will clean itself.”


Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
Updated 22 September 2021

Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
  • European countries likely to be most affected

RIYADH: A surge in natural gas prices is expected to jack up inflation worldwide with Europe likely to be most affected, said a Capital Economics report.

The report said unreasonable and extreme weather conditions led to longer periods of cooling and heating and China’s rebound from the pandemic also boosted gas demand. On the other hand, extreme weather and the pandemic-related price collapse in 2020 hit US production and exports. Outages at several liquefied natural gas plants and Russia limiting exports via Ukraine for political reasons caused an imbalance in the supply and demand, which raised gas prices globally.

The most pronounced impact has been in the euro zone, where the rise in gas and electricity inflation has added 0.5ppts to headline CPI inflation since the start of the year.

“Since the start of Q2, the European (TTF) gas price has surged by 290 percent, Asia LNG spot prices are up 260 percent and US natural gas (Henry Hub) has nearly doubled,” the report said.

In the US, higher gas and electricity inflation has added just 0.2ppts to CPI inflation this year given the less pronounced rise in US gas prices and the lower weight of gas and electricity in the CPI basket. Japan has experienced a boost of 0.4ppts, as its gas imports are tied to long-term contracts indexed to oil prices. It’s a similar story in many emerging markets where gas prices tend to be tied to long-term contracts and/or indexed.

“We think natural gas prices will remain elevated for some time yet. Globally, but particularly in Europe, stocks are at historic lows and will take some time to rebuild even if we are right and supply picks up,” wrote  Jennifer McKeown, head of Global Economics Service.

The analyst, however, predicted that by Q2 2022 prices will be under sustained downward pressure.

Current prices will incentivize supply, particularly in the US where shale operations can ramp up relatively quickly. The situation will probably also hasten the approval of the Nord Stream II pipeline from Russia to Germany. Prevailing prices are likely to curb demand, the report said.

The passthrough is likely to be far smaller since governments are already acting to limit the effect on consumers.

According to McKeown, gas and electricity inflation is likely to surge by 16 percent to add an average of 0.3ppts to headline inflation in major advanced economies in the rest of this year, on top of the 0.3ppt boost which they have experienced already. “This should reverse next year, particularly given our expectation that gas prices will recede. But there are risks in both directions, and gas prices are notably volatile,” she said.

The report said there will be a drag on activity in most economies as higher utilities prices eat into the income available for discretionary spending. There could also be adverse consequences for the energy industry, particularly in countries where prices are regulated – most notably the UK, it added.


Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%
Updated 22 September 2021

Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%

JEDDAH: Saudi Arabia leading multinational dairy company Almarai has taken several steps to reduce emissions and increased the use of solar energy by 119 percent, according to its annual Sustainability Report 2020.

The Tadawul-listed company has reduced car fuel consumption in its sales, distribution and logistics department by 4 percent as compared to 2019. According to the report, clean energy accounted for 2.5 percent of the total power consumption, which is 4.4 percent within the sustainability strategy’s limits.

“Climate change can pose risks to agricultural production,” said Abdullah Al-Otaibi, head of corporate communication and public relations at Almarai. He said in order to fight climate change the company is taking measures to ensure sustainable growth.

Al-Otaibi said their energy strategy is based on solar power generation, increasing operational efficiency and energy monitoring efficiency, and improving the energy culture in pastures.


Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
Updated 21 September 2021

Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
  • In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years

DUBAI: Saudi Arabia’s Kamal Osman Jamjoom Group on Tuesday signed a master franchise agreement with Subway in the UAE as the restaurant brand seeks to expand its footprint in the region.

The deal marked the start of a new chapter for Subway in the UAE as it seeks to expand its footprint and remain competitive in the market.

“Subway is making bold and impressive changes to continue to grow its presence in markets around the world,” said Hisham Al-Amoudi, Group CEO of Kamal Osman Jamjoom Group.

“As Subway continues to expand internationally, we are focused on attracting well-established, large-scale operators in regions where they can leverage market expertise to help our brand thrive,” said CEO John Chidsey.

Established in 1987, Kamal Osman Jamjoom Group is a major franchise industry player in the Middle East with 675 stores across seven countries, making it one of the largest franchise networks in the region. They are a valued partner to some of the world’s most iconic brands, such as The Body Shop, LEGO, and Early Learning Center.

