NielsenIQ: Saudi FMCG sector sees strong momentum, e-commerce fastest growing

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Pavlos Pavlou, Executive Director of NielsenIQ in Saudi Arabia, said that the Kingdom’s fast-moving consumer goods (FMCG) sector witnessed strong momentum in Q2 2025, with sales volumes growing by 5.5% year-on-year (YoY), mainly driven by increased consumption, reflecting resilient demand.

In an interview with Argaam, Pavlou added that value growth slowed slightly to 3.7%, signaling increased promotional activity and pricing pressures in the market. He indicated that growth was broad-based across all FMCG categories, with the snack segment leading in terms of performance. Beverages and frozen foods came next, both of which saw moderate-to-high growth, highlighting consumers' increasing desire for convenience.

He also noted that supermarkets remain dominant, accounting for 43% of total FMCG value, pointing out that growth in this channel has peaked, indicating a maturing market.

According to the top executive, e-commerce remains the fastest-growing channel, albeit with a smaller base, contributing 5% of total value while posting a remarkable 45% YoY growth, highlighting a major shift toward digital shopping.

Self-service and retail stores, with a 16% market share, also showed robust performance with 13% growth, fueled by demand for quick and easily accessible shopping experiences, he added.

Despite global uncertainties, consumer confidence in Saudi Arabia remains relatively strong, with about 47% of Saudi consumers reporting financial improvement in 2025, compared to a global average of only 30%. However, price sensitivity remains high, with more than 80% of shoppers closely monitoring prices of essential food items, noticing even minor changes.

“The premium products segment now accounts for 25% of total FMCG spending, with 71% of consumers willing to pay more for high-quality products and 64% willing to pay extra for time-saving products, showing the rising significance of convenience in purchasing decisions,” Pavlou said.

Geopolitical unrest and economic uncertainty continue to pose challenges for consumers worldwide. With rising food prices being the top concern, followed by housing and utility costs, Saudi consumers are not immune to financial pressures despite their relative optimism, which is indicative of the larger post-pandemic inflationary environment, according to Pavlou.

He noted that, even though inflation has moderated in recent months, its fallout still impacts consumer behavior. Saudi shoppers have become more cautious and value-conscious, reassessing spending priorities and adjusting their purchasing habits. Around 78% actively seek promotions and special offers, which in turn has pressured manufacturers’ margins, prompting a strategic shift across the industry.

“Saudi Arabia’s retail sector is undergoing a major transformation, driven by evolving consumer preferences and rapid adoption of digital and convenience shopping. The value of e-commerce grew remarkably by 45% in Q2 2025, while retail stores grew by 13% YoY, signaling a clear consumer shift toward speed, accessibility, and seamless shopping experiences,” said Pavlou.

“In response, several FMCG companies are focusing on innovation and excellence to maintain their profitability. By offering high-quality, premium products, brands aim to meet evolving consumer expectations while justifying higher pricing. This shift towards value does not come at the expense of convenience, as convenience remains a key driver of purchase decisions,” he added.

As more players enter Saudi Arabia’s digital and convenience-driven retail space, competition is intensifying, and the pace of change is expected to accelerate. To stay competitive and relevant, brands need to adopt a comprehensive, multi-channel strategy that integrates physical and digital touchpoints for a better shopping experience, according to the top official.

In addition, Pavlou anticipates a change from traditional trade, which consists of small, independent grocery stores, to more contemporary, structured retail formats, driven by urbanization, the uptake of digital technologies, and changing lifestyles.

With continued digital adoption, e-commerce is set to play an increasingly pivotal role in the Kingdom’s retail ecosystem, making excellence in multi-channels a critical success factor for brands seeking growth in this dynamic market, he added.