The rise of consumerism in Saudi Arabian society Soraya W. Assad Department of Sociology, King Abdulaziz University, Jeddah, Saudi Arabia Abstract Purpose – The emergence of consumer-oriented societies has become the central trait of our era. Saudi Arabia gained entre ´e to consumerism via its oil wealth. Numerous studies demonstrate that consumer lifestyle and consumerist attitudes are spreading in the country. The purpose of this study is to explain how Saudi Arabia came to be a consumer society, to present evidence of rampant consumption, and to describe how global and local economic, social, and governmental factors colluded to reinforce this cultural trend. Design/methodology/approach – This study is based on the survey and analysis of secondary data gathered from published studies and reports available in English and in Arabic. Findings – The study shows that the spread of consumerism in Saudi Arabia is a consequence of a complex of global and local factors. Commercial television and the internet, marketing strategies, relentless and manipulative advertising, urbanization, and proliferating shopping centers, are all components of globalization promoting emulation of the Western consumerism lifestyle. The national government subsidies and give-aways during the oil boom years due to increased national income, absence of taxes, public job availability, emerging middle class, liberal import policies, increased female participation in family purchase decisions, a burgeoning youth market, and increased per capita income have also enabled Saudi Arabia’s transformation into a consumer society. In addition, statistics presented for a variety of durable and nondurable goods and services amply testify to rampant Saudi consumerism. Originality/value – Excessive consumption in Saudi Arabia is a threat to the social order. It is exacerbating economic, environmental, social, psychological, and health problems. As Saudi Arabia seeks sustainable development, more research is needed to identify and address problematic aspects of consumption. As part of this process, policy makers should distinguish what constitutes consumerism from healthy consumption patterns. Excessive consumption should be minimized as a way to avoid economic minefields and sustain economic growth. Keywords Consumption, Consumerism, Persian Gulf States, Saudi Arabia Paper type Research paper Introduction In twentieth century capitalism, the focus shifted increasingly from production to consumption, resulting in a parallel shift from control and exploitation of workers to control and exploitation of consumers. Capitalism has created a controllable “consuming mass” to complement the control of the “producing mass.” The central concern is to concentrate the means of consumption on the control of consumers in order to get them to spend as much as possible (Gane, 1991; Schor, 1998; Ritzer, 2001). The emergence of consumer-oriented societies has become the central trait of our era. In such societies, sustaining a productive economy demands that consumption becomes a way of life, and buying and use of goods converts from utilitarian to ritualistic excess. The consumer society had already expanded from the USA to Western Europe and Japan by the 1960s. The 1980s were a decade of marked extravagance in all these regions. Laissez-faire economic policies and newly The rise of consumerism 73 International Journal of Commerce and Management Vol. 17 No. 1/2, 2007 pp. 73-104 q Emerald Group Publishing Limited 1056-9219 DOI 10.1108/10569210710774767
Transcript
The rise of consumerismin Saudi Arabian society
Soraya W. AssadDepartment of Sociology, King Abdulaziz University, Jeddah, Saudi Arabia
Abstract
Purpose – The emergence of consumer-oriented societies has become the central trait of our era.Saudi Arabia gained entree to consumerism via its oil wealth. Numerous studies demonstrate thatconsumer lifestyle and consumerist attitudes are spreading in the country. The purpose of this study isto explain how Saudi Arabia came to be a consumer society, to present evidence of rampantconsumption, and to describe how global and local economic, social, and governmental factorscolluded to reinforce this cultural trend.
Design/methodology/approach – This study is based on the survey and analysis of secondarydata gathered from published studies and reports available in English and in Arabic.
Findings – The study shows that the spread of consumerism in Saudi Arabia is a consequence ofa complex of global and local factors. Commercial television and the internet, marketing strategies,relentless and manipulative advertising, urbanization, and proliferating shopping centers, are allcomponents of globalization promoting emulation of the Western consumerism lifestyle. The nationalgovernment subsidies and give-aways during the oil boom years due to increased national income,absence of taxes, public job availability, emerging middle class, liberal import policies, increasedfemale participation in family purchase decisions, a burgeoning youth market, and increased percapita income have also enabled Saudi Arabia’s transformation into a consumer society. In addition,statistics presented for a variety of durable and nondurable goods and services amply testify torampant Saudi consumerism.
Originality/value – Excessive consumption in Saudi Arabia is a threat to the social order. It isexacerbating economic, environmental, social, psychological, and health problems. As Saudi Arabiaseeks sustainable development, more research is needed to identify and address problematic aspects ofconsumption. As part of this process, policy makers should distinguish what constitutes consumerismfrom healthy consumption patterns. Excessive consumption should be minimized as a way to avoideconomic minefields and sustain economic growth.
Keywords Consumption, Consumerism, Persian Gulf States, Saudi Arabia
Paper type Research paper
IntroductionIn twentieth century capitalism, the focus shifted increasingly from production toconsumption, resulting in a parallel shift from control and exploitation of workersto control and exploitation of consumers. Capitalism has created a controllable“consuming mass” to complement the control of the “producing mass.” The centralconcern is to concentrate the means of consumption on the control of consumers inorder to get them to spend as much as possible (Gane, 1991; Schor, 1998; Ritzer, 2001).
The emergence of consumer-oriented societies has become the central trait of ourera. In such societies, sustaining a productive economy demands that consumptionbecomes a way of life, and buying and use of goods converts from utilitarian toritualistic excess. The consumer society had already expanded from the USA toWestern Europe and Japan by the 1960s. The 1980s were a decade of markedextravagance in all these regions. Laissez-faire economic policies and newly
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International Journal of Commerceand Management
Vol. 17 No. 1/2, 2007pp. 73-104
q Emerald Group Publishing Limited1056-9219
DOI 10.1108/10569210710774767
internationalized stock and bond markets created easy-money euphoria among thewell-to-do (Durning, 1992, p. 33).
The lifestyle of the majority of Americans and of those around the world, who canafford to emulate it, is the lifestyle of a consumer class. With the growth of this classcame the spread of consumerism. It is a cultural orientation that perceives the possessionand use of a variety of goods and services as the path to personal happiness, socialstatus, and success. Consumption tendencies comprise a set of practices which permitpeople to express self-identity, show attachment to social groups, accumulate resources,exhibit social distinction, and ensure participation in social activities. Buying thingsbecomes both a proof of self-esteem and a means to social acceptance via what Veblentermed “pecuniary decency” (Durning, 1992, p. 40).
Consumerism has already spread to Arab countries and in particular to the Gulfstates (Abdu, 1992, pp. 60, 62; Zaid and Abu-Elenin, 1995, p. 5). Within Arab societies, thelower middle-income class is emulating the lifestyle of the upper-and middle-incomeclasses in terms of their consumption behavior. Arab conspicuous consumption began inthe Gulf countries, from which it spread via Arab expatriates, and intellectuals who hadworked in the Gulf states. Today, it is generally agreed that the Gulf countries areconsumer societies (Al-Shouki, 1989; Al-Abadi, 1990; Al-Nouri, 1990; Abdu, 1992;AL-Qudsi, 1992; Zaid and Abu-Elenin, 1995; Al-Motwa, 1996; Al-Saif, 2002).
