Master the 2023 Tech and Durables market in META

Buoyed by a more positive mood compared the global average, META consumers are willing to spend on the brands they trust and the categories they believe they need — even when coming from more cash-strapped economies like South Africa. 

An extreme range of digital literacy is a key characteristic of META region consumers. While some, like Emiratis, are completely habituated to online channels and digital engagement with brands, others, like low-income South Africans are hamstrung by technology — willing to embrace online channels but limited to engaging via smartphones. 

To capitalize on opportunities in 2023, brands must rethink what “digital engagement” and “omnichannel” means for every target segment in each of the countries they’re hoping to grow in. For example, changes to the laws and social regime in Saudi Arabia, embodied by government-led initiatives such as Vision2030, have boosted their goal of being the new digital headquarters in the region. This gives brands a unique opportunity to partner with Saudi government to expand their regional, and digital footprint.

Depending on which country they’re from, META consumers have widely different expectations from promotional periods. For example, in the UAE consumers are used to near-constant promotions. Coupled with the rare buffering from the near-global cost of living crisis and high digital literacy, Emiratis have been shaped to web crawl extensively for the best deal, and can afford to wait for promotions — where they constantly buy up. Meanwhile, South African consumers are exploiting promotions and leveraging their price discounts to buy necessities such as groceries. For example, Black Friday 2022 saw a +7.5% boost in key category unit sales (compared to 2021), despite consumers avoiding big-ticket items such as expensive PTVs or overly-sophisticated appliances.

In 2023, T&D manufacturers and retailers have the opportunity to expand on promotional activity with rewards programs or similar, that bring an element of personalization into discounting. To succeed brands must be available to consumers at the times that suit them, and offer targeted rewards when they seamlessly intersect with consumer’s needs, rather than employ a “spray and pray” approach to what they offer and when.

In South Africa, for example, big brands are now giving the cash-strapped mass market extended opportunities to shop on promotion. Previously, certain promotional periods were typically leveraged by specific categories, such as Easter focusing on FMCG confectionery. Now multiple, categories, including Tech and Durables take advantage of Easter and other promotional periods throughout the year to maximize their sales in the slow economy.

While more affluent segments in South Africa may alter their purchasing behavior to shop more sustainably, the majority of the population must choose products offering the best value for money — whether it’s sustainable or not, and regardless of their environmental concerns. According to 2022 GfK Consumer Life data, South Africans are also notably more likely to feel the government should address environmental problems instead of individuals, compared to global consumers.   

Meanwhile, MENA consumers orient differently to the concept of sustainability altogether. The region includes seven of the top ten most water stressed nations on Earth, and a 2021 Arab Barometer survey shares that water scarcity and its sustainable use dominates the hearts and minds of its consumers — with 70% of respondents citing water pollution as a very serious concern, compared to 38% saying the same about climate change.  

Leading the charge with authentic positioning that offers proof of sustainable business practices, and product ranges that enable consumers to live sustainably (at a range of price points) will best position brands to capitalize on the growing trend when it reaches critical mass. And the change has already begun, for example, Saudi Arabia just launched its first local Electric Vehicle brand, and with brand’s opportunity to leverage strategic partnerships through their Vision 2030 initiative for a significant signal boost. 

Brands hoping to win the purchase of META consumers in 2023 have to cater to segments characterized by extreme differences in spending power, sometimes within the same country.  

Consumers are spending more in the UAE and Saudi Arabia than anywhere else in the region. In South Africa, brands have the unique challenge of catering to two countries that share the same geography: with High Net Worth (HNW) consumers living alongside a poorer majority who nevertheless also favor aspirational purchases and are fiercely brand loyal. Here, GenZ are increasingly polarized between consumers who are aware that they are in a minority with access to social and economic privileges their peers have been denied, and those who are acutely aware that they do not have the same luck.  

Successful brands will craft campaigns and messaging with a laser-sharp focus, knowing which shopper profiles they’re targeting beforehand. Further, with the cost-of-living crisis affecting the majority of regional consumers, companies who manage a portfolio of brands that address a range of consumer needs and pockets (rather than focusing exclusively on Premium) stand the best chance of long-term success — inspiring loyalty as aspirational consumers move up price segments over time. 