The group’s “deep knowledge of the Middle East and experience strengthening and expanding other global franchisee brands makes them the ideal partner in the UAE,” Mike Kehoe, EMEA president at Subway.

In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years and will continue to seek strong partners to support the brand on its journey.

The agreement will enable significant growth in the UAE in the coming years  including accelerated deployment of restaurant remodels — featuring a new, modern “Fresh Forward” design — as well as improved, consistent guest experiences, both on- and off-premise.


Saudi team’s performance at robotics summit to pave way for more progress

Saudi team’s performance at robotics summit to pave way for more progress
Updated 21 September 2021

Saudi team’s performance at robotics summit to pave way for more progress

Saudi team’s performance at robotics summit to pave way for more progress

RIYADH/JEDDAH: As the Saudi team secured sixth place in a contest at the World Robot Summit held in Japan, the chief of the Research Products Development Co. (RPDC) expressed optimism over Kingdom’s plan to promote artificial intelligence and build a strong robotics base in the Kingdom.

Abdulmohsen Al-Majnouni told Arab News that it was a major accomplishment as the Kingdom “is building its capabilities” to bring about the Fourth Industrial Revolution.

The company is owned by Taqnia, a subsidiary of the Public Investment Fund. Officials of the Research Products Development Co. led the Saudi robotics team, which competed with 16 other countries at the summit and qualified for the final contest.

“Inspired by the Kingdom’s Vision 2030, our national robotics team of young men and women, under the leadership of Dr. Nahid Sidki, the chief technology officer of RPDC, reached the final competition. The journey to the summit included qualification round of 119 international teams where 16 teams managed to reach the finals in the industrial challenge,” he said.

According to Saudi Minister of Communications and Information Technology Abdullah Alsawaha, advanced technology from the Fourth Industrial Revolution is expected to generate around SR1 trillion for the Saudi economy in new revenue streams.

The Kingdom will enjoy economic boosts from robotics, artificial intelligence, and wireless production models as it pushes for smarter cities and infrastructure.

“This accomplishment is inspiring to both our young men and women and to our leadership. We do not need to wait until 2030 to start achieving our targets. They are closer than many (people) think. With the government's support, we can start building amazing capabilities in robotics and AI and transform the Kingdom into a highly competitive economy,” said RPDC COO Dr. Mashal Al-Harbi. 

The secret to achieving the target, he said, is to find “passionate, dedicated and smart talent, engaging them in challenging projects for hands-on experience and supporting them with the needed resources and guidance to unlock their full potential.”

The World Robot Summit is supported by Japan’s Ministry of Economy, Trade and Industry; and the Energy Industrial Technology Development Organization. It aims to expedite the development of robotics and AI technologies to support the Fourth Industrial Revolution. 

“They open it up to the world to inspire young men and women to solve a very challenging problem. We managed to develop an innovative architecture to address the challenge and our talented team worked hard for almost two years despite the COVID-19 lockdown and the many challenges we faced,” said Sidki.

“The accomplishment is a reminder to our young talent that only through the dedication and hard work we can accomplish what others consider impossible,” he said.

“My message to Saudi young men and women is to follow your dreams and unlock your full potential and don’t let fear drive your ambition. Moving forward, we expect Saudi Arabia’s young talent to be major competitors in international AI and Robotics competitions,” the company’s chief technology officer said.


Egypt’s sovereign fund eyes investment in fintech sector

Egypt’s sovereign fund eyes investment in fintech sector
Updated 21 September 2021

Egypt’s sovereign fund eyes investment in fintech sector

Egypt’s sovereign fund eyes investment in fintech sector

RIYADH: The Sovereign Fund of Egypt is exploring investment opportunities in the fintech sector with a focus on small and medium projects, Ayman Suliman said in a CNBC Arabiya interview.

Talking about investments in other sectors, the chief executive officer of the fund said the tourism sector represents 20-20 percent of the fund's total investments.

Suliman also mentioned the fund’s plans to transform the historic Bab Al-Azab area in Cairo’s Salah Al-Din Al-Ayoubi Citadel into the first integrated innovation zone in the Middle East and North Africa.  

He said several projects in the health sector are also being studied such as the expansion of pharmaceutical exports.

“The health sector is a mainstay in the fund’s investment portfolio,” the CEO added.

The fund aims to attract private investments in Egypt’s underutilized assets and create wealth for future generations and boost the country’s economic growth.