Business | Economy
Price-conscious consumers seek more value in products
As rising inflation and commodity prices take hold, the working class consumers in the UAE are hunting down budget bargains and larger pack sizes in supermarkets to save money wherever they possibly can.
- By Cleofe Maceda, Staff Reporter
- Published: 23:52 September 16, 2008
Dubai: As rising inflation and commodity prices take hold, the working class consumers in the UAE are hunting down budget bargains and larger pack sizes in supermarkets to save money wherever they possibly can.
Wealthy shoppers, on the other hand, remain unaffected by the economic woes, as they continue to show a huge appetite for fancy labels and are unwilling to compromise on quality.
"The rich are going for premium products while the so-called middle class is looking for better value bargains," Piyush Mathur, regional managing director at market watcher The Nielsen Company, told Gulf News.
Ashish Panjabi, chief operating officer of Jacky's Electronics, said the UAE's retail sector remains buoyant despite the financial crisis.
"We have not seen any impact on retail sales within our outlets and we don't expect to see a major impact going forward as well. The Middle East in general is still viewed as a growth territory for most multinationals," Panjabi said.
Going strong
Figures compiled by Nielsen, which tracks consumer spending in the UAE, showed that sales of premium brands in the last 12 months were still high, with rice posting a 38 per cent growth, chocolates 33 per cent and toilet soaps 14 per cent.
Among the rice varieties at different UAE stores, the expensive items cornered the highest increase in sales, but the economically-priced products were fast catching up with 32 per cent increase.
When it comes to chocolates, UAE shoppers were indulging themselves more on mid-priced brands, which registered the highest growth of 35 per cent, as well as premium labels, which showed a 33 per cent increase.
"For commodities like rice, we see the consumers seeking value for money and shifting towards larger pack sizes. While in products like chocolates, consumers continue to indulge with their favourite brands and show willingness to afford this indulgent luxury," Mathur explained.
Premium-brand toilet soaps remained a favourite to UAE shoppers, as sales growth in this category was the highest in the last 12 months.
Gaining popularity
The mid-priced products were fast gaining popularity as well, registering a 12 per cent increase.
A report by Nielsen said the figures indicate that some "consumers don't want to compromise on products that affect their image" despite rising prices.
The company cautioned, however, that inflation is a "serious black spot" that should not be ignored.
In its recent Shopper Trends survey, Nielsen found that more consumers are now patronising hypermarkets over other stores.
Spending in hypermarkets increased from 33 per cent in 2006 to 38 per cent in January this year. Trips to supermarkets, however, appear to have slowed down, as spending dipped from 33 per cent to 24 per cent.
Spending in co-operative stores did not move a bit, while other stores posted a slight increase from four per cent to six per cent.
"Consumers cannot ignore the increasing pressure of inflation and the higher cost of living. Therefore, the average UAE consumer has become price-conscious and has started looking for more value," Mathur said.
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