Until the discovery of its vast oil resources in 1938, the economy of Saudi Arabiawas based on subsistence arid-zone agriculture and desert pastoralism. Presently, theeconomy is dominated by the oil industry. Large-scale oil production increasedthe national income exponentially, enabling expanded access to imported goods withthe rise of individual incomes and the ability to consume. Since, 1970, developmentplans in Saudi Arabia have encouraged this trend, aiming to raise the standard ofliving of the Saudi individual by raising his/her income. Several studies (Shukri, 1981;Al-Gamdi, 1988; Abd-Elal, 1995; Al-Shanbary, 1998; Al-Saif, 2002) agree that thespread of a consumer lifestyle and consumerist attitudes in Saudi Arabia isincreasingly evident. According to Al-khateeb (1998, p. 172), Saudi society has becomeone of the most consumer-oriented societies in the world. All family members – men,women, and children – are encouraged to become consumers.
As Saudi Arabia seeks sustainable development, it is important to understand andanalyze the factors that colluded to reinforce the current consumption orientation in thecountry. Because Saudi Arabia plays an important role in the global community andthe majority of its population is involved in consumption and leisure related-activities,studying their consumption patterns and behavior becomes important forpolicy-makers, multinational corporations, and researchers. The purpose of thisstudy is to explain how Saudi Arabia came to be a consumer society, to presentevidence of excessive consumption, and to describe how global and local economic,social, and governmental factors colluded to reinforce this cultural trend.
Factors promoting consumptionIt has long been recognized that the aggregate behavior of consumers can beunderstood as the result of economic and social psychological forces. Consumerbehavior is part of a larger process of interaction among consumers, advertisingagencies, mass media, and other institutions, which are all functionally related toeach other. Research on consumption behavior is incomplete without some effort
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to understand the nature of these functional relationships (Glock and Nicosia, 1964,p. 54). Consumption behavior is also central to understanding the structure andfunctioning of societies.
The growing influences of the multinational corporations that distribute Americanproducts, the worldwide rise of a popular media and electronic communications systemand worldwide trends in inequality suggest that consumerism has spread beyond theshores of the USA (Schor, 1999, p. 47). The Arab Gulf countries are among those whichhave attracted Western marketers’ array of goods promoting conspicuousconsumption. The spread of consumerism in Saudi Arabia is a consequence ofa complex of global and local economic, social, and governmental factors. Commercialtelevision and the internet, marketing strategies, relentless and manipulativeadvertising, urbanization, and proliferating shopping centers, are all components ofglobalization promoting emulation of the Western consumerism lifestyle. The nationalgovernment subsidies and giveaways during the oil boom years due to increasednational income, absence of taxes, public job availability, emerging middle class,liberal import policies, increased female participation in family purchase decisions,a burgeoning youth market, and increased per capita income have also enabledSaudi Arabia’s transformation into a consumer society.
Global factorsEmulation of Western lifestyles. Veblen (1987, p. 103) considered much of consumptionbehavior to be driven by emulation, the stimulus of an invidious comparisonmotivating people to seek to outdo those with whom they are in the habit of classingthemselves. Emulation leads to discrimination in favor of visible consumption.That is, the goods people purchase to impress others must be visible to those withwhom they compare themselves. According to Veblen, consumption also requiresa conspicuous waste of goods. That is, consumption must convey economicextravagance in excess of what is required for physical comfort (Olson, 1998, p. 192).For Veblen, conspicuously wasteful consumption expressed a desire to live up to theconventional standard of good taste as defined by the wealthy leisure class.
As we enter the twenty-first century, emulation continues to govern consumerbehavior. However, emulation has evolved to reflect a new global order in which theindustrialized countries of the West have replaced Veblen’s nineteenth century leisureclass in setting the standards of good taste for the rest of the world. Emulation canbe understood as a global process in which countries compete for economic status andesteem. The highest status is accorded to “developed” nations such as the USA andWestern Europe, among others. These countries are considered superior and dominanttechnologically, economically, and militarily. Consequently, they set the standardsand norms by which all other countries are judged backward, inferior, different,deviant, or subordinate. Because of this supremacy, many people around the worldattempt to emulate Western consumption patterns (Olson, 1998, pp. 191-2). However,emulation of the West is most apparent in the nations that have the ability to pay forWestern goods. Nations such as the Gulf states are able to demonstrate their pecuniaryprowess in the most conspicuous and wasteful ways.
In a quest for global status, Saudi Arabia is striving toward modernization. Since,modernization has been equated with westernization, there has been a tendency toadopt Western models of development, in particular in the case of the country’s
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infrastructure projects. Saudi Arabia is dependent on imports of Western goods andservices. It relies on industrialized nations of the first world for food, manufacturedgoods, and arms. There is dependency on Western technology and know-how. At theindividual level, becoming modern is assumed to be related to the acquisition andconsumption of certain status goods and a preference for the Western lifestyle. As aresult of travel, mixed marriages, foreign expatriate importation, and Westerneducation, the Saudi upper-middle and upper classes have acquired a taste forWestern fashions, luxuries, and superfluous goods. Purchasing goods associated withWestern middle- and upper-class lifestyles, young people dress in the latest Westernfashions, use Western brand-name fragrances, eat at Western fast-food outlets andrestaurants, and listen to Western music as a mark of social status. The desire to havea European-made car and European-designed clothes reflects a cultural preference forWestern standards of taste. Furniture has become more westernized, imported fromdifferent parts of the Western world. Private motor vehicles have become increasinglycommon even in rural villages. Expenditures on expensive consumer goods such ascomputers, mobile phones, and other important markers of social status are regardedas indispensable. More household appliances are acquired and used by the Saudifamily. Most Saudi homes now have ovens, washing machines, refrigerators, electricheaters, and air-conditioners (Al-Khateeb, 1998, p. 172).
Emulation by the “new rich” takes the form of increasingly wasteful expenditures:luxury homes with swimming pools, increased expenditures on leisure, takingvacations abroad, buying residences abroad, and purchasing jewelry. But as Veblenpointed out, the conventional standard defined by the wealthy is “indefinitely”extensible. As the “pecuniary ability” of the lower classes increases, the scale of decentconsumption expands. To maintain their relative position within the social hierarchy,members of the leisure class or high status groups are forced to increase their level ofconsumption. In the process, the pecuniary canons of good taste and standards ofreputable living are redefined for those below (Olson, 1998, p. 191).
Traditionally strong group ties in Saudi Arabia encourage people to imitate theirrelatives, friends, and neighbors, who also tell each other about new products, therebyreinforcing advertisers’ marketing efforts (Al-Shanbary, 1998, p. 57). To enhance theirsocial status and live up to the stereotypical social expectation that Saudis are rich andshould behave accordingly, some Saudis spend more than they can afford.
The tendency to conform to Western standards and consumer culture is evident inthe proliferation in Saudi Arabia of department stores, shopping malls, fast-foodsoutlets and convenience stores such as 7-11, all of which are replacing local marketsand street stalls. In short, what the West exports to the Saudis is the taste for a Westernlifestyle. Creating a global economy means transforming the vast majority of largelyself-sufficient people living in “underdeveloped” countries into consumers of Westerngoods provided by transnational corporations. As the president of the NabiscoCorporation put it, “I am looking forward to the day when Arabs and Americans,Latin and Scandinavians will be munching Ritz crackers as enthusiastically as theyalready drink Coke or brush their teeth with Colgate” (Mander, 1996, p. 321).
