With the significant low recorded cases in the region, GCC nations have finally slacken the measures and protocols related to COVID-19 pandemic. These changes have improved the current market situation which led to the resumption of the business as usual or as one might hope.
Such refinements have caused the foodservice sector to grow their sales in Ramadan of 2022, reaching at 78% of the sales achieved during pre-COVID times in 2019. This is a good indication that the market has recovered faster than expected and will continue to expand until the end of this year. Service channels such as car service and delivery are some of the winning strategies that sustained restaurants during the pandemic and gained greater revenue share in 2022. However, the reliance on car service and delivery was insufficient for restaurants to maintain healthy revenue streams in 2022 where fierce dine in competition played a major role in the revenue generated by the sector around the GCC except for Oman. Oman maintained the social distancing and the 70% capacity in all public places in compliance with their ministry’s regulation. All in all, restaurant performances achieved an acceptable performance, 78%, compared to Ramadan in 2021 and 2020.
On the other hand, retail sector experienced an inverse effect witnessing a decline in Ramadan of 2022 achieving 63% of the sales in 2019. The sector’s fell off performance was because of the Eid becoming a travel event rather than the usual social event. Eid holiday was extended in most of the GCC countries for more than 5 days. Eid purchases are essential revenue contributor to fashion and retail brands during Ramadan. The second revenue contributor to retail/fashion purchases during Ramadan was the traditional and social gatherings which witnessed a sharp increase in 2022 due to the restrictions being lifted. The revenue contribution of events during the holy month contributed significantly to the 63% rebound of retail and fashion. The sector experienced an exceptional online sales momentum during Ramadan 2020 and 2021 due to consumers’ limited social and entertainment options compared to previous years. The retail sector in general was remarkably thriving in the last quarter of 2020 and the whole year of 2021 exceeding the sales of 2019 by 5-10%. The year 2021 sales target was achieved earlier before the end of the year where majority of the retail brands showcased a market-wide sale promotion.
The entertainment sector such as cinemas, Family Entertainment Centers (FEC), and museums continued their positive revenue performances during Ramadan of 2022 compared to the lockdown years. The re-opening of schools and the resumption of school tours benefited the sector and recovered a small portion of its losses in the past 2 years due to the temporary closures. The entertainment industry across the GCC witnessed major staff layoffs and small operators exits due to the long lockdown period that mainly targeted group activities. Entertainment in general offers special services to the group of people for a space in a designated period that is usually longer than the experience in the foodservice industry and retail industry. FEC centers, cinemas, and museums witnessed high occupancy rates during Ramadan and even since the restrictions were lifted that enabled them to achieve their maximum allowed revenues compared to the prior years.
Furthermore, hypermarkets and supermarkets registered a stable market performance in Ramadan 2022 reflecting the same normal sales figures generated in 2019. Consumer behavior was altered during the pandemic significantly where online grocery sales accounted for a considerable source of the revenue in 2021 and 2020. That online grocery shopping however did not continue as a preferred grocery shopping method yet registered higher contribution in 2022 compared to 2019 in most GCC countries. Saudi Arabi’s and UAE’s online grocery sales declined but maintained and still generated higher returns in 2022 compared to 2019 sales and the rest of the GCC countries. One major highlight regisitered in FMCG market during Ramadan 2022 is the significant decline in discounts and promotions due to the global inflation fluctuations, supply chain issues, and the Ukrainian war.
The positive performances witnessed during Ramadan and Eid of 2022 are backed by the strong desire by consumers to return to normalcy, however it continues to be threatened by the increasing inflation rates and the unstable consumer confidence. If it was not for the strong oil and gas prices that generated unprecedented economic gains in more than a decade to the six GCC, the region might have been hugely affected by the staggering inflation, supply chain issues, and the war in Europe. Also, it would have posed a negative impact on the current performances in the different industries across the GCC region most especially during the month of Ramadan in 2022, like the implications witnessed during 2021 and 2020 lockdown years.