UAE consumer confidence rebounds on faster recovery hopes

Consumer confidence has rebounded in the UAE in the wake of rising optimism about a faster economic recovery with most residents becoming increasingly comfortable in spending on non-essentials, luxury items, dining and travel, a survey reveals.

Attitudes and preferences of consumers also have undergone significant changes over the past 18 months since the outbreak of Covid-19, according to the research that shows that 64 per cent of those surveyed in the UAE report an increase in their online spending.

The survey conducted by Visa reveals the impact of the pandemic on areas including consumer attitudes towards local merchant categories, travel and events; cash versus digital payments, online shopping and “buy now, pay later” trends and cryptocurrencies.

According to the findings, 87 per cent of those who took part in the survey said they would continue to shop online even after the end of the pandemic.

“Digital payments remain the preferred method for transactions, with continued strong use of contactless solutions, including cards, digital wallets and mobile payments. The urgency in controlling savings and budgeting has somewhat waned compared to the onset of the pandemic – while consumers in the UAE remain cautious, those surveyed have largely resumed shopping, dining, entertainment and travel, albeit with hygiene precautions in place,” Visa said in its survey report.

“Our research shows how the Covid-19 pandemic has transformed the way the region’s consumers spend their money, with many of these significant behavioral changes likely to continue after the pandemic is over,” said Shahebaz Khan, Visa’s general manager for UAE. “As online shopping and contactless payments become the ‘new normal’, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience, which is increasingly seen as a safer and more seamless alternative to cash,” said Khan.

“In countries such as the UAE, where vaccination rates in the general population are high, consumers are optimistic towards the country’s economic recovery, with a positive shift in opinions towards income, spend and savings,” said Khan.

Visa’s research indicated a noticeable increase in consumer knowledge of cryptocurrencies, with 84 per cent of consumers reporting awareness. Moreover, close to half of respondents see cryptocurrencies as a viable alternative to cash.

Consumers are gaining confidence in their shopping behaviours, with a significant improvement in consumer shopping habits for essentials, such as groceries, and a visible shift in attitudes towards wanting an ‘optimized’ experience, as well as being conscious about hygiene and avoiding contact, according to the findings.

“Customers have increasingly turned to online shopping channels for both essential and non-essential purchases – with a noticeable shift towards eCommerce and away from traditional face-to-face transactions. In the UAE, 64 per cent of consumers now say they shop for groceries online.

Consumers’ behavioral changes that took place during the pandemic seem likely to continue once the crisis is over. Eighty-seven percent of consumers surveyed in the UAE revealed that they will continue to shop online for both essentials and non-essentials.

Overall, Visa’s survey found that the pandemic has created significant opportunities for the eCommerce sector, especially those retailers entering the digital economy for the first time, and those consumers who made their very first online purchases.

While Covid-19 severely impacted consumers’ overall travel expenditure, the sector is beginning to rebound, with a likely boost for local destinations over the coming months.

In the UAE, 22 per cent of consumers said they prefer short-haul trips over long-distance destinations, while 33 per cent said that local tourism and ‘staycations’ take preference over international travel.

— issacjohn@khaleejtimes.com