Even before the COVID pandemic, consumers and businesses in the Middle East were reeling from the socio-economic impact of tumbling oil prices, digitization and geopolitical instability.

The Winds of Change
The pre-existing purchase power fluctuations and the recent apprehensions around health/hygiene have heavily impacted the shopping behaviour of consumers in the Middle East. And more importantly, it has fundamentally shaken long-standing customer-brand relationships and led to a large number of customers migrating to cheaper, better-value alternatives.

The McKinsey report also reveals that more than half (54%) of those who have chosen lower-priced alternatives were satisfied with their decision; which is an indication that the trend is likely to be sustained in the future.

What’s Eroding Customer Loyalty in the Middle East
Consumer behaviour shifts usually don’t hinge on a single entity and are typically driven by a collective system of change factors. Here are the major ones impacting customer loyalty in the Middle East.

Rapid Rise of Ecommerce:
While ecommerce had a slow start in the region, it has steadily picked up pace in the last 2 years. Saudi Arabia’s ecommerce market is expected to hit 9 billion USD by 2025, rendering it one of the fastest-growing ecommerce landscapes in the world. The COVID crisis further accelerated ecommerce adoption in the region, especially for the grocery and personal care segment.

The COVID Pandemic:
The pandemic contributed to declining customer loyalty in two ways: by accelerating ecommerce adoption and shrinking the consumer wallet share.

The Large Millennial Population:
The Middle East is home to around 108 million millennials and they account for about 60% of the population. Globally, millennials are notorious for their fickle brand loyalty and only 7% of millennials identify themselves as brand loyalists. However, millennials in the Middle East are an outlier here – a Google Consumer Barometer study found that millennials in the region demonstrate more brand loyalty than their peers in the US, the UK, Japan or Australia.

How Brands Can Adapt to the New Loyalty Narrative
Adapting to these rapid changes and fluctuations in customer behaviour and brand loyalty can be tricky. But it’s not impossible. Based on our experience with 400+ global retailers and insights from millions of customer interactions, here’s what works:

• Create Digital-first, Omnichannel Loyalty Programs
• Offer Adaptive & Personalized Rewards
• Drive Deeper Engagement through Emotional Loyalty
• Double Down on Customer Experience

For detailed insights visit https://www.capillarytech.com/blog/loyalty/customer-loyalty-middle-east/