Shoppers in the UAE are increasingly demonstrating strong loyalty to their preferred brands, even as rising inflation continues to impact their purchasing power. According to NielsenIQ’s latest H1 report, this shift is driven by consumers’ growing reliance on promotions and discounts to maintain access to their favored products, with many still opting to pay a premium for items that offer enhanced benefits. Despite price increases, brand loyalty has become a key factor in the retail sector’s evolving landscape.
Inflationary pressures have driven a notable increase in spending on daily essentials across the UAE and Saudi Arabia, with retailers reporting significant year-on-year growth in revenue. NielsenIQ data from Q3 revealed that the value of consumer goods sales in the UAE jumped by 8.8%, largely attributed to inflation. However, this increase in spending has not necessarily translated into higher volumes of goods purchased, with the UAE seeing a 1.5% decline in the total volume of sales.
The rise in food prices has been a key concern for consumers, with staples such as frozen foods and dairy products seeing price hikes of over 18% in the UAE. As a result, shoppers are turning to promotional offers and discounts to mitigate the impact of inflation, while maintaining loyalty to the brands they trust. The NielsenIQ study indicated that promotions play a critical role in consumer decision-making, with many shoppers actively seeking deals to keep their shopping habits intact despite the economic challenges.
NielsenIQ’s report highlights a trend where UAE shoppers, while concerned about inflation, continue to value quality over quantity, often choosing to spend more on products that promise better functionality and added benefits. This behavior is particularly evident in categories like personal care and wellness, where consumers remain willing to invest in premium brands.
Despite higher prices, the demand for promotions remains steady, and retailers are responding by offering targeted discounts to appeal to budget-conscious consumers. Promotions in categories such as frozen foods, dairy, and household items are particularly popular, helping to maintain sales volumes even as overall purchase quantities have dipped. However, the intensity of promotions in the UAE has seen a reduction across many food categories, further encouraging consumers to strategically plan their purchases around available deals.
UAE retailers are navigating this shift in consumer behavior by focusing on maintaining customer loyalty through personalized promotions and rewards programs. These initiatives aim to strengthen brand attachment while also addressing the cost concerns of shoppers. The retail industry is keenly aware of the need to balance profitability with customer satisfaction during a time of economic uncertainty.