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Picture: 123RF/MEL POMEN
Picture: 123RF/MEL POMEN

The pandemic has changed the way we live, work and play. Consumers have had to adapt frequently as infection rates fluctuated and governments issued new rules and restrictions. Some changes are here to stay, while others are more transient.

Visa has been closely tracking the impact of the pandemic, with regular research into consumers’ income, spending levels, attitudes and behaviours, to ensure that we stay on top of fundamental changes, that we can adapt our business to these changes and that we can help our customers and partners to realign their businesses too.

Our most recent Covid impact tracker for Central and Eastern Europe, the Middle East and Africa (Cemea), dated September 2021, focuses on our key markets: the UAE, Saudi Arabia, Russia and SA. It builds on our research and helps us understand how consumers and businesses in these countries continue to react to the evolving nature of the pandemic.

Vaccination unlocks spending and reinforces consumer confidence

One clear indicator from the research is that where vaccination rates are high, consumers are more hopeful about their country’s economic recovery. High vaccination rates bring a positive shift in sentiment towards households’ financial wellbeing, including the aspects of income, spending and savings.

In the UAE and Saudi Arabia, where a large percentage of the population is vaccinated, over 80% of consumers are more optimistic about their country’s economic recovery; 71% and 77% respectively believe that this recovery will mean an improvement to their salaries by 2022. 

As countries begin to open up, consumers have become more comfortable about their spending, with fewer people closely controlling their overall expenditures compared with the number who did so at the height of the economic uncertainty last year. In Saudi Arabia it’s 10% less, in SA 8% less and in Russia 19% less.

More people in the UAE (62%) and Saudi Arabia (62%) say that they are making purchases on credit cards or instalments, and in SA (40%) and Russia (36%) there is also a marked increase in the use of both payment methods. Consumers appear more financially liberated as well, as they have gained more confidence in the economy, with fewer consumers reporting focusing on saving and budgeting compared with June last year.

The acceleration of digital payments continues unabated

Since the start of the pandemic, digital payments have overtaken cash as consumers looked to contactless payments for convenience, hygiene and speed. Cash payments and cash-on-delivery payments have decreased greatly across all markets.

In our September 2021 research, 57% of consumers in Russia, 44% in Saudi Arabia, 43% in SA and 40% in the UAE reported lowering their cash spending and cash-on-delivery payments.

Consumer preference for mobile payment and digital wallets continued to gain ground, as these payment methods are becoming more popular and widespread in our key Cemea markets. More than two-thirds of consumers in the UAE reported increasing their usage of both mobile payments and digital wallets.

Similarly, 42% of consumers in Russia reported increasing their usage of mobile payment and 33% said they used digital wallets more. With cash avoidance being a key trend during the pandemic, contactless payments in general have risen across the focus countries – 76% of consumers in Saudi Arabia, 75% in UAE and 67% in SA have increased their use of contactless payments.

Online shopping – there is no going back

As noted in the previous three waves of our study (conducted in May and June last year), customers have increasingly turned to online shopping channels for both essential and nonessential purchases, with a noticeable shift in sentiment towards e-commerce and away from traditional face-to-face purchases.

Overall, the pandemic has created significant opportunities for e-commerce, with many retailers entering the digital sphere for the first time and many consumers making their first online purchases in key categories.

Most Cemea consumers report that they will continue to prefer online shopping, even once the Covid crisis is fully over, especially for food delivery, fashion and groceries. In the UAE, Saudi Arabia and SA online fashion and luxury purchases are becoming more popular, while online food delivery continues to grow in the UAE, and online grocery shopping continues to gain ground in SA.

Digital is the way to go for small and medium-sized enterprises

As e-commerce and contactless payments become the new normal, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience.

In the UAE, 92% of consumers say Covid has permanently changed how they pay, compared with 68% globally. In Russia, more than a third (35%) of small and medium-sized enterprises (SMEs) say accepting contactless payments is among the top investment areas needed to meet consumer expectations.

The need for SMEs to provide their customers with more convenient ways to pay and to have an online presence is even more critical now. At the height of the crisis, positive sentiment and support for SMEs was extremely strong, with consumers preferring to shop at neighborhood stores and spread the word among family and friends to support local businesses.

Our latest study shows that consumers across Cemea markets continue to feel strongly about supporting SMEs and local businesses. The urgency and the intensity of support have decreased slightly, however, as the severity of the economic impact of the pandemic continues to wane, highlighting that many small businesses may still face an uncertain future, especially if they have not adapted to the new market realities.

Mohamed Bardastani is Cemea economist and director of business and economics insights at Visa.

The big take-out:

As e-commerce and contactless payments become the new normal, it is more important than ever that businesses adapt to the changing consumer demand for a digital experience.


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