The e-commerce sector in the UAE has experienced substantial growth, particularly in the fast-moving consumer goods (FMCG) market, which surged by 29 percent last year, according to research from NielsenIQ. This growth reflects a broader trend of consumption-led expansion within the UAE, contrasting with Saudi Arabia’s flat performance attributed to a high base from the previous year.

In 2024, 72 percent of UAE shoppers indicated they would pay more for quality products, illustrating a strong consumer preference for quality alongside value. The FMCG sector in Saudi Arabia also grew, achieving a 46 percent increase last year. A statement from NielsenIQ noted that while consumers in both markets prefer established retail channels, there is a growing trust in alternative channels for better deals.

The year 2024 posed several challenges in the Middle East, including global tensions, economic uncertainty, and extreme weather events. Despite these hurdles, economic growth remained robust, particularly in the UAE, which is bolstered by active tourism, construction, and financial services sectors. Traditional retail channels, consisting of small independent outlets, account for a quarter of revenues in Saudi Arabia, growing by 1.7 percent, while the UAE’s traditional retail has expanded almost 10 percent.

This diversification in shopping options enhances consumer choices and allows suppliers to improve product distribution. In the technology and durables (T&D) sector, online channels contributed over 25 percent of total revenues in both the UAE and Saudi Arabia, outpacing brick-and-mortar sales.

The FMCG market in the UAE saw significant product launches, with 1,090 new stock keeping units (SKUs) introduced, averaging 90 new SKUs each month throughout the year. Meanwhile, the T&D industry saw 493 new brands launched in Saudi Arabia and 457 in the UAE, reflecting a dynamic market eager to meet consumer demands.

In terms of revenue growth, Saudi Arabia’s FMCG industry saw a gain of 2.4 percent, while the UAE experienced a 5.5 percent increase compared to 2023. This growth was primarily driven by increases in snacking, beverages, and dairy products. The T&D sector in the UAE also performed well, adding 3.4 percent to annual revenues, supported by strong smartphone and mobile computing markets.

However, revenue growth in Saudi Arabia’s T&D sector remained relatively flat at 0.7 percent, affected by a decline in PTV revenues by 3 percent due to increased competition from entry-level brands. Consumers across the region continue to prioritize value for money, influencing their purchasing decisions.

In the T&D sector, premium brands accounted for over 55 percent of revenue in the UAE and 40 percent in Saudi Arabia. Andrey Dvoychenkov, the NielsenIQ APP cluster leader, emphasized that consumers are willing to pay more for quality while still seeking value. He also noted that understanding consumer behavior will be crucial for future product success in 2025, suggesting that innovation and strategic agility will be necessary to capture emerging market opportunities.