22 Jul 2024 03:44

Advertising & Marketing

Decoding FMCG price and promotion trends in KSA and UAE

Fast-moving consumer goods (FMCG) sales volumes are down by 3.2% and 9.5% in the UAE and KSA, respectively, on MAT Q2 from 2017. The declines are partly due to the recent implementation of new taxes (sin tax and value-added tax {VAT}) as well as progressive consumer price increases. To compensate for lost sales—and maintain market share—manufacturers and retailers have been aggressively tapping into promotions. In the UAE today, for example, the total sales of goods sold through discounts and special offers have reached 47% of total volume sales, up 2.5 percentage points from 2017.

In light of the new taxes, shoppers in KSA and UAE are more sensitive to price changes than they have been in the past, and are actively looking for promotions. FMCG sales based on discounts and special offers have increased year on year, reaching 49% in 2018. And given the upsurge in promotional activities, pricing, which is the only element of the marketing mix that produces revenue directly, is becoming an increasingly crucial factor for both retailers and manufacturers to consider in their go-to-market strategies.

In this environment, with mounting pressure on businesses and increasingly cautious shoppers, the natural question to ask would be, “What’s next?” Nielsen’s Decoding FMCG Price and Promotion Trends in KSA and UAE report examines past and current price and promotion trends and the impact those trends have had on the market over the last two years. The report delves into aggregated findings from more than 500 advanced price and promotion studies leveraging multi-regression-based modeling with actual store-level sales data.

It also discusses the learnings from past price and promotion tactics, opportunities the market presents, as well as the framework and steps manufacturers and retailers can take to create optimal price and promotion strategies to win in this new market reality.

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