Consumers in Saudi Arabia and the United Arab Emirates are shifting spending away from mainstream-priced fast-moving consumer goods (FMCG) toward both cheaper and premium alternatives, as persistent inflation and economic uncertainty prompt closer scrutiny of purchases, according to a NielsenIQ report.
The company’s Consumer Outlook 2027, released on October 27, found that shoppers in both markets increasingly expect products to justify their price through either meaningful savings or superior quality and performance. Artificial intelligence is also emerging as an influence on household and grocery purchasing decisions.
The report draws on a survey of more than 21,000 respondents across 31 countries, combined with NielsenIQ’s measurement of actual purchasing behavior. The UAE is included in the report for the first time.
Saudi consumers report stronger financial confidence than UAE shoppers
Consumers in Saudi Arabia were among the most optimistic about their financial circumstances, with 46% saying they were better off than a year earlier, compared with 30% across the markets surveyed globally.
Only 20% of Saudi respondents said their financial position had deteriorated, against 34% globally.
In the UAE, 37% of respondents reported being better off than a year earlier, while 31% said they were worse off.
Among consumers experiencing financial difficulties, rising living costs were the leading explanation in both countries, cited by 68% of respondents in Saudi Arabia and 69% in the UAE.
Global conflict was the biggest near-term concern for 22% of Saudi respondents and 31% of those in the UAE. Food prices, utility bills and housing costs also ranked among consumers’ leading worries for the following six months.
Globally, a basket of goods that cost $100 in 2024 now costs about $105, underscoring the continued pressure on purchasing power, NielsenIQ said.
Value and premium products gain share as mainstream loses ground
More than $23 billion in value share has shifted globally from mainstream-priced products toward value and premium alternatives, according to NielsenIQ. Saudi Arabia and the UAE are among the markets where this polarization is particularly pronounced.
In Saudi Arabia, value products accounted for 20.3% of measured FMCG retail sales by value, while mainstream products represented 41.9% and premium products 37.9%.
Year over year, the value segment gained 1 percentage point of sales value and the premium segment gained 1.5 points. The mainstream segment lost 2.5 points.
The shift was more pronounced toward premium products in the UAE, where they accounted for 45.2% of FMCG sales value. Mainstream products represented 32.8%, while value products accounted for 22%.
The UAE’s value segment gained 0.3 percentage points of sales value year over year, while the premium segment gained 0.5 points. The mainstream segment lost 0.7 points.
Consumer attitudes help explain the shift. About seven in 10 shoppers in both countries said they would rather save money when a product did not offer a clear improvement. Roughly two-thirds said that, when spending more, they preferred a clearly premium option.
Six in 10 consumers in the two markets said midrange products needed a compelling reason to be chosen over cheaper or premium alternatives.
Quality and performance increasingly determine purchase value
Quality and performance were the leading considerations for everyday household and grocery purchases in both markets, although affordability remained important.
In Saudi Arabia, 43% of respondents prioritized quality and performance when assessing whether a purchase was worthwhile, compared with 29% who prioritized affordability.
In the UAE, 36% prioritized quality and performance, while 28% placed affordability first.
The findings suggest that consumers are not simply trading down to cheaper products. Instead, they are becoming more selective, balancing price against the perceived benefits of a product and switching between value and premium options depending on the category.
“Consumers across KSA and the UAE are no longer buying by default. They buy when a compelling reason exists and walk away from purchases that fail to justify their place,” said Andrey Dvoychenkov, general manager for the Arabian Peninsula and Pakistan at NielsenIQ.
Purchases were increasingly being evaluated on the balance between price, quality, performance and personal relevance, he said.
The polarization also applies to individual shoppers, who may seek savings in one category while remaining willing to pay more for premium products in another.
Shoppers use discounts and online channels to manage budgets
Consumers in both markets are adopting a range of strategies to manage household budgets, from switching retailers to buying in bulk and monitoring overall basket costs.
In Saudi Arabia, 43% of respondents said they were shopping more frequently at discount or lower-priced stores, compared with 39% in the UAE.
Monitoring the total cost of a shopping basket was reported by 38% of Saudi consumers and 35% of UAE consumers.
Online shopping to find better deals, save on fuel or reduce store visits was cited by 35% of respondents in Saudi Arabia and 32% in the UAE.
Buying larger pack sizes to obtain a better unit price was reported by 32% of Saudi consumers and 27% of those in the UAE.
Other measures included buying in bulk when preferred brands were discounted, a strategy cited by 29% of Saudi respondents and 33% of UAE respondents.
Using loyalty programs and points to manage spending was reported by 30% of consumers in Saudi Arabia and 35% in the UAE.
Meanwhile, 28% of Saudi respondents and 33% of UAE respondents said they had stopped buying certain products to concentrate on essentials.
Dvoychenkov said brands and retailers would need to respond to increasingly polarized spending patterns and rising expectations around value.
Businesses that succeed in 2027 would focus on affordability, pack and price structures, demonstrable value and more effective channel strategies, he said.
Artificial intelligence gains influence over grocery purchases
Artificial intelligence is becoming an increasingly important tool for product discovery and consumer decision-making in Saudi Arabia and the UAE, NielsenIQ found.
About seven in 10 consumers in both markets said AI tools or assistants influenced their household and grocery purchases at least sometimes, compared with 55% of respondents globally.
In the three months before the survey, 34% of Saudi consumers and 37% of UAE consumers said they had used AI-powered tools to research products or decide what to buy.
The findings point to an expanding role for AI in how shoppers discover brands, compare products and make purchasing decisions.
“AI is creating new pathways through which consumers discover products and brands,” Dvoychenkov said.
As recommendation engines, digital assistants and AI-powered search tools become more influential, brands in Saudi Arabia and the UAE would need to consider their visibility and performance in these environments alongside traditional marketing channels, he said.
The report’s findings indicate that companies operating in both markets face a consumer landscape in which financial confidence varies, affordability pressures persist and purchasing decisions increasingly depend on a clear demonstration of value.
