What shoppers want – and how to make sure they get it

Generative AI tools and ‘value hacking’ will influence buying decisions this year

By Rabia Yasmeen

January 9, 2024, 10:28 AM

Decision time: how much help from AI do consumers want?

“Follow the customer. If they change, we change.” That is the mantra of Sir Terry Leahy, former chief executive of supermarket giant Tesco.

In retail, understanding the consumer provides the compass for strategic decision-making. Euromonitor International’s study Top Global Consumer Trends for 2024 outlines what businesses in the sector can expect from Middle Eastern consumers this year.

AI, value hacking and wellness results

2023 was the year that generative artificial intelligence (Gen AI) went mainstream. Gen AI tools, such as ChatGPT, are now influencing how consumers make buying decisions and informing their expectations of products and brands.

More than 46 percent of professionals in the region confirm this trend, saying Gen AI has an impact on travel planning or shopping decisions.

Consumers share personal information such as height, weight and other metrics to generate fashion recommendations to suit their body type or to find colours to wear.

They may also use Gen AI to generate recipes or travel suggestions. ChatGPT is limited in its learning with data up to 2021, but in many cases consumers find it a good starting point, to inspire and help them make decisions.

Local and regional players such as Etisalat and Botim have already introduced GPT-powered chatbots. However, we have yet to see more integrated functions on mainstream digital commerce platforms such as Amazon, Noon and Talabat.

The region’s startups are investigating the use of AI across various areas. Many young shoppers manage their shopping decisions through these platforms. Businesses that integrate Gen AI solutions will win consumers in a crowded marketplace this year.

Nearly 53 percent of Middle Eastern retail professionals plan to invest in the technology over the next five years.

A new consumer mindset is set to emerge this year: “value hacking”. In uncertain economic times, with high inflation, consumers are hunting for the best deals, looking beyond the price tag alone.

They will take smart approaches to maximising budgets without sacrificing quality and skimping on what they really want.

Businesses will need to innovate around affordability to cater to these highly informed consumers. Stepping up incentives is an attractive option for businesses and the trend for reward-based loyalty programmes is set to continue.

The loyalty landscape is competitive, though. Businesses in the region should also look at wider options to fulfil consumers’ need for value.

The wellness industry has evolved at a rapid pace in the region, with many beauty and wellness brands emerging and growing quickly. The market has become saturated, however, and customers have become sceptical of some claims.

Middle Eastern consumers are willing to move away from multi-step beauty regimens, time-consuming treatments and less effective products.

Companies will need to offer effective products that require little time or effort. Over 46 percent of UAE online consumers said they would strongly prefer products with proven efficacy over lower prices in 2023, compared to 40 percent in 2022.

This trend may unfold in two ways for businesses: consumers may stick with products that can show proven results, or they may want to try new technologies. Brands and companies will need to be careful when adding or removing products from their portfolios.

The importance of understanding consumers cannot be overstated. Changing attitudes precipitate shifts in what they buy, how they make purchases and where these transactions occur.

To navigate this dynamic successfully, decision-makers must be attuned to evolving preferences.

Rabia Yasmeen is a senior consultant at Euromonitor International