A new study by Boston Consulting Group (BCG) has found that residents in the Gulf Cooperation Council (GCC) region are optimistic about their economic futures – the highest level of optimism that BCG found across similar consumer surveys conducted across the world. More than a quarter (27%) of consumers in the GCC countries plan to increase spending on products and services in the next 12 months.
GCC countries are represented in the top quartile of average income per capita globally. Moreover, the region is home to a young, fast-growing, and digitally savvy population.
“GCC countries have a strong cohort of wealth, with consumer sentiment and optimism levels ranking very high by most world standards,” said Rami Rafih, Managing Director & Partner at BCG Middle East. “Tapping into the region’s vast potential will become a priority for many e-commerce and tourism companies in the future.”
Cashing in on e-commerce
E-commerce has had a slow start in the GCC. Although more than 70% of consumers have made at least one online purchase in the last 12 months, and half plan to increase their online purchases in the next year, e-commerce makes up a small fraction of overall sales in the GCC. For example, the UAE is the most active e-commerce country, yet e-commerce only accounts for around 4% of all retail sales.
“There are opportunities for e-retailers to expand their footprint as the sector eyes a potential boom period,” said Markus Massi, Managing Director & Senior Partner at BCG Middle East. “To capitalize on this, e-retailers will need to influence consumers’ to build trust for online payment methods, enhance the end-to-end e-commerce experience, and persuade people who have never shopped online.”
Despite the slow uptake of e-commerce, consumer resistance to online purchases isn’t apparent when it comes to travel planning. In the GCC as a whole, 54% of all consumers book their trips online, with bookings made through travel agencies only representing 25%. This trend coincides with leisure travel being a key area of spending, with people taking one trip per year on average.
“Global and local companies are becoming aware of the fact that the tourism sector is poised for avid growth in the face of rising economic confidence,” said Pablo Martínez, Managing Director & Partner at BCG Middle East. “This is aligned with significant calendar events for many GCC countries as they open their doors to a new era of tourism, business, and leisure experiences.”