Media exposure. The cultivation of needs is a mammoth global enterprise. For fourdecades, advertising has been one of the world’s fastest-growing industries.In developing countries, advertising has exploded (Durning, 1992, p. 120). Globaladvertising agencies have become the most powerful and influential teachers of the
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next generation (Olson, 1998, p. 192). Advertising translates mass production intomass consumption.
As commercial television has rapidly advanced around the world, everywhere it hasproved exceptionally effective at stimulating buying urges. Aside from sleeping andworking, watching TV is the leading activity in most consumer societies (Durning,1992, pp. 125-6). In addition to carrying many commercial messages, televisionprogramming reinforces consumerist values.
Television aims to make as many people as possible compulsive and impulsiveconsumers, which is to say addicts, by daily bombarding them with advertising(Orr, 1999, p. 142). Seductive advertising makes people believe that who they are andwhat they own are one and the same. Socializing with family, friends, and neighborshas been replaced by hours spent in front of the television set, which presents a skewedpicture of spending patterns.
Another risk of commercial TV is that it homogenizes human cultures, leading toa loss of healthy diversity and to a weakening of attachments to local places.It promotes worldwide uniformity in consumer tastes. With the advent of TV, peoplehave lost interest in native stories and legends. Whereas once cooperation, sharing, andnonmaterialism were valued, TV always seems to present values opposite to these(Durning, 1992, pp. 127-8).
Omar (2000, p. 89) points out that advertising has played an important role inspreading consumerism in Arab countries as a result of satellite TV and an open trademarket. Zaid and Abu-Elenin (1995, p. 17), Obid (1997, p. 171), and Al-Rahmani (1999,p. 42) have all indicated that advertising has been important in changing people’stastes and has been effective in spreading consumerism in third-world and ArabianGulf countries, particularly the United Arab Emirates (UAE) and Saudi Arabia.Previous research has indicated that most advertising in the UAE was a product ofWestern multinational corporations, which attempted to formulate one pattern ofconsumption.
Furthermore, in the Gulf countries, advertising has been increasing. Al-Rahmani(1999, p. 43) indicates that, particularly in recent years, total expenditures onadvertising in the Gulf have grown as a result of the spread of satellite channels. It hasbeen estimated that between 1995 and 1996, advertising expenditures in the Gulfcountries increased by 20 percent, from 750.7 million dollars to 902.4 million dollars.They are expected to increase to more than a billion dollars in the near future(Middle East Newspaper, 1997).
Saudi Arabia had become far more exposed to the world’s media by the late 1950s.The country had over 6 million television sets in 1999 and over 260 television sets per1,000 people in 2000. Most educated Saudis now have satellite dishes. Over 95 percentof the Saudi people have exposure to radio. The Saudi government estimates that theaverage Saudi spent 50-100 percent more time watching television in 2000 than his orher US or European counterpart (Cordesman, 2003, pp. 12, 234).
To penetrate the profitable Saudi market, more and more companies have turned toadvertising. According to industry estimates, advertising expenditures in SaudiArabia had more than doubled before 1990 and the Kingdom, along with other ArabianGulf countries, accounted for 75 percent of the Arabic advertisement industry’s sales atthat time (Okaz Newspaper, 1990). While outdoor and print media have traditionallybeen the major advertising media in the Kingdom, television has been making
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significant inroads. Twenty years ago Lavell (1987) was already citing TV as thefastest growing advertising medium in the country.
Awad (1994, p. 187) indicated that 90 percent of the advertising on the three ArabianTV channels (Saudi Arabia, MBC, and Dubai) was for foreign durable and luxurygoods. These goods were Japanese, American, and European, and most of them werethe products of multinational corporations.
Omasha (2003) studied the effects of such advertising on Saudi women, whoremembered, preferred, and purchased certain advertised brand-name foodstuffs.In Saudi Arabia, television advertising has also been ranked as a main source ofinformation and influence on family purchasing behaviour, particularly amongchildren (Al-Saud, 1997).
According to Al-Hedithi’s (2000) study, 93 percent of Saudi children watchedtelevision daily or regularly. He demonstrated that children remembered the televisionadvertisements they saw and that these had a strong impact on purchasing behaviour,stimulating the buying urge, providing information, and affecting selection ofproducts. He found that 26.25 percent of children bought the goods they saw ontelevision advertisements. Al-Anad (1993) found that the majority of the children inRiyadh, Saudi Arabia watched television almost three hours daily, asked to buyproducts advertised on television, and consumed a large number of these products.Al-Harthi (1994) found that 97.4 percent of elementary school students in Saudi Arabiawatched television, 76.2 percent watched television daily, 93.3 percent watchedcommercials, 70.5 percent knew commercials’ broadcasting times, and 90.4 percentliked to watch commercials. He also found that a large percentage of the childrenremembered what they watched.
Yavas and Abdul-Gader’s (1993, p. 38) study also sought to determine Saudichildren’s exposure to and awareness of commercials. They found that during a typicalevening, regardless of their gender, 13.4 percent of the respondents were exposed toone commercial break, 31.5 percent to two, 15.3 percent to three, and 39.8 percentto four. The commercials generating most viewer awareness were those for food, softdrinks, toys, and automobiles. The authors concluded that commercials did stronglyinfluence children’s requests to parents and influence family purchases. In fact,32 percent of the children “always” and 46 percent “sometimes” asked their parents topurchase the advertised products. Given the strong family orientation in the Kingdom,not surprisingly, 44 percent of the parents “always” and 45 percent “sometimes”consented to these requests and bought the products the children requested. It shouldbe noted that about 70 percent of the children accompanied their parents on shoppingtrips, and an overwhelming proportion could identify the advertised brands duringthese trips.
A survey of Saudi college students also found that they ranked television as themost important mass media information source (Quraeshi et al., 1991). No wonderAl-Hedithi (2000) found television advertisement the second most importantinformation source about a product while Al-Saud (1997), studying the impact oftelevision advertisements on Saudi family purchasing behavior, found that the mostimportant goods and product information sources were, in turn:
. television advertisements;
. personal shopping experience;
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. newspaper advertisements; and
. family and friends.
Electronic consumption facilitators. The latest electronic means of consumption havinga profound effect on consumer behavior include home shopping television andseemingly infinite sites on the internet. These are revolutionizing consumption of allsorts of things including books, toys, clothing, automobiles, stocks, and airline tickets.The credit card has given the consumer society an enormous boost. Consumption ofcertain goods and services would have not occurred had the credit card not beenavailable to enable people to spend all that they have and then to go well beyond thatamount using their credit cards. Instead of shopping only during a store’s businesshours, people can order products at any time of the day or night through catalogs, theinternet, or television shopping networks and charge the purchases to their creditcards. Related phenomena – debit cards, ATMs, and electronic funds transfers – alsohelp to feed the consumption-oriented society (Ritzer, 2001, pp. 100, 102). Saudi Arabiahas entered the electronic age, and credit card use is becoming common.
