Arab News, Sat, May 25, 2024 | Dhu al-Qadah 17, 1445
Point-of-sale spending in Saudi Arabia hits record $16bn, SAMA reveals
Saudi Arabia:
Food and beverages transactions helped drive point-of-sale payments in Saudi
Arabia to a record SR59.68 billion ($15.91 billion) in March, official data has
revealed.
Figures released by the Saudi Central Bank, also
known as SAMA, show an 8 percent annual increase in spending across all sectors,
with outlays during the holy month of Ramadan likely responsible for driving the
uptick, alongside an expanding market with flexible payment options.
Spending on food and beverages in March made up
the largest portion, accounting for 17 percent of total payments for the month.
Expenditures on restaurants and cafes, along with
miscellaneous goods and services, each represented 12 percent of overall
spending.
In February, Redseer Strategy Consultants
predicted a heightened eagerness among consumers in Saudi Arabia to explore new
attractions and destinations during Ramadan.
Their survey, probing changes in shopping behavior
for Ramadan 2024 compared to the previous year, revealed that 62 percent of
Saudi respondents planned to increase their spending, surpassing the 48 percent
of respondents from the UAE.
The report highlighted that this surge is driven
by factors related to platforms and experiences, particularly flexible payment
options and the launch of exclusive products of high quality.
The research showed that in the UAE, where the
market has matured, consumers are placing a growing emphasis on affordability,
prioritizing products with the lowest prices.
Factors such as product variety, fast delivery,
and quality no longer serve as significant brand differentiators, as the market
has leveled the playing field.
Conversely, in Saudi Arabia, a market experiencing
growth, there is a notable focus on platform and experience-related aspects.
Flexible payment options and strong customer support are becoming increasingly
important, indicating a shift in consumer preferences.
According to data from SAMA, the primary drivers
of growth during this period were increased spending on miscellaneous goods and
services, which include personal care supplies and cleaning products.
This category represented the second-highest share
of March spending at 12 percent, having grown by 28 percent to reach SR7.06
billion. This growth accounted for 36 percent of the overall annual increase in
POS spending.
The second-highest contributor to the rise is
clothing and footwear, with an increase that contributed 26 percent to the
overall growth, reaching SR5.8 billion in March. This was followed by food and
beverages, contributing 13 percent, with spending reaching around SR10 billion,
marking a 6 percent increase from the same month last year.
Research from Redseer indicated a strong
inclination among Saudi respondents towards purchasing groceries, fashion, and
beauty or personal care products during the month of Ramadan.
According to the survey, 93 percent of respondents
were open to buying groceries, 84 percent to buying fashion, and 72 percent to
buying beauty and personal care products.
This period is often associated with heightened
social engagements, hospitality, and generosity, leading to increased consumer
spending on food, gifts, and charitable donations. Additionally, businesses
often offer special promotions and discounts during Ramadan, further stimulating
consumer spending.
In Saudi Arabia, there has been a notable shift
towards online payments and digitalization, driven by the country’s commitment
to providing cutting-edge technologies for its tech-savvy population.
With the rise of e-commerce accessibility and the
increasing convenience of online shopping platforms, consumers are opting for
digital transactions more than ever before. This trend is not only reshaping the
retail landscape but also significantly impacting consumer behavior.
The ease of comparing prices and product options
online has empowered consumers, fostering increased competition among retailers
and ultimately driving down expenses.
As a result, the adoption of digital payment
methods continues to grow rapidly, reflecting a fundamental shift in how
transactions are conducted in Saudi Arabia’s dynamic and rapidly evolving
marketplace.
One challenge that arises with this growth is the
proliferation of fraudulent sites and platforms attempting to deceive interested
users. During Ramadan and Eid Fitr, the increase in retail and online
transactions provides more opportunities for cybercriminals.
These fraudulent entities have targeted major
Saudi platforms by creating fake websites designed to intercept two-factor
authentication or one-time passcode codes.
According to Cyber Security News, this
sophisticated phishing tactic aims to bypass security measures and gain
unauthorized access to victims’ accounts.
Consumers are therefore strongly advised to avoid
sharing personal and payment information on questionable sites or with
individuals posing as bank or government employees.
Reporting suspicious resources to local law
enforcement and designated contacts within these organizations is crucial in
helping to mitigate potential fraud risks.