Some categories have benefited tremendously from the current situation as customers adapted very quickly to the “new normal” by redeeming or purchasing gift cards in these categories. A study provided by Merit Incentives.
Gift card market in the UAE is expected to grow 13.3% during 2020-2024, from $1.27 billion in 2019 to over $2 bn by 2024.
The UAE is unique in its extraordinary diversity. Its expat community makes up 80% of its population and comprises more than 200 nationalities, which in turn has a profound impact on local culture and shopping trends. In order to understand gift cards’ trends in the country, a clear overview of its landscape is essential.
In 2020, population of the UAE is estimated at 9.89 million, with 72% male and 28% female, and 65% of the population aged between 25 and 64. The vast majority of the population is working class, with a high smartphone and internet penetration rate.
The retail landscape is well diversified from high-end to mass retail brands, with a large representation of international brands, together with locally-developed concepts.
Gift card market in the UAE is expected to grow 13.3% during 2020-2024, from $1.27 billion in 2019 to over $2 bn by 2024.
In 2020, the growth of digital gift cards was further expanded, with a shift to digital standing now at over 90% of the customers’ redemption in our B2B programmes. The COVID crisis accelerated further digitalisation by forcing merchants, programmes and customers to adapt to lockdown restrictions. Adoption of e-Gift cards have increased by over 250% in the first quarters of 2020, compared to the same period in 2019.
We saw 3 major trends in the first part of 2020.
1. A shift from in-store redemption to e-commerce platforms:
UAE being one of the countries with the highest number of multi-brand e-commerce marketplaces in MENA region, COVID restrictions encouraged customers to look at more online options.
Online shopping had increasingly been customers’ choice over the past few years, but this trend was greatly accelerated by the strict lockdown measures put in place in Dubai by the UAE government.
2. Some categories have benefited tremendously from the current situation:
Customers have adapted very quickly to the “new normal” by redeeming or purchasing gift cards in the above categories.
Due to restaurants and bars closure, customers spent heavily on groceries and other supermarket’s purchases;
As work from home and online schooling became the new norm, customers had to reorganise their house in a short time spam;
New devices, gaming and streaming options were of course popular;
Fashion and lifestyle are still listed in the top categories with a clear shift on beauty products.
Some categories were seriously impacted: travel, experiences, transportation, jewellery and F&B. However, in the second part of the year, we can see that staycations and experiences are catching up again.
3. Increase of “remittance” redemption:
One trend in particular has caught our attention: there has been a marked increase in demand for international option for top represented nationalities’ home countries (Egypt, India, Pakistan, Filipinos), but also for Western countries (UK, France).
UAE’s expat population immediately saw the benefit of sending digital gift cards to their relatives in their country of origin with a click of a button and without any fees associated to it.
As a conclusion, customers were highly adaptive and willing to use gift cards across countries, currencies and brands.