Commercialization of public spaces. Integration into the global economy is not newfor the oil-rich countries of the Arabian Peninsula and Gulf, insofar as their moderndevelopment has been dependent on trade for decades (Doumato, 2003, p. 50). However,the last 25 years have witnessed Western consumer trends flooding Arabian Gulfmarkets. If one single thing represents the way Gulf consumer patterns have changed,it is the retail revolution there. The last 25 years have witnessed an unparalleled boomin supermarkets, hypermarkets, and gleaming air-conditioned shopping malls. It isobvious that Western convenience shopping is increasingly popular with Europeanexpatriate, Arab, and Asian shoppers.
Ritzer et al. (2001, pp. 421-2) rightly indicate that technological changes made thenew sites of consumption (department stores, malls) possible and helped to make themmore fabulous. Art and technology produced fantastic dream worlds, oriented toentertain the consumer in order to increase consumption and designed to providegoods and services to fulfill the needs of consumers’ imaginations. These sites offerhope to the masses via inexpensive imitations and credit so that lack of resources willnot prevent consumption. From fragrances to the latest computer technology and frommobile phones to themed restaurants, young Gulf Arabs can buy or visit a wideselection of foreign brands at a local mall.
The consumer revolution has spread beyond the weekly shop: even the mosthumble Gulf city is now awash with foreign-branded burger bars, ice-cream stores,fashion boutiques, and themed restaurants that operate either with local partners orthrough regional franchise deals. Fast-food firms say that their market has alreadypeaked in all but a few underdeveloped regions. New Foreign brands flocked into theGulf until the mid-1990s, but now the name of the game is market share rather thanmarket entry. Even before low oil prices started to bite, price wars and takeovers ofsmall, weak fast-food chains by stronger rivals had become the norm in the regionalfast-food trade (Thomas, 1999, p. 10).
Market liberalization. Globalization laissez-faire economic policies andinternationalized stock and bond markets have created an easy-money euphoriaamong the well-to-do, which translates into a “get it while you can” mentality. Marketliberalization and the introduction of buying on credit have led to explosive growth in
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sales of everything from automobiles and televisions to frozen dinners (Durning, 1992,p. 33). As previously noted, the spread of the credit card industry has encouragedconsumers to spend money, in many cases far beyond their means.
Marketing strategy advances. Companies are using effective marketing techniquesto influence both affective and cognitive dimensions of individual purchasingbehavior. Marketers use such incentives as increased warranty periods, rewardingcustomers with premiums and free gifts, and extensive use of games of chance andcontests as part of their sales promotion programs. Other promotional devices includediscounts on large purchases and the use of local newspapers to advertise these. Half orfull-page advertisements contain culturally relevant messages. In addition, extensiveuse is made of available outdoor advertising sources – lamp post signs, stadiumpanels, uni-pole billboards, and bus stop posters (Tunclap, 1993, p. 38). Somerestaurants and stores in Saudi Arabia make special effort to make women comfortablein public. Restaurants are obliged to provide separate seating areas for women andfamilies. A few women’s clothing boutiques are owned and run exclusively by women,and only women are allowed inside.
Urbanization. As in other countries, Saudi Arabia is going through the process ofurbanization; its population is becoming increasingly urban. The rapidity of thechange in the Saudi case is startling. According to Wilson and Graham (1994, p. 235), in1902, less than 10 percent of the Kingdom’s inhabitants lived in cities. Oil revenues ledto increased expenditures, which in turned spurred the urban economy. Trade andconstruction jobs were initially created, attracting tribesmen. Whereas 30 percent ofthe Kingdom’s population was said to be urban by 1960, this had increased to75 percent by 1990, a proportion far outstripping that in such neighbors as Iraq andIran, although still the lowest among the six members of the Gulf Cooperation Council(GCC). The Kingdom’s urban population was also increasingly concentrated. Riyadh,Jeddah, and Makkah contained more than half of the country’s urban population as of1990. A United Nations Development Report of 1999 indicated that more than80 percent of the population of the Gulf states could be called city dwellers. In SaudiArabia, for example, 84 percent were city dwellers (Barakat, 2000, p. 49). Most Saudisprefer city life today. Despite efforts by the government to stem the flow to the cities byimproving rural services and providing farming subsidies, tremendous gaps betweencity and rural life remain (Wilson and Graham, 1994, p. 235).
Studies in the Arab countries have indicated that immigration from rural tourban areas has increased consumption expenditures (Al-Shanbary, 1998, p. 61;Obid, 1997, pp. 77, 89, 91). People in urban areas consume more than in ruralareas as demands increase for housing, water, electricity, transportation, food, andeducation.
In Saudi Arabia, urbanization has encouraged many youths to move from rural andBedouin areas to urban areas in search of jobs and better services. First, these youthsmove alone, but after settling down, they bring their families to the city. Young couplesprefer to set up their own households, forming nuclear families. If they cannot afforda separate home, they live with either set of in laws until they can build their own(Al-Khateeb, 1998, p. 173). The rise of the nuclear family has affected consumptionpatterns. The young married couple living independently starts to spendindependently on food, furniture, home appliances, water, electricity, gas, otherutilities, and domestic help.
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Local factorsGovernment subsidies and giveaways. Since, the oil boom of the late 1970s and early1980s, Saudi Arabia has undergone rapid and continuous economic, social, and culturaltransformation from its tribal beginnings. The Kingdom derives around 75 percent ofgovernment revenue from the oil sector. The oil wealth that Saudi Arabia obtained in1974 led the government to establish many subsidies. With the inflow of petrodollars,infrastructure projects were stressed; the government also laid the foundations for awelfare state. Education and health care were made free, and students were givengrants to attend school.
During the boom years, food prices for bread, rice, cooking oil, sugar, and meat weresubsidized. The Kingdom also subsidized low-cost utilities. Consumers were chargedonly eight cents per cubic meter for the water coming from the country’s newdesalinization plants even though the cost to the government was $1.20 (Wilson andGraham, 1994, p. 177). Similar subsidies were implemented for electricity, gasoline,cooking gas, telecommunications, and air travel. The government also created severaldirect and indirect subsidies for Saudi businesses through offsets, tariffs, andinvestment and partnership arrangements. Subsides have had unintended results.Given the low prices of many goods during the late 1970s and early 1980s, manySaudis suffered no qualms about wasting previously expensive goods. Waterconsumption is one example: Saudi city dwellers used more than 500 liters per day,roughly 10-20 times the average of their rural Arab brethren (Beaumont, 1977,pp. 42-60). By 1983-1984, direct subsidies accounted for 14.7 percent of the Saudibudget according to a 1985 US Embassy subsidy study (Wilson and Graham, 1994,p. 179).
Another stratagem for the distribution of oil wealth was through real estate. Realestate prices soared; in some instances, land prices doubled every week (Lacy, 1981,p. 422). The real estate boom created scores of millionaires and fueled a massive bingeof consumer spending.
In 1992, in addition to lowering the prices for gasoline, water, electricity, and bottledgas, lower port fees were provided, which reduced the price of imports and wasexpected to add one billion dollars to the pockets of consumers (Wilson and Graham,1994, p. 190).
