Much like Christmas in the West, Ramadan is the Middle East retail industry’s busiest time of year and 2018 will be no different.
Shoppers from Kuwait, Bahrain, Oman, and Saudi Arabia, will flock to the region’s shopping centre, Dubai, to take advantage of a plethora of deals and discounts. Each year car dealers offer incentives which range from long service contracts to domestic appliance giveaways. Not only do smartphones drop in price but two for one deals are plentiful.
Newspaper reports in 2017 quoted one online retailer as saying year on year sales had increased 400%, with the Eid celebration (a three day period at the end of Ramadan) adding an additional 20-30% to that figure. Anecdotally, anyone in the UAE will have a ‘Friday morning queue at a supermarket’ story to tell. The UAE’s consumers know that Ramadan is the best time to shop for large purchases and retailers jostle for position as the hordes descend on the country’s malls.
Due to the furore surrounding this time of year, the UAE government puts strict checks in place to monitor prices. Even though many retailers offer discounts and deals, it is well understood that prices do increase during Ramadan as retailers capitalise on the season. To allow retailers to profit but also to protect the shopper, the Ministry of Economy mandates price freezes on basic commodities. A top of the range television may cost more during Ramadan but staples such as water and rice will not see price increases. In addition to this, the UAE requires all retailers to notify their local Ministry office when they plan to start a sale. Retailers need to supply a detailed account of the goods to be sold and the price before and after the sale. This policy is not unique to Ramadan however.
The economic effects of Ramadan are not to be underestimated. In 2010 Indonesia recorded a 9.2% increase in spending across all levels of society. In 2014 Saudi Arabia recorded household spending at a record $193 billion. The Islamic Food and Nutrition Council of America (IFNCA) said in 2016 that since 2005 there has been an 80% increase in demand for halal products. As Ramadan approaches, beef exporting companies see a boost as Islamic economies prepare for the increase in food demand.
Most of the retailers’ buying decisions about new stock and merchandise are decided at least a few months in advance, so definitely something for brands to be aware of and to target in their marketing calendars for the year. If you’d like to discuss how Ramadan may affect your particular business or brand, please get in touch.