E-commerce in the UAE grows in double digits in both FMCG and T&D sectors
NielsenIQ, the world's leading consumer intelligence company, has announced a recap of the FMCG and Tech and Durable (T&D) sector under State of the Nation 2024 revealing insights on GCC shoppers as 2024 was a year that proved that the Middle East continues to be a hub for growth, populated by a resilient people with the willingness to push on amid global tensions and economic uncertain.
The UAE is experiencing consumption-led growth in the first half of the year, while Saudi Arabia is exhibiting flat performance following a high base from last year. E-commerce in the FMCG sector in the kingdom grew 46 per cent last year. 'In both markets, consumers prefer to complete their purchases through the established organised retail channel; however, they are becoming more trusting of alternative channels in their search for better deals,' a statement said.
2024 was marked by significant challenges in the Middle East. Global tensions, economic uncertainty, and extreme weather all contributed to this year's events. Economic growth in both regions remained robust, and the inflation rate in Saudi Arabia is still controlled. At the same time, the UAE is broad-based and driven by intense activity in the tourism, construction, and financial services sectors.
The traditional retail channel, consisting of small, independent outlets, contributes a quarter of revenues generated in Saudi Arabia and has grown by 1.7 per cent. The same channel has grown by almost 10 per cent in the UAE. This highlights once again that one size does not fit all.
This gives consumers more choices in terms of shopping destinations and allows suppliers to improve the distribution of their products. In the tech and durables (T&D) space, a similar dynamic is emerging, where the online channel consistently contributes more than 25 per cent of total revenues across the UAE and Saudi Arabia, achieving growth figures that surpass those of the brick-and-mortar stores.
In 2024, the FMCG market saw significant changes in the number of products hitting the shelves. This is particularly true for the UAE, where an additional 1,090 stock keeping units (SKUs) were launched. That is, 90 different SKUs were launched every month for a year. The T&D industry saw suppliers launching 493 new brands in Saudi Arabia and 457 new brands in the UAE. The constant desire to launch new brands leads to new product offerings, and the T&D space is bursting with all sorts of products to meet the consumer's every demand.
The FMCG industry realised gains of 2.4 per cent in Saudi Arabia, while the UAE observed the market gaining 5.5 per cent in revenues compared to 2023. The growth realised is driven through snacking (+6 per cent Saudi Arabia / +6 per cent UAE), beverages (+5 per cent Saudi Arabia / +7 per cent UAE) and dairy products (+3 per cent Saudi Arabia / +6 per cent UAE).
Data shows that the UAE enjoyed a relatively stronger T&D sector performance in 2024, adding 3.4 per cent to annual revenues. This is driven by a flagship-led smartphone market (+5 per cent) and a dynamic mobile computing market (+5 per cent), while a more modest appetite for spending as revenue growth was seen in Saudi Arabia remains relatively flat at 0.7 per cent, driven by the performance of Smartphones (+2 per cent), PTV (-3 per cent), and Mobile Computing (+5 per cent).
PTV revenues contracted by 3 per cent as less-established brands flood the market with entry-level offerings.
Consumers in the Middle East continue to seek out value for money when making a purchase, which extends far beyond just the product but instead to where you are purchasing the product.
In the T&D sector, premium brands generated more than 55 per cent of revenue in the UAE, fastest growing across three segments, while it comprised 40 per cent of revenue in Saudi Arabia. 'However, it is important to also pay close attention to the subtle nuances of value brands. This is evident as we observe a new-found focus on entry-level brands from both suppliers and consumers, who have realised more than 10 per cent gains year on year across both markets. This indicates that while consumers of T&D products are parting ways with their hard-earned incomes for premium goods, they are constantly considering finding similar value from a more economical offering,' the statement said.
Andrey Dvoychenkov, NielsenIQ APP cluster leader, commented: 'Our recent State of the Nation highlights how the FMCG and T&D sectors in the Middle East evolved throughout 2024, with consumers spending their money with purpose as investments. They are willing to pay more for quality while they don't give up choosing value for money on certain essential needs. Looking ahead to 2025, a breakout product could emerge, but success will demand bold innovation, strategic agility, and a deep understanding of shifting consumer behaviours.'
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