During the 1996-2001 periods, massive swings occurred in annual oil prices andrevenues. The value of Saudi oil and petroleum-related exports dropped in late 1997,then rose in 1999, leaped in 2000, and dropped again in 2001 (Cordesman, 2003, p. 24).As a result of these swings in oil revenues, the government cut back on subsidies. Forexample, during the oil crash of 1997, state subsidies were reduced on gasoline, dieselfuel, water, electricity, and air travel. Despite these cuts, however, these goods andservices remained underpriced. Suspended subsidies were reintroduced when oilrevenues once again rose. For example, at a cost of around 4 billion riyals ($1.1 billion)a year, the government reintroduced the barley subsidies in mid-2000 that it hadsuspended in 1998 (Bourland, 2001, pp. 7-88). Government aid also encouraged theexcessive use of water by providing free deep wells and low-cost diesel fuel for pumps.The subsidies for electricity, fuel, and petroleum products alone cost the governmentan estimated $2.7 billion in 1997 at world market prices. Diesel fuel, for example, soldfor 8.59 cents per gallon in Saudi Arabia although it cost 12 cents per gallon to produce(Middle East Economic Digest, 1995, pp. 32-33).
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Public job availability. During the boom years, oil revenues not only allowed thegovernment to offer massive subsidies, but also enabled it to create thousands of jobsin its own bureaucracy, thereby increasing consumer purchasing power. To be Saudimeant to be assured of a job, but not just any job. White-collar jobs that indicateeducation and responsibility have a high social cachet in Saudi Arabia. Even in timesof increasing economic uncertainty, there are clearly jobs that young Saudis cannotimagine doing (Wilson and Graham, 1994, p. 179). By 2000, 40 percent of the laborforce – almost all Saudis – worked in government office jobs. As for the rest of theSaudi labor force, some 25 percent worked in industry and oil, and 30 percent workedin services. Little of the Saudi portion of this workforce did manufacturing or manuallabor (Cordesman, 2003, p. 7).
Emerging middle class. The Saudi government’s educational subsidies and demandfor white-collar workers to support national development goals have had thepredictable effect of producing a more educated, professionally and technically skilledpopulation sector which constitutes an emerging middle class. The rise of amiddle-class population with some surplus income has enabled Saudi Arabia’stransformation into a consumer society. As research by Abd-Elal (1995, p. 131) andSager (2004, p. 303) has confirmed, in Saudi Arabia as educational level increases, sodoes consumption. The often Western-educated professional and technical workers ofthe middle class are those most likely to espouse the Western values of success,achievement, and consumption as an indicator of these.
Liberal import policies. Saudi consumption has been facilitated by allowing importof a dazzling array of luxury goods that only a few can afford. An emerging breed ofSaudis began to consume conspicuously. Their behavior took hold among anincreasing number of Saudis. This, in turn, stimulated the state to import moreconsumer goods to satisfy these consumers’ insatiable appetites. In addition, inJanuary 2003, the 12 percent tariff on most goods imported into the Kingdom wasreduced to 5 percent, following a decision taken in December 2001. Basic food items,other essentials (including many medicines), and capital equipment for developmentprojects continue to be imported free of any tariff (The Economist Intelligence Unit,2004, p. 59).
Increased female participation in family purchase decisions. A number of authorshave noted that Saudi women’s influence on family purchase decisions is rapidlyincreasing (Al-Torki, 1977; Al-Khateeb, 1987, 1998; Alireza, 1987; Jewell, 1987; Yavasand Babakus, 1994, 1995; Sager, 2004).
In their study of Saudi couples’ purchase decisions, Yavas and Babakus (1994,pp. 80, 83) found that the husband alone made 26 percent of these decisions, the wifealone made 30 percent, and the jointly couple made about 44 percent. While husbandsdominated in general on the question of how much to spend, this did not hold true inthe case of women’s clothing. Similarly, on the question of where to buy, husbandsdominated except in the cases of furniture and women’s clothing.
Yavas and Babakus (1994, pp. 80, 83) also found a significant positive relationshipbetween Saudi wives’ employment and educational status and how dominant theywere in purchase decisions. Education and female employment have given Saudiwomen more power generally in family decision making, particularly in theupper-middle and upper classes. Men’s increasing interest in their businesses givesthem less time to spend with their families, leaving household and childrearing
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responsibilities in the hands of women. As men’s domestic authority has lessened,women’s has increased. Women have more power in buying domestic equipment. Theyare usually responsible for buying anything relating to children, such as their clothesand toys. Women are the ones who determine family needs and decide what topurchase for family meals. They are also responsible for family visits and invitations(Al-Khateeb, 1998, p. 184). It is estimated that around 40 percent of Saudi privatewealth is in female hands. Women own approximately 15,000 commercialestablishments or about 10 percent of private business in the Kingdom (Doumato,2003, p. 252), which enhances their power.
The rapid growth of TV programs and channels throughout the Middle East isoffering advertisers more opportunities than ever before to reach Arab women – anaffluent, discerning, yet highly discreet consumer market. Arab women are an attractivetarget group for a broad range of advertisers for two reasons. Traditionally, they areheavy media consumers, and they are increasingly influential in Arab households.Regional demographics also reveal that the female 20- to 30-year-old age group is largerthan the male group of that age in many key target markets (Carter, 1997, p. 33).
Burgeoning youth market. By far the most influential demographic factor impactingon consumption patterns in Saudi Arabia is the burgeoning youth market. SaudiArabia’s population increased at least by 300 percent between 1973 and 2000(Cordesman, 2003, p. 6). According to the Saudi Central Department of Statistics in 2001,the Kingdom’s total population was 22.01 million in 2000. It is estimated that the nativeSaudi population increased at an average rate of 3.5 percent during 1995-2000 (SAMA,2000, p. 265). The consequence has been that roughly 42.5 percent of the Kingdom’spopulation was aged 14 years or younger in 2002 (Cordesman, 2003, p. 6). The fertilityrate of Saudi women was 5.5 births per woman in 2000 compared to a global average of2.7 and a Middle East and North Africa (MENA) average of 3.5. Meanwhile, improvedhealth care has increased the life expectancy of the average Saudi to 72 years (SAMA,2000, p. 45, 2001, p. 265). The World Bank (2001), p. 46, 2002, p. 50 estimates that theSaudi population would increase to 32.1 million in 2015 and 46 million in 2030.
The Saudi youth population has enormous buying power. As their tastes change, sodo their spending habits. They are also particularly important since they are a primemarket for advertisers. The market targets them since they have the consumptionpower to buy such goods as clothes, shoes, cosmetics, fragrances, and fast food.Hussain’s (1991, p. 220) found that age has an impact on Saudi consumption. Theyoung in his study (15-30 years old) tended to prefer buying such luxurious foreignfood products as chocolates and candies. Saudi parents generously give money to theirchildren to spend and save. However, some wealthy parents spoil their children withoverly generous amounts of discretionary spending money, thereby exacerbating theirexcessive consumption. In addition, other research studies show that besides spendingtheir own money, children spend a portion of their parents’ money and advise them onwhat to buy (Toman, 1989, p. 6; Al-Anad, 1993; Yavas and Abdul-Gader, 1993, p. 38;Al-Saud, 1997; Al-Hedithi, 2000).
