At the start of the pandemic in early 2020, no one expected it to be at this point in 2022.
The world economy is undergoing turbulent changes, and consumer habits and preferences are changing rapidly to adapt to this evolution. One major trend that has unquestionably influenced most (if not all of us) of us is the transition to digital.
Pandemics have played a major role in making that change, but digital remains part of its stickiness, especially in the retail industry, despite the world gradually learning to withstand the Covid crisis. I have succeeded in doing so.
Online shopping is no longer fashionable and is no longer a last resort. This is the preferred option for many consumers, mostly young people.
In the recently released Economy 2022 report, Mastercard Economic Research Institute Up to 20% of retail digital shifts are expected to remain.
“Digital agility is a key factor in increasing revenue across the pandemic. At the heart of this digital shift was e-commerce,” he said.
At the peak of the 2020 pandemic, the global share of online spending exceeded pre-crisis trends by about 4.3 percentage points, but as of September 2021, as people broke out of the blockade and rushed back to physical stores. Dropped to 0.3 percentage points.
“Overall spending levels for both face-to-face and online spending remain unprecedentedly high. The big problem for 2022 is the composition of online spending following the easing of savings and the decline in financial support. Is how it calms down, “the report said. ..
In pre-pandemic digital mature countries, we found that the share of online transactions increased further and the digital divide expanded further globally.
Looking at the United Arab Emirates, the report found that the online share of spending in the retail sector was on par with pre-pandemic trends. It also highlights another new model that is gaining attention both domestically and internationally.
“With the momentum of the global transition to digital, we have discovered a growing trend of increasing e-commerce subscriptions for wine clubs, weekly grocery deliveries, clothing and more. According to an analysis of the subscription economy, subscriptions surged in nearly 88% of countries in 2021 compared to the previous year, “the report added.
This new model was prominent among car companies, virtual training partners, bicycle rentals and pet services.
In the United Arab Emirates, retail subscriptions’ share of total spending increased 1.5-fold between 2020 and 2021.
“Even before the pandemic, I think people were creating businesses first online and then over-the-counter. It’s just an accelerated trend due to the crisis,” said Mastercard Chief Economist and Mastercard Economics Institute. The person in charge, Bricklin Dwyer, said. Gulf business.
“That is, much of that demand will be more tenacious, as all supplies are just moving online. Now I think we’ll see some of that overturn. That’s” there. Let’s go back to, brunch with friends, “and so on, but then we’ll reduce that percentage of our spending. “
MasterCard’s report also predicts major moves this year in terms of consumer savings and spending. “The biggest change to watch in 2022 is household savings and the potential impact they have on consumer spending. Supported by stimulating funding, households can repay or invest in debt. I’ve saved more than usual because I put money in banks. To understand the growth prospects, it’s important how quickly consumers return to their old savings habits, especially in the world. The household savings rate almost doubled from 2020 to 2021 compared to before the pandemic. “
Private consumption of accumulated savings could contribute an additional 3 percentage points to global GDP growth in 2022. In the UAE, excess savings are expected to reach approximately 295 billion dirhams.
“How quickly or slowly consumers spend from their savings will have a spillover effect on the global economy,” the report said.
“Globally, economic growth, vaccine advances and digital transformation that have made businesses bigger and smaller more resilient continue to shape the future. Against this backdrop, consumer demand and purchasing power. Is growing and the experience economy is expected to reappear next year, “added Dwyer.
https://gulfbusiness.com/how-digital-is-set-to-shape-the-future/ How digital is set up to shape the future