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August 2, 2018

The Disruption of FMCG

The retail market size in the Gulf Cooperation Council is forecasted to reach 290 billion U.S. dollars 2018 in comparison to 2017 where the retail market size was estimated to be 271 billion U.S. dollars.

Cooper Fitch Dubai
Cooper Fitch Dubai
Cooper Fitch Dubai
Cooper Fitch Dubai

The FMCG industry in the GCC has been rapidly undergoing changes. Typically trends in the FMCG and retail sector are predominantly decided by the customer needs. According to Statista, the retail market size in the Gulf Cooperation Council is forecasted to reach 290 billion U.S. dollars 2018 in comparison to 2017 where the retail market size was estimated to be 271 billion U.S. dollars.

Marketing Shift

When we look at marketing, we see that there has been a drastic change in the marketing tactics of the FMCG and retail sectors. Traditional media and regular promotion channels no longer attract the customer of today.  A huge shift towards digital marketing can be witnessed as the market is trying to stay aligned with the consumers of today. FMCG and retail is very much moving towards implementing strong online marketing strategies in order to grow their businesses and in the near future, every FMCG will heavily depend on these marketing tactics to slowly replace traditional marketing methods. A recent report by We Are Social asserts that more than 3 billion people around the world now use social media each month and the number of social media users has increased by 13 percent in comparison to the last year. FMCG and retail corporations in the GCC are conjuring digital marketing professionals from inside and outside the Middle East. This allows them to strategically reach a much larger number of the population.

E-commerce and Online Shopping

Online shopping is not something new to the Western market and the GCC is successfully catching up to the e-commerce game. Having a strong e-commerce strategy in place requires tackling several obstacles such as customer trust, awareness, shortcomings, distribution, policies and logistics infrastructure. Despite all the above-mentioned factors, we can see many supermarkets in the GCC have already successfully launched online shopping websites and applications.  However, there are certain pitfalls that need to be taken care of when it comes to e-commerce. For instance, when you opt for online shopping to buy groceries, you have no control over the expiration date as whereas, walking into actual stores allows you to see the expiration date of the product. Are online shops affecting the revenue of actual shops? Online shopping provides consumers with convenience as they can shop wherever they are which in turn decreases the amount of footfall in physical stores. The malls are designed in a way that encourages consumers to spend money. Big sale signs and visual merchandising drive sales. In that sense, e-commerce could be damaging to the retail market and reduce the consumers’ purchasing. On the other hand, having an e-commerce does not necessarily negatively affect the brand itself as it is just selling itself via a different and more convenient channel. Consumers nowadays lead busy fast-paced lives and successful FMCG and retail corporations are those who listen and understand the consumers of today.

Emerging Markets and Sustainability

In the very near future, we will see a sustainability movement in the FMCG market and specifically the F&B industry in the GCC. Sustainability requires much more than putting a “green” label on products or recycling. The whole production process of FMCG products needs to be sustainable and cost-effective. From plastic packaging to the minute details of manufacturing, companies need to understand the impact of their actions on the environment.  While the sustainability move might be slow in the GCC, it is surely forthcoming and we also expect to see a growth towards organic products.

Mentalities of consumers on the GCC are very varied due to the high number of expatriates and different ethnicities. While a certain trend might work well with Asians or Westerners, it might not necessarily work well with Middle Eastern nationalities. FMCG and retail corporations must listen to their customers by localising their products and adapting to their needs in order to drive their sales. Smart FMCG corporations are able to cater their services to the needs and requirements of their customers. Consumers’ expectations of the products they buy nowadays are high and they want high volume, high performance without any compromise on the quality.  The future of FMCG is continuing to transition towards the digital-based services, innovation and sustainability.

Victoria King By Victoria King

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