Increased per capita income. Another factor that has contributed to increased Saudiconsumption is relatively high annual per capita income. According to the World Bankclassification of countries of the Arab region by GNP per capita, Saudi Arabia falls intothe upper-middle range with a GNP per capita range of $2,966-9,265 (Pfeifer andPosusney, 2003, p. 30). Western estimates indicate that Saudi Arabia’s annual per
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capita income has declined to around 40 percent of its peak at the height of the oil boomin the late 1970s and early 1980s. However, the resulting figure is still high by thestandards of most developing countries. The World Bank estimates that SaudiArabia’s per capita income averaged $7,230 in 2000. Annual per capita income is $2,090for the MENA as a whole, and $1,080 for East Asia. With regard to the other Gulfstates, this compares to $570 in Iran, $1,680 in Iraq, $1,803 in Kuwait, and $370 inYemen (World Bank, 2002, pp. Sections 1.1 and 1.4).
Evidence of consumption in Saudi ArabiaThe accumulation of wealth in Saudi Arabia has been phenomenal, converting thecountry from a marginal third-world economy to one of the world’s richest marketplaces.While maintaining certain traditional values, Saudis have used their abundant incomesto exercise their new tastes for a variety of consumer products (Yavas and Abdul-Gader,1993, p. 37). Today’s Saudi market is an incomparable avenue for international productsranging from home computers to sporting equipment. Consumerist attitudes andbehavior in Saudi Arabia are manifested in increased importation of goods,consumption of durable and nondurable goods, and consumption of services.
Importation of goodsSaudi Arabia is one of the most important markets in the developing world,representing $25-30 billion of annual export potential to international marketers(Bhuian, 1997). The country is on the top target market lists of the major industrializedas well as industrializing countries (Baker and Abou-Ismail, 1993). Saudi Arabiaimports more than 80 percent of its total commodity requirements from variouscountries (GCC Main Economic Indicators, 1992-1993, cited in Bhuian, 1997).
During the boom years 1970-1980, total Saudi imports of goods and servicesincreased substantially, from SR 4.990 billion ($1 ¼ SR 3.75) to SR 157.459 billion;then decreased during the 1983-1986 period from SR 186.412 billion to SR 115.239billion as a result of declining oil revenues; again increased between 1987 and 1992,from SR 119.170 billion to SR 184.746 billion; and remained generally high, althoughfluctuating with economic conditions (the rise and fall of oil prices and revenues),reaching SR 175.973 billion in 2000, SR 165.219 billion in 2001, and SR 162.558 billionin 2002 (United Nations Statistics, 2004). Imports by major commodity groups havealso increased, from SR 3.2 billion in 1970 to SR 113.2 billion in 2000 (Cordesman, 2003,p. 8).
According to The Economist Intelligence Unit (2004, pp. 57-8) report, the data for2003 show that the year-on-year increase in the value of Saudi imports in the thirdquarter was a striking 38 percent. Transport equipment and electrical equipmentand appliances represented the dominant import sectors, with each rising by around33 percent in value. Since, 2000, metals, machines, appliances and equipment haverepresented an increasing portion of imports (totaling some 55.3 percent by 2002) and,together with foodstuffs, now represent nearly three-quarters of the total value ofimports. The metals, machinery, appliances and equipment category, which includesthe high-value market for imported transport equipment, has risen from 50.3 percent(at cif rates) of the overall import market in 2000, to 55.3 percent in 2002. Foodstuffs(including beverages) accounted in 2000 for almost 18 percent of the total importmarket (from 11 percent in 1992).
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Consumption of durable and nondurable goodsAbdu (1992, p. 61) indicates that the discovery of oil was followed by excessiveconsumption in the Arab states of durable and luxury goods. According to the GlobalMarket Information (2004) report, consumer expenditures on goods in Saudi Arabiaincreased substantially during the 1990-2003 period. Consumer expenditures ondurable goods increased by 72.3 percent, from SR 22,870.00 million to SR 39,400.13million; on semi-durable goods grew by 82.2 percent, from SR 16,968.00 million to SR30,911.22 million; and on nondurable goods rose by 82.8 percent, from SR 53,099.00million to SR 97,044.70 million. According to the same Global Market Information(2004) report, total consumer expenditures on goods and services in Saudi Arabia grewduring the 1990-2003 period from SR 154,265.00 million to SR 276,553.66 million – anincrease of 79.3 percent.
The present study focuses on Saudi consumption of durable goods such ashousehold goods, electronics, automobiles, telecommunications, gold, and jewelry;nondurable goods such as food and groceries, clothing and footwear, cosmetics andtoiletries; and services such as domestic help, travel, leisure and recreation, bankingand credit, and energy and water.
Household goodsAs members of a highly consuming society, the Saudi people like to acquire new goodsarriving on the market. Between 1990 and 2003, the number of household durablespurchased continued to increase for most items (Global Market Information, 2004).
Furniture imports in 2001 totaled an estimated $420 million, compared to$399 million and $379 million, respectively, in the previous two years, and wereprojected to increase at an average annual rate of 5 percent during the following twoyears (Middle East Executive Reports, 2001a, p. 6).
According to the US and Foreign Commercial Services (US & FCS) report, while theimport share of the Saudi market is declining because of increased local production andchanging spending habits, there is still strong demand for stylish imported furniture ofgood quality, design, and durability. Although US furniture is considered expensive,demand for it is strong among upper-middle to high-income Saudis and expatriates aswell as young Saudis, many of whom have lived or studied in the US (Middle EastExecutive Reports, 2001a, p. 11). They are showing more interest in home exterior andinterior design, landscaping, and furnishing accessories.
Table I shows that Saudi consumer spending on all household goods and servicesincreased substantially during the 1990 and 2003 period, growth ranging from56.90 percent on furniture, furnishings carpets, and other floor coverings to as high as263.00 percent on household textiles.
Electronic goodsSaudi consumption of electronic goods has grown more slowly in recent years,probably because such goods had been purchased earlier for many households.Statistics are available only from 1998 to 2003. The total number of electronics unitspurchased grew between 1998 and 2003 from 2,539,100 to 3,492,600 – an increase of37.6 percent; the number of audio units bought grew by 44.1 percent, from 818,200 to1,178,900; and the number of video units purchased increased from 1,720,800to 2,313,700, which is a 34.5 percent increase (Global Market Information, 2004).
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The Global Market Information (2004) report shows a more dramatic increase between1980 and 2003 in the number of various electronic goods owned per 100 Saudihouseholds. For example, Table II shows substantial increases in the ownership ofsatellite TV systems, CD players, mobile phones, and videotape recorders. Ownershipof satellite TV systems increased dramatically between 1990 and 2003, from 0.37 to60.77 per 100 households. CD player ownership rose from 0.44 in 1985 to 32.75 in 2003.Mobile phones became very popular in Saudi Arabia, with ownership spreading from5.89 to 67.88 percent of households between 1980 and 2003. Videotape recorderownership also increased during the 1980-2003 period, from 7.96 to 53.20 per 100households.
