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December 2021


5 - 6 Minutes

What consumers tell us about the bounce back

From a return to social spending to new interest in buy-now-pay later, consumers are mixing old and new payment habits to drive the recovery. Mohamed Bardastani, Economist and Director of Business and Economic Insight at Visa CEMEA, explains Visa’s latest research – and where to focus in 2022.

As everyone knows, the pandemic has created massive shifts in consumer behavior – yet it can sometimes seem that the only constant about the “new normal” is that it keeps changing. So, who better to ask about what is happening than consumers themselves?

To that end, the Visa Business and Economic Insights team commissioned a survey of consumers across the Central and Eastern Europe, Middle East and Africa (CEMEA) region1 on their behaviors, attitudes, finances and other topics – which may hold significant insights for the rest of the world too. “The diversity of the countries covered and the differences in their COVID-19 mitigation models could be indicative of other regions and countries”, notes Bardastani.

Vaccinations boost confidence

A key story emerging from the survey is how countries’ response to the pandemic supports consumer sentiment. At least seven out of ten consumers in the UAE and Saudi Arabia – which have had relatively swift vaccination roll-outs – are optimistic about their countries’ and their own prospects for 2022. In contrast, those in Russia and South Africa, which both trail the global average vaccination rate of 48 per cent2, are markedly less bullish.3“Consumers in CEMEA countries with higher vaccination rates appear to have a more favorable view of their country’s economic recovery and their financial wellbeing,” notes Mohamed – a view supported by the OECD think-tank’s December warning that the top policy priority to secure the global recovery is “to ensure that vaccines are produced and deployed as quickly as possible”.4

In tandem, consumers in the region have resumed some of their pre-pandemic behaviours – including more social forms of spending. While the majority surveyed in June 2020 said they completely stopped going to high-contact places such as cinemas and theatres5, by August 2021, they largely reported resuming these activities – though the degree to which they did varied across the region.6 “Our VisaNet data7 shows restaurant transactions per consumer have exceeded their pre-pandemic levels in Russia, UAE and Saudi as consumers gain confidence in resuming more social forms of spending,” says Mohamed – although he notes their caution in “preferring restaurants that visibly enforce precautionary measures” . Innovation may play a role here: for example, restaurants in the UAE, where transactions top pre-pandemic levels, have invested in measures such as QR code-based menus and app-based ordering.8

As border restrictions remain in place around the world, travel remains among the sectors worst hit. Here, recovery is being driven by short-haul flights, with staycations and domestic tourism gaining ground with CEMEA consumers.9 Where international travel is of interest, such as in UAE and Saudi Arabia– with 73 percent and 56 percent of consumers surveyed in the UAE and Saudi Arabia respectively planning international travel last year — they strongly preferred countries with high vaccination rates of 70 percent or more10; highlighting how the vaccine roll-out can support consumer confidence.

The digital shift: there’s no going back

The shift to digital, driven by the response to the pandemic has been well documented, and, as expected, across the four waves of the Visa survey — the latest being in August 2021 — consumers have consistently reported a preference for and increased usage of digital payments, such as contactless and mobile payments, over cash11, but their behaviours continue to develop beyond that headline shift.

For instance, most say that they will continue to shop online even after the pandemic is finally over, especially for their groceries, food deliveries, pharmaceutical and fashion purchases (by August 2021 , the number of consumers shopping online for groceries had reached 64 percent in the UAE, 61 percent in Saudi Arabia and 42 percent in South Africa).12 But spending in categories that have not traditionally seen as high levels of online shopping is also gaining traction: by August of this year, one in two consumers in the UAE, Saudi and South Africa, and in Russia just over one in four, said they had started luxury shopping online.13 The fashion industry continues its digital expansion – including rolling out virtual stores, gaming, and online events – expected to gather pace in the coming 12 months,14 that could potentially support the luxury sector further in this respect.

However, a minority of customers said they would go back to brick-and-mortar shops.15 “Consumers had concerns about the reliability and security of the eCommerce websites/apps, high shipping costs, lengthy delivery times, product quality when not inspecting in-person, and the refund process,” notes Mohamed – flagging an opportunity for merchants who can perform well in these areas.

Consumers largely gaining confidence in their spending habits

During the height of economic uncertainty in June 202016, many consumers reported avoiding impulsive purchases, shopping only for necessities and buying in bulk to minimize trips out. There was also an increased spike preference for home-cooked meals to reduce contact. By August 2021, however, these patterns had largely reversed (although among those opting not to cook for themselves, an increasing number have been won over to online delivery).17 “The urgency of saving, budgeting and closely monitoring household spending that was reported in June last year has significantly weakened as the economic recovery has taken hold,” says Mohamed.

