What does a millennial leader mean for Saudi Arabia?
The Kingdom of Saudi Arabia (KSA) is experiencing a revolution in terms of both social and economic change. The country is now led by the youngest Saudi prince in history — a Millennial who wants to shift the ethos of the nation with an ambitious 2030 vision.
The nation’s reliance on oil is diminishing, its youth are ambitious and grasping the emergent opportunities and half the population — women — are experiencing a freedom and choice never before allowed within the boundaries of the nation.
Here at Brand Genetics we wanted to better understand the shifting sands of Saudi Arabia and the trends shaping its future journey. We conducted a month-long immersion in the market to get an on the ground view of the nation as it strives to become the heart of the Arab and Islamic worlds, an investment powerhouse, and the hub connecting three continents. Below we share seven big trends shaping the future of the region — and reflecting opportunities for business.
The full report can be downloaded from our blog here
1) Economic transition
Saudi Arabia currently has the 2nd largest oil reserves in the world. However, in search of long term economic stability, and the nation understands the need to diversify with new investment in education, entrepreneurship and employment prioritised alongside the re-introduction of VAT. KSA aims to generate up to 40 billion riyals ($11bn) in non-oil revenues from its privatisation program by 2020 and create up to 12,000 jobs.
In the short term, brands will benefit from understanding how they support those consumers hit hardest by this period of economic transition. While in the long term, business must recognise the significant opportunities this shift represents for a range of new industries.
2) A more moderate Islam
As home to two of the holiest sites in Islam (Mecca & Medina), Saudi Arabian society is shaped by a complex intertwining of strong religious beliefs and rich culture. Yet, even with this backdrop, more relaxed and open-minded stances on religion have — and continue — to be embraced, slowly breaking down previously steadfast cultural barriers.
There is a strong sense that KSA is leaning towards the path of Bahrain or UAE, which both still follow Islamic conduct but are much more accepting of modern societies, beliefs and lifestyles. Whilst some fear this change — concerned about a loss of identity — Saudi’s religious roots and position on the world stage will undoubtedly ensure religion remains a key facet of the nation as it evolves.
Importantly, the brands who find a way to tread this line between tradition and progression will gain a significant advantage — particularly in younger and growing audiences.
3) Ambitious youth
51% of the Saudi population are under 25 years old, but they face a 35% youth unemployment rate and history shows this is often a powerful driver of. Younger Saudis are increasingly exposed to the freedoms peers have in other nations, imparted through travel, further education abroad and social media (see trend 4). This has fuelled a groundswell for change at a time when the man in power — a millennial himself — is passionate about creating such a shift.
While the nation is ripe for foreign investment, this ‘youthquake’ means we also expect a boom in entrepreneurship and locally founded start-ups. Businesses must be aware of how the more liberal and risk-taking mindset of younger customers will start to impact the consumption landscape of the country.
4) Women on the move
Saudi Arabia is arguably the world’s most gender-segregated nation. Women have previously faced frustrating restrictions; however, the nation is now undergoing a significant shift in women’s rights as Saudi women step up and have their voices heard.
Recently, women have been allowed to drive on public roads, fly planes, attend football matches and ultimately have greater freedom to choose their way of life. Importantly, whilst women are huge proponents of these changes, they are not alone, and many young Saudi men are fighting for women’s rights, encouraging their independence.
This radical change in mindset from previous, more protective male generations is creating new, more diverse, markets with emerging needs and wants. Brands are already beginning to capitalise on this shift, for example Careem (the Eastern equivalent of Uber) is recruiting Saudi women to become taxi drivers or ‘captainahs’. The company’s success lies in embracing an eager population of drivers excited to take the wheel, helping it to expand its fleet & also provide new job opportunities.
We see a real opportunity for other businesses to follow this approach, not just embracing the huge potential Saudi women represent as a market, but also as a workforce that understands and empathises with their peer group’s unique position.
5) Hyperconnected reality
In a country that has a wide range of restrictions for so long, social media provides an ’escape’ for many, allowing them to share their personalities and thoughts in a virtual universe where, by contrast, few rules apply.
Saudi Arabia has one of the highest rates of smartphone penetration globally and this has led to a culture that relies on the internet for information and commerce. 91% of Saudi’s population are active internet users while 75% have active social media accounts. Individuals heavily document their lives online, and use social media as a key channel for communication, spreading news and taking a point of view.
As such creating a strong digital portfolio that is mobile ready, is unavoidable for any business in the market — as is understanding how your brand can tap into this channel to generate new opportunities.
6) Reclaiming the kingdom
Historically, the majority of Saudis worked in well paid government jobs and / or received generous grants and allowances. However, the government is now curbing and redistributing these funds, injecting them into national entrepreneurship and education programs as part of the economic rebalancing. This is forcing Saudis to adapt to working in more demanding business environments to retain their standard of living with less government support.
Foreign firms are reducing their reliance on their ex-pat workforce. For example, Starbucks, has committed to localising 35% of its workforce by 2020 as part of its ongoing Saudi nationalisation strategy, to provide better opportunities for Saudi youth and create a positive impact on society. In the medium to long term, all firms will benefit from the upskilling of the local workforce, but in the shorter term companies need to consider how they manage and enable this process in the most positive way for their workforce and their business.
7) Let Saudi entertain you
Tourism represents another growth stream for KSA, given the diverse opportunities the nation can provide, driving attention towards its abundant natural resources (including the Red Sea & desert) as well as its newly restored historical & cultural sites. It is clear that we are only just seeing the start of what KSA can achieve with the nations untapped resources beyond oil.
Equally, while in the past, Saudis would travel over the border — to neighbours such as Dubai & Bahrain — for entertainment the country is developing more offers for its local market. The country has recently re-opened public cinemas, circus shows and even introduced the country’s first international fashion show in Riyadh.
Ultimately, KSA’s drive to redefine entertainment unlocks a variety of opportunities for brands — in and around this world. Understanding how your brand can offer new entertainment experiences for Saudis could generate real growth.
Ultimately, the most striking thing we take from all the above is the potential, optimism and excitement about the road ahead for Saudi Arabia as it undergoes a significant shift. Brands — both foreign and domestic — face many challenges but also have huge opportunities to address rapidly changing wants and needs. For the full report click here & please get in touch with us if you want to hear more about how we can help your business.
Neha Ahmed is a consultant at Brand Genetics, an insight and innovation agency specialising in human-centred insight and innovation. With a background in Business & Management, she has worked at IBM in global resource management and is fascinated by culture, human psychology and social enterprise