Automobiles and transportOil wealth not only lifted Saudi Arabia out of a subsistence economy, but alsocreated the infrastructure of a modern state by allowing the country to spend some$1.124 trillion dollars on development between 1970 and 1995. Saudi Arabia’s 8,000kilometers of paved roads in 1970 had increased to 44,104 kilometers by 2001; its
Table II.Ownership of electronicgoods, 1980-2003 (per 100households)
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64,300 kilometers of both unpaved and asphalted roads in 1974 had increased to102,420 by 2001 (Cordesman, 2003, p. 7). The Saudi government recently invested inthe improvement of the highway infrastructure in order to alleviate congestionproblems in the big cities and to improve traffic flow and access between cities. Publictransport is readily available but is mainly used by those on low incomes and foreignlaborers. The hot climate causes Saudi nationals to prefer cars to bicycles ormotorbikes, and long distances between regions encourage travel by air rather than byroad between cities.
Al-Shouki (1989, p. 74) indicated that Gulf country consumers tend to consume moredurable goods than consumers do in industrial societies – e.g. more frequentlychanging car models. The car market in Saudi Arabia is exhibiting phenomenalgrowth. Table III shows, for example, that total imported vehicles (passenger cars andjeeps, buses, trucks, special vehicles, and other cars) showed a more than threefoldincrease during the 1995-2002 period, reaching 298,857 in 2002. With regard only topassenger cars and jeeps, total imports have increased substantially, from 8,334 in1970 to 218,413 in 2002.
Today it is also common for Saudis to own more than one car and to employ a full-timechauffeur to drive their children to school and their women, who are not allowed to drivevehicles in the Kingdom. Car ownership and registration continue to increase. Table IIIalso shows that the number of passenger cars in use has increased substantially, from764,000 in 1980 to 2,762,900 in 2003. Passenger car possession (per 100 households)increased only gradually during the same period, from 89.55 to 99.16, because manyhouseholds owned cars by the beginning of this period. The number of registered vehicleshas also risen dramatically, from 60,000 in 1970 to 9,484.891 million in 2003.
In addition, during the 1990-2003 period, consumer expenditures on transport rosefrom SR13,393.00 million to SR25,913.72 million, while consumer purchase of cars,motorcycles, and other vehicles increased from SR4,227.00 million to SR7,429.51million (Global Market Information, 2004).
The increased number of cars has increased the demand for spare parts. Accordingto The Economist Intelligence Unit (2004, pp. 57-8) report, in 2003 transport equipmentand electrical equipment and appliances represented the dominant Saudi importsectors, with each rising by 33 percent in value. The metals, machinery, appliances,and equipment category, which includes the high-value market for imported transportequipment, has risen from 50.3 percent (at cif rates) of the overall import market in2000 to 55.3 percent in 2002.
Factors stimulating the expansion of demand for cars include a high car accidentrate, influx of petrodollars and expatriate guest workers into the country, theaffordability of car prices, the availability of relatively inexpensive petrol, and littledevelopment of alternative means of transport.
Telecommunications: telephones, televisions, and computersSaudi Arabia has witnessed rapid expansion in the telecommunications sector.An estimated $600 million to one billion dollars is spent on this sector annually in theKingdom, with services – mainly information technology training – accounting forabout 10-20 percent of the total. Between 1998 and 1999 alone, Saudi imports oftelephonic equipment increased from $251,733 dollars to $437,593 dollars (Middle EastExecutive Reports, 2001b, p. 16).
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87
Veh
icle
con
sum
pti
on19
7019
7519
8019
8519
9019
9520
0020
0120
0220
03
Tot
alim
por
ted
veh
icle
sa22
,922
118,
984
391,
741
252,
033
186,
702
97,3
5021
0,63
132
3,30
229
8,85
7–
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cars
and
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sa8,
334
59,1
6722
7,55
913
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411
7,08
175
,710
158,
343
241,
245
218,
413
–P
asse
ng
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use
(’000
)b–
–76
4.00
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1,71
02,
689
2,71
6.80
2,75
02,
762.
90P
asse
ng
erca
row
ner
ship
(per
100
hou
seh
old
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––
89.5
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.05
99.1
199
.16
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reg
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veh
icle
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6011
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6.7
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082
8,46
6,97
39,
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111
9,48
4,89
1
Sources:
aM
inis
try
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.399
,200
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Table III.Vehicle consumption,1970-2003
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For the Saudi government, expansion of the telecom sector and its eventual privatizationhas been a longstanding goal, spurred by the rapidly increasing Saudi population as wellas by advancements in the telecom industry. The Kingdom’s network capacity hadincreased from 76,600 exchange lines in 1970 to more than 3.5 million telephone lines by2000. Measures of success in the sector change rapidly: after the country achieved10 lines for every 100 people by 1996, the goals were quickly raised again, and the currentfive-year development plan (the seventh, for 2000-2004) calls for 25 lines per 100 peopleby 2005 (Middle East Executive Reports, 2001b, pp. 7, 14).
As Table IV shows, the number of telephone lines in use increased more thanthreefold between 1990 and 2003; consumer expenditures on telecommunications morethan doubled over the 14-years research period, reaching SR 7,058.16 million in 2003;and telephone main lines (per 1,000 people) almost doubled between 1990 and 2002.
The Kingdom began to upgrade its telephone lines from analog to digital in themid-1990s. Currently, the country’s telecommunications infrastructure include3.5 million telephone lines; long distance networks with almost 11,000 kilometers offiber optic cable and over 50 STM-16 rings; almost 16,000 kilometers of optical networks;and a mobile network with two million subscribers, almost 2,000 cell sites, and2,500 wireless towers. Interactive voice response is widely used by large companies, andpaging services have 300,000 subscribers (Middle East Executive Reports, 2001b,pp. 15-16).
The Kingdom has also progressed rapidly with INTELSAT and the newARABSAT. Four ground stations for satellite communications (two in Riyadh, one inJeddah, and one in Taif) provide a total of 1,000 telephone circuits with direct access to152 countries. The telex network connects more than 300 cities and towns with morethan 150 countries (Global Market Information, 2004).
Saudi Arabia is served by the most modern telephone system. Direct internationaltelephone calls can be made to most of the world’s countries. Telephone servicecontinues to improve throughout the Kingdom. Both domestic and international callsare easy to place, and in-coming and out-going reception is excellent (Global MarketInformation, 2004). According to the World Bank (2004), outgoing internationaltelecom traffic rose substantially between 1975 and 2002, from 19.81 minutes persubscriber to 577.63.
Saudis have shown keen interest in acquiring the latest network andtelecommunications systems technology to facilitate communication. As mobiletelephone usage has grown, the government has identified the global system formobiles (GSM) as a major area for potential growth and privatization, and the
Sources: aGlobal Market Information (2004); bWorld Bank (2004)
Table IV.Telecommunications
consumption, 1990-2003
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Saudi Telecommunications Company (STC) has indicated that the GSM subscriberbase in the Kingdom is expected to expand from almost two million in 2001 to over fourmillion by the end of 2005. When the country’s first GSM network was launched in1994, 500,000 mobile telephone lines were installed. In 2000, installation expansion tookplace to accommodate about one million mobile phone users in Riyadh, Dammam, andQaseem (Middle East Executive Reports, 2001a, b, p. 15).