Despite the global T&D market posting negative YoY growth in Q4 2022 (-14%), META grew +0.7%, with a T&D sales value of US$54 billion. Alongside LATAM, it was an exception to the deceleration rule.  

Whether an established player or a new category- or market entrant, T&D manufacturers and retailers moving into 2023 and beyond can maximize growth by leveraging these key opportunities and turning disruptions to their advantage.  

The COVID-19 pandemic accelerated online shopping adoption across the region. In countries with an established online profile, the pandemic instead shifted consumer behavior within the online space — the UAE, for example, showed a marked shift towards premiumization in online purchases with 92% YoY growth in premium online purchases, 2019 vs 2020/2021.

  While the major growth by online channels achieved during the pandemic’s major restrictions have stabilized, and the traditional market has regained its presence, online channels have kept the attention of their new customers. Saudi Arabia, for example, has amplified and further entrenched the shift with their Vision2030 project. 

Further, consumers’ offline consumption preferences have shifted from traditional retail stores to more modern megastores in key markets, including Egypt — expanding opportunities for global brands in the brick-and-mortar space.  

As a result, omnichannel strategies are a must across META. Futureproofed brands will offer a range of touchpoints that seamlessly transition between online and offline experiences — providing equally convenient, engaging experiences to affluent consumer segments with full phygital mobility, and those whose use of online channels are still hamstrung by a lack of national infrastructure or personal buying power. 

Brands can leverage trust to expand their digital footprint, and maintain it by offering well considered pricing and product mixes across online and offline channels. While the perception of online as a discount channel threatens revenue cannibalization and profitability drain, an online presence is essential.  

GfK POS data shows bookended T&D development in the Middle East, with premium (+10.7%) and bottom category (+4.8%) segments both growing YoY. Amongst South African consumers, premium price points contributed to a +10% YoY growth in Cooling sales in 2022 — proving that those who can afford it will spend, and those buying up will invest if they have sufficient trust in the brand. 

Within premium strategies tailored to meet the unique demands of each market and consumer segment, brands have an opportunity to appeal to consumers with the existing spending power, while nurturing the aspirations of those who don’t to secure their future purchase. 

Manufacturers with a brand portfolio who cater to premium, mid- and low-income segments, and consumers at every stage of digital maturity stand the most chance of long-term success. However, that needn’t stop new entrants from first landing in the market or new categories with a more limited scope. 

Brands who succeed will first deeply understand consumer demand and fit to identify what must be stocked first and where, and place it in the context of the longer-term product mix and price points to match a range of consumer spend potential.  

To mitigate the risk of threats such as supply chain disruptions, new brands must inform their distribution strategies with a granular understanding distribution and retail dynamics in the target country/category.  

Brands who stand to win big are those who invest in, and think laterally about retailer-distributor partnerships — and ensure consumers can receive their products reliably under every circumstance, no matter where they are. For example, in South Africa, some retailers are stepping into the logistics gap and functioning as third-party courier networks to support last-mile distribution. Meanwhile, new entrants to the Middle East have the opportunity to upend the status quo, where no significant direct relationship exists between brands and marketplaces, and individual buyers currently import goods to sell to consumers via online marketplaces. 

Understanding the micro-economics of the target country and/or category is critical to ensuring expansions are legally compliant, and socially en pointe. A deep understanding of everything from trade dynamics, consumer culture, and legislation (for example, around the ease of opening a business) will set market entry up to succeed.   

The onus is on brands to know their consumer, down to the finest, everchanging, nuance. For example, with new permissions to drive, study, travel and work legally without as strict a need for a male guardian’s approval, women’s empowerment in Saudi Arabia has progressed in recent years.  

Saudi women can now exercise a series of human rights and freedoms that are revolutionary in the kingdom. This empowers more women to lead decisions around which brands and products to purchase for their household, and transact unsupervised. This has broader, exciting implications for T&D manufacturers and retailers hoping to grow in the market, necessitating a rethink of everything from brand-building to promotions strategy and messaging, to embrace women’s growing power to decide which products they want for themselves and their families. But these strategies and messaging may fall flat outside of the kingdom, where many META women are able to take these rights and freedoms for granted.