Artificial intelligence is a new game in the 21st century, and with time, every part of the world has begun to embrace it gracefully. One part of the world where AI has shown a magnificent shift is Saudi Arabia. This is the reason Google conducted research in partnership with Ipsos and examined internal analysis. These findings were highlighted at Google’s Accelerate Saudi event earlier in 2024.

The retail and e-commerce market in Saudi Arabia is increasing at a quick speed with total market revenue of USD 0.25 billion in 2023 to USD 1.52 billion – that’s a straight increase of 35.4% CAGR.

Evolving Consumer Behavior in Saudi Arabia: The Companion Effect

In the last few years, people in Saudi are dedicating their time to leisure activities. This is happening as more entertainment options are opening within the Kingdom from Riyadh Season.

There are other new sports venues that have the capacity to hold large events, like the Esports World Cup. This powerful change doesn’t happen offline; it is seen in online behavior and is called the ‘companion effect.’

Let’s explore some examples:

• Sports Personalities: They are associated with online physical activities to maintain their health, so they look to YouTube for online tutorials, workout routines, and equipment reviews. Additionally, it contains easy explanations of sports rules and terminology.
• Gamers: This section of people associate themselves with the gaming industry, where they move towards YouTube to view and post gameplay reviews and trailers, with walkthroughs. Their love for gaming drives their online consumption.
• Online shoppers: People always find new places to shop online after doing research on YouTube and Google. They like to try new brands and products and view which size will fit them. Their desire for the best shopping experience translates into active online engagement.

Shifting Consumer Habits Amid Inflation

Undoubtedly, groceries and housing are on the top list for the highest share of wallets in Saudia. Personal spending is taking a hit from inflation and changing priorities.

However, the categories of entertainment and fashion are facing a duality. As a matter of fact, around 40 percent of individuals intending to raise their spending in these two areas are motivated by the growing variety of entertainment choices offered in Saudi. The lively atmosphere in Saudi Arabia – highlighted by events like Riyadh Season and the emergence of new malls and eateries – is driving this trend.

Conversely, entertainment and fashion show the greatest intent to reduce spending, with 20 percent of participants looking to scale back. Inflation is a major issue, prompting 57 percent of individuals to cut back on expenses related to entertainment and fashion.

As per a survey, 92 percent of people are changing their spending habits because of inflation by:

• Searching for sales: The typical reaction to inflation is to look for discounts and offers.
• Classifying expenses: Shoppers are differentiating between necessary and unnecessary expenditures. Significantly, 40 percent will hold out for discounts on homecare items, demonstrating a clever strategy for managing finances.
• Delayed gratification: Approximately 72 percent of participants set aside money for purchases, reinforcing the movement towards conscious spending. Notably, locals tend to indulge in spontaneous buys more than expats do.

Key Shopping Events and New Influences

Being present at the appropriate time is essential. Saudi Arabia is witnessing the rise of new peak shopping times – including Saudi National Day, Singles’ Day, Black Friday, and year-end – along with traditional periods like Ramadan and Eid. These instances have become essential shopping events in multiple sectors.

There has been a swift rise of Saudi National Day as a significant shopping occasion. The study indicates that it's a much-awaited event, with a notable increase in search interest related to Saudi National Day.

Nonetheless, November remains the ultimate shopping month, with Singles’ Day, Black Friday, and the holiday season leading to significant consumer expenditures. The year-end timeframe also experiences a spike in retail and discount-focused searches.

The standout moments of this year have been especially intriguing, marked by the rise of new global influencers in the region. In 2022, international apps (businesses with minimal office presence in the nation) represented 17 percent of leading shopping app downloads in Saudi Arabia, primarily driven by Shein. The entry of Temu and Trendyol increased that share to 65 percent in 2023, according to data.ai reports.

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