Consumers similarly reported a more relaxed attitude to budgeting as the economic recovery has gained pace. They placed less importance on saving and budgeting, and reported using credit cards more often compared to June 2020, when they appeared to avoid extra debt. At least one in three consumers in the UAE, Saudi Arabia, Russia and South Africa plans to increase their spending over the next six months.18

And when they do splash out? Mindful spending is emerging as a trend in the region: 85 percent of consumers in South Africa, 76 percent in Saudi Arabia, 74 percent in the UAE and 58 percent in Russia say supporting small and medium-sized enterprises (SMEs) during and after the crisis is important, be that by buying local, shopping at neighbourhood stores, or spreading the word about local small businesses.19

Interest in innovative payment options is growing

New payment formats are gaining traction with consumers. Those in CEMEA are widely aware and willing to use ‘buy now, pay later’ (BNPL) services – with 60 percent or more of consumers in Russia, South Africa, the UAE and Saudi Arabia saying they are willing to use BNPL in the future20. Age and income play a role: in the UAE it is popular with both Gen Z (aged 18-24 years) and Millennials (aged 25-34 years) across all income groups21; supporting that picture, Dubai-based BNPL shopping platform tabby recently reported that 70 percent of its Saudi Arabian customers are under 30 years old, and the majority are women.22 In Russia, however, BNPL is so far more popular with Gen Z and high-income earners. Across the region, those using it cited being able to pay in instalments and the fact that BNPL does not charge interest, as their motivation for using the service.23

Awareness of cryptocurrencies was also high – ranging from 76 percent in Saudi Arabia to 94 percent in South Africa – but that did not always transform into intent to use them. More than one in two consumers were planning to invest in cryptocurrencies in the next 12 months in the UAE, Saudi Arabia and South Africa, but in Russia, 54 percent had no plans to use them. As Mohamed reports: “A sizeable minority of consumers in CEMEA believe cryptocurrencies are either a bubble or that they will be banned in the future.”24 At least some formal intervention looks likely: in South Africa, for example, a regulatory framework is expected early next year, after two major crypto scams.25

Whatever the future holds, as the recovery continues, it seems that, increasingly, the response to the crisis will be far from the only factor to shape consumer habits.

Stay current with the latest payments insights from Visa Navigate CEMEA – subscribe today.

1 https://www.unwto.org/news/2020-worst-year-in-tourism-history-with-1-billion-fewer-international-arrivals

1 Visa CEMEA COVID-19 Impact Tracker, August 2021.

2 Our World In Data: https://ourworldindata.org/covid-vaccinations

3 Visa CEMEA COVID-19 Impact Tracker, August 2021.

4 OECD, December 2021. OECD Economic Outlook, Volume 2021 Issue 2: Preliminary version: https://doi.org/10.1787/66c5ac2c-en

5 Visa CEMEA COVID-19 Impact Tracker. Total of 5,027 consumer interviews conducted targeting the banked population in four CEMEA markets: the U.A.E., K.S.A., Russia and South Africa. Interviews were conducted online across four waves: 23-29 June 2020.

6 Visa CEMEA COVID-19 Impact Tracker, August 2021.

7 Visa Business and Economic Insights, analysis of VisaNet data.

8 Dubai Restaurants Group survey as per Hospitality News report, May 2021: https://www.hospitalitynewsmag.com/eye-on-the-uaes-restaurant-scene-post-covid-19/

9 International Air Transport Association, Air Passenger Monthly Analysis, August 2021: https://www.iata.org/en/iata-repository/publications/economic-reports/air-passenger-monthly-analysis---august-2021/

10 Visa CEMEA COVID-19 Impact Tracker, August 2021.

11 Visa CEMEA COVID-19 Impact Tracker, August 2021.

12 Visa CEMEA COVID-19 Impact Tracker, August 2021.

13 Visa CEMEA COVID-19 Impact Tracker, August 2021.

14 McKinsey State of Fashion 2022 report, December 2021: https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion

15 Visa CEMEA COVID-19 Impact Tracker, August 2021.

16 Visa CEMEA COVID-19 Impact Tracker, June 2021.

17 Visa CEMEA COVID-19 Impact Tracker, August 2021.

18 Visa CEMEA COVID-19 Impact Tracker, August 2021.

19 Visa CEMEA COVID-19 Impact Tracker, August 2021.

20 Visa CEMEA COVID-19 Impact Tracker, August 2021.

21 Visa CEMEA COVID-19 Impact Tracker, August 2021.

22 ‘Young Saudi women driving ‘buy now, pay later’ boom: tabby executive’, Arab News, November 2021: https://www.arabnews.com/node/1972991/business-economy

23 Visa CEMEA COVID-19 Impact Tracker, August 2021.

24 Visa CEMEA COVID-19 Impact Tracker, August 2021.

25 ‘Crypto Rules Planned to Protect Vulnerable in South Africa’, Bloomberg, December 2021: https://www.bloomberg.com/news/articles/2021-12-10/crypto-rules-planned-to-protect-vulnerable-in-south-africa

All brand names, logos and/or trademarks are the property of their respective owners, are used for identification purposes only, and do not necessarily imply product endorsement or affiliation with Visa.

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