COVID-19: Online grocery shopping surges, UAE retailers look to ride new wave

Dubai: The pandemic has brought about a surge in online shopping, more so when it comes to buying groceries, and UAE retailers are looking to adapt to this new revenue stream, surveys show.

Online shopping for groceries has been an e-commerce segment in the Middle East region that has historically grown comparatively slower, however, the recent onset of COVID-19 has resulted in a surge in e-grocery sales.

A new market analysis by management consultant RedSeer revealed how the pandemic had doubled the demand for online grocery shopping in the UAE and elsewhere in the Gulf region, compared to previous years.

UAE online sales to boom

UAE is expected to generate around $1.5 billion (Dh5.51 billion) in online sales this holiday season. That’s against the $1 billion (Dh3.67 billion) or so online shopping portals picked up in the last three months of 2019.

Among online sales, grocery demand made up about 20 per cent of the $1.5 billion (Dh5.51 billion) in online sales, while in comparison, grocery made up 9 per cent of fourth quarter sales last year.

In the UAE, e-grocery gross merchandising value (GMV) grew from $170 million (Dh624 million) in 2018 to nearly $300 million (Dh1.1 billion) in 2019.

Growing need to further adapt

A similar survey by Emerson’s Commercial & Residential Solutions also showed how consumer shopping habits had changed with COVID-19 and retailers need to further adapt to changing consumption patterns.

The Emerson survey has gathered responses from 604 male and female adults aged 20-60 in Australia, China, India, Indonesia, Philippines, Saudi Arabia, South Africa, South Korea, Thailand and the UAE.

“Retailers need to adjust to new consumer behaviours shaped by COVID-19,” the Emerson survey noted, while adding that strong focus on e-groceries underscores a critical need for retailers, supermarkets and suppliers to design and invest in technology and related processes.

The brick-and-mortar retailers, who were earlier caught off guard with the shift in shopping habits, are increasingly seen adapting to the change now – bringing in additional revenue through further expansion and investments digitally.

Retailers ride the digital wave

With the online boom, retailers within the UAE and in the GCC, have been quick to invest in digital sales channels, developing a variety of online products and services catering to customers.

According to reports, multiple new players entered the online retail segment recently as well, with analysts citing examples of Noon Daily, Dubai Store and Areem.

In the UAE, online giants such as Amazon and Noon boosted their sales market share broadly across industries and existing players such as Spinneys, Mrsool and Nana invested in digital expansion. Also, food delivery and grocery platform talabat had earlier this year announced a 24x7 quick-commerce grocery platform, talabat mart.

Asian population drives demand

The Emerson study revealed 88 per cent of China-based respondents now order fresh food from online stores or through mobile applications, followed close behind by South Korea, India and Indonesia.

While most of its respondents plan to return to more traditional venues like grocery stores once COVID-19 restrictions are fully removed, nearly half of those surveyed who are from India and China will continue buying food online.

When it comes to fresh products, 52 per cent of Indian respondents and 50 per cent of Chinese respondents said they will continue to purchase the products online.