Much like other religious festivities, the holy month of Ramadan is about celebrating life with friends, family and loved ones. As with any festive period, there is a noticeable shift in consumer behaviour from what they shop, to how and when they shop, bringing about a huge engagement opportunity for both brands and retailers.
The Ramadan effect on retail
For those who have never experienced Ramadan in the Middle East, the expectation that food-related sales go down during the month of fasting, where Muslims fast during daylight hours, is a reasonable one. However, food consumption across most categories surges during this month in comparison to others. This rise in consumption is due to the change in daily habits of the roughly 1.8 billion Ramadan observers (nearly one-quarter of world population).
Although Muslims fast the entire day, family and friends often come together to break the fast at dusk for a meal called Iftar. It’s precisely the activities around Iftar that lead to large changes in consumer behaviour and a rise in related sales. For example, consumers shift towards making more bulk purchases needed for large family meals. An exchange of gifts such as dates, chocolates and perfumes also takes place as a token of appreciation, foreshadowing the celebrations at the end of the holy month (Eid-al-Fitr). Understanding such a shift in consumer behaviour and patterns is key for retailers to not only improve their sales opportunities but also better engage with and cater towards a large part of their customer base.
Of course, retailers operating in the Middle East as well as other predominantly Muslim societies, such as in Malaysia and Indonesia, have responded to increased consumption habits with a range of Ramadan-centric marketing communications – with those in western countries only more recently following suit (see Tesco and Sainsbury in the UK). However, it’s not only food and beverages that are affected. The retail industry more generally, from clothes and electronics to automotive and airlines, experience increased consumer behaviour. It’s therefore important to understand the consumer journey and moments that matter before, during and after Ramadan.
So, what changes during Ramadan?
With shorter working hours and time often spent resting indoors while fasting, an increased pace of life occurs after Iftar. As a result, mobile, online and social media usage is also at its highest during the night, with Facebook usage growing by an extra 57 million hours and a peak usage time of 3 am. This provides a unique environment for online shopping and engagement opportunities – with an estimated 35% increase on e-commerce platforms during Ramadan.
Offline consumption remains just as important. The slow days are met with a vibrant social scene following Iftar where friends and family gather for hours in cafes, spend time in malls browsing and buying gifts, and enjoying a range of amusement activities.
But what opportunities does this bring?
Looking at the consumer journey, three broad phases can be identified: the three to four weeks in the lead up to Ramadan, the four weeks during Ramadan, as well as the last week of Ramadan in its own respect as it doubles up as being the week prior to Eid. Each phase presents opportunities for greater brand engagement strategies, particularly underpinned by mobile engagement.
Phase 1: the lead up to Ramadan
Data shows traffic peaks in the run-up to Ramadan, starting as early as four weeks prior to its start but most noticeable the week just before, with an average site visitor traffic uplift of 15%. Considered generally as an inspiration and planning phase, consumers are more likely to engage in planned rather than impulse buys. For retailers, this means targeting loyal customers within this period to sustain greater engagement throughout their journey touchpoints. Examples include pushing out new fashion collections targeted at Eid outfits, car dealers linking promotions with new car model launches anticipating Eid gifts, or cafes and restaurants offering post Iftar activities to heighten a social experience within their space.
Phase 2: during Ramadan
Increased spending during Ramadan is met with consumers actively searching for bargains. Retailers offering promotional offers such as ‘buy-one get one free’, free gifts and extra volume witness highly positive sales, especially related to bulk food and household items. Specifically the electronics space sees a 20% purchase increase because of hard-to-resist promotions. Deals can be so good that many postpone their purchases for the Ramadan period, much like Black Friday.
With the increased online presence, data shows a rise in nutrition and recipe related searches as people plan for their Iftar and following Suhoor (before daybreak) meals. For brands, this means using data insights and leveraging online channels to push personalised food recipes and related ingredient promotions as exemplified by Nestle and Unilever. Offline, as people spend more time in malls and with others in community areas, cafes, restaurants and cinemas for example, can all benefit from targeted marketing deals focused on evening hours.
The UK market is beginning to understand these opportunities. Westfield, Europe’s largest shopping centre, developed a pop-up Eid festival last year including food stalls, live events and special offers for gifts, demonstrating an understanding of this consumer group by creating and tailoring experiences specifically for them.
Phase 3: the lead up to Eid
The much-anticipated Eid festivities see the third and fourth week of Ramadan producing the highest ROI due to last minute gift purchases, impulse buys, taking advantage of promotions and a general excitement for the holiday period with online travel bookings soaring. For example, mobile travel bookings jumped 52% in Turkey last year. Particularly reliant on web and mobile, adopting a mobile-first strategy to engage and inspire travellers and consumers well in advance to Eid, is key.
However, understanding this rush of last-minute consumer behaviour can generate increased sales through slight price increments as well. Through data insights generated by online activities, retailers can better tailor prices and offers to match their customer’s willingness to pay during this period of the journey.
What challenges emerge?
For retailers, these numerous opportunities are met with a fair share of challenges. Like other festive periods, the importance of great customer service and convenience goes beyond price and promotion offers. It requires retailers to go back to basics: to truly listen and understand their customers and in turn, respond quickly. It requires strategically balancing front and back-end operations.
Focusing on Ramadan shopper priorities of time and ease of the transaction experience means ensuring enough staff on the ground, frequently bought products are conveniently placed in a store, effective stock management for popular products while maintaining cash-flow and for successful overall operations. It is also important to consider planning well ahead of Ramadan and handling the post-Ramadan transition effectively. Implementing an automated ordering system, for example, could prove valuable in improving product availability and reducing gaps in offers, thereby ensuring a positive customer experience.
The high online presence and peak browsing and transaction window being at night, means additional pressure is placed on e-commerce. Successful retailers are those that are well-equipped to manage their e-commerce operations while paying attention to often small but immensely powerful customer strategy offers e.g. next-day delivery, click & collect, in-store availability, virtual assistance. Moreover, with Ramadan sales constituting a combination of both physical and online transactions, ensuring omnichannel presence is a challenge requiring strong data analytics capabilities to help distinguish, prioritise and enable focused re-design of operations accordingly.
Despite customers largely bargain-hunting, maintaining price competitiveness and carefully avoiding over-promotions is often key to balancing sales, profits and market share – a challenge often faced by retailers during the Christmas period. However, possibly the biggest challenge is developing and consistently adhering to a strong customer strategy across all aspects of retail operations ensuring strong brand engagement both during and outside of Ramadan.
Sharing the spirit of Ramadan
Ramadan is a unique experience and brands that tap into and share it with their consumers will be most equipped to drive both brand awareness and engagement in a period known for low brand loyalty as people lean towards the best offers.
Being able to create meaningful stories around people’s Ramadan expectations, traditions and values, based on strong consumer insights, will separate brands who act on intent signals from those who create them. Coca Cola’s popular “Ramadan Acts of Kindness” advertising campaign is related directly to consumers by capturing the spirit of the holy month (considered as a month of giving) and tapping into emotions and direct experiences. It requires an understanding of the consumer behaviours of this demographic group and leveraging data analytics and insights to develop a tailored mix of marketing communications across channels both on and offline while focusing on peak times to gain wider brand engagement.
With Ramadan taking place from May 6th to June 4th this year (depending on moon sightings), keep an eye out for any Ramadan specific marketing you may encounter.
Consultant, Customer Engagement