According to Global Market Information (2004), mobile telephone users in SaudiArabia during the 1990-2003 period rose dramatically, from 14,850 to 4,943,280, andpossession of mobile phones per 100 households increased substantially, from 5.89 to67.88. Mobile phone ownership is now more prevalent in Saudi Arabia than in the USA,where it increased during (1990-2003) from 0.51 to 44.06 per 100 households. Having amobile phone is also more common in Saudi Arabia than in the UAE, where itincreased during the same period from 7.41 to 39.38 per 100 households. Mobile phonesper 1,000 people also rose dramatically in the Kingdom between 1990 and 2002, from0.93 to 217.17 (World Bank, 2004).
Abdu (1992, p. 59) had noted that during the 1970s and 1980s a ten-fold increase inradio ownership and a 20 fold increase in TV ownership in the Arab world, andKutbkhana (1993, p. 29) found that 100 percent of Saudi homes in urban areas had atelevision. Television sets per 1,000 people in Saudi Arabia increased between 1975 and2002 by 140.6 percent, from 110.33 to 265.48 (World Bank, 2004). According to a GlobalMarket Information report in 2004, the number of TVs in Saudi Arabia was expected toincrease by about 400 percent in the following 20 years, to an average of two perhousehold by 2024.
As Table V shows, the number of personal computers in Saudi Arabia have alsoincreased substantially, with possession of personal computers (per 100 households)almost doubling between 1990 and 2003. Internet users (per 1,000 people) have alsoincreased substantially, from 0.11 in 1995 to 217.17 in 2002. The number of internetusers likewise increased dramatically, from just 2,000 in 1995 to 1,289,120 in 2003.
The STC expects “tremendous growth” in the internet market. Internet service hasonly been available since January 1999, when 48 internet service provider (ISP) licenseswere issued. By 2000, the number of subscribers to ISPs had already reached anestimated 220,000, and 2,422 domain names were registered (Middle East ExecutiveReports, 2001b, p. 15).
Gold and jewelryAl–Terkestani (1999, p. 1) indicated that Saudi Arabia was already one of the20 countries leading the world in gold consumption by the end of the twentieth century.In 1993, the world gold supply was almost 2,537 tons of which the Middle East’s
Computer and internet consumption 1990 1995 2000 2001 2002 2003
Sources: aWorld Bank (2004); bGlobal Market Information (2004)
Table V.Computer and internetconsumption, 1990-2003
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market share was 17 percent. Saudi Arabia ranked first in the Middle East inconsuming 55 percent of this market share, and third in the world market, its share ofwhich was 9.4 percent, after the USA and India. Annual Saudi consumption volumewas 250 tons in 2002. In the Middle East, the UAE and Egypt together were in secondplace as gold consumers with 60 tons, followed by Kuwait with 33 Syria with 30, andLebanon with 20 tons (Al-Watan Newspaper, 2002).
In addition, according to the newspaper Al-Hayat (2003), despite a global recession,the Saudi gold and jewelry market continued to improve. A report issued by the WorldGold Council showed that the demand for gold in Saudi Arabia grows as long as pricesremain stable. Mr Ibrahim Al-balwi, a Saudi gold and jewelry dealer, explained that thedemand for gold and jewelry is 15-20 percent higher in the summer than during the restof the year to commemorate special occasions such as weddings and graduations.Visits to the holy cities increase also the demand for gold and jewelry.
In Saudi Arabia, expenditures on jewelry increased between 1998 and 2003 from5.3 SR billion to 6.1 SR billion. The number of jewelers’ outlets grew between 1996 and2003 by 34.3 percent (from 538.0 to 722.3 outlets). Expenditures on jewelry, silverware,watches, clocks, and travel goods increased from SR 5,485 million in 1990 to SR8,779.66 million in 2003 – an increase of 60.07 percent (Global Market Information,2004).
In addition to increasing consumption of durable goods, Saudis have increasedconsumption of such nondurable goods as food and groceries, clothing and footwear,cosmetics and toiletries.
Food and groceriesSaudi dependence on food imports has continued to rise with the steady populationincrease and a shift toward a more varied diet. The Saudi meal today consists ofdifferent dishes from various countries. Food imports had risen in value from around$3.5 billion in the early 1990s to around $7 billion in 1997 (Cordesman, 2003, p. 304).Foodstuffs (including beverages) accounted in 2000 for almost 18 percent of the totalimport market (from 11 percent in 1992), but have since declined to just over 16 percentas the surge in food demand previously caused by the cutback in subsidies to theagricultural sector in the early 1990s has been partially mitigated by rising domesticoutput (The Economist Intelligence Unit, 2004, p. 58).
As Table VI shows, consumer expenditures on food and beverages rose from SR36,355.00 million in 1990 to SR 64,948.33 million in 2003. Fish, fruits, meat, and oil andfats comprised the largest share of the market. Consumer expenditures on fish andseafood increased almost threefold, on fruits more than doubled, and on meat almostdoubled. Table VI also shows that food expenditures in Saudi Arabia are dominated bymeat which is more than ten times higher than expenditures on dairy productsincluding milk, cheese, and eggs. According to Global Market Information (2004), percapita consumption of poultry meat increased from 16.5 kilogram in 1979 to 35kilogram in 2000 based on a population of 21 million including 6.5 million expatriates.
Clothing and footwearThe standard Saudi women’s costume consists of a black scarf with a long black coatcalled an “abaya” worn over clothes, while the man’s costume is a long white gown witha head scarf called a “shmagh” which is held by an “aagal,” a black cord-like string.
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These outfits are the official wear at work and in schools and are worn on a daily basis.However, fashion wear and Western-style clothing are readily available at shoppingmalls and are highly sought after, especially by women and the younger generation.Dress has become more westernized. Customers, particularly these of the middle andupper classes, are highly brand conscious and tend to purchase their clothes in shoppingcenters. Fashion wear, footwear, and accessories are available in Saudi Arabia at muchlower prices than in other countries due to the absence of sales tax. Total expenditures onclothing and footwear grew from SR 15,500.00 million in 1990 to SR 27,142.53 million in2003, a 75.1 percent increase; spending on clothing alone increased by 79.6 percent,from SR 12,682.00 million to SR 22,775.19 million, and on footwear increased from SR2,818.00 million to SR 4,367.34 million, an increase of 54.98 percent (Global MarketInformation, 2004).
Cosmetics and toiletriesSaudis, particularly those of the upper-middle and upper classes, have begun to spendmoney on hairstyling, dying, and coloring, even hiring personal hairstylists andindulging in spa treatments and cosmetic surgery. Table VII shows that the SaudiArabian cosmetics and toiletries market reached SR 4,791.99 million in 2004. Themarket is highly developed and well established due to the strong presence ofmultinational companies as well as the high population growth rate and highpurchasing power of many Saudi consumers. In 2004, hair care and skin care were thelargest sectors of the market, each with around 38.7 percent of total market sales. Giventhe harsh climatic conditions in the country, such products are considered essential.
The retail value of fragrances sold in Saudi Arabia in 2004 reached SR 688.5 million,which accounted for 14 percent of total market sales and presented 0.9 million liters offragrance sold. In the 1980s, Saudi Arabia was the sixth largest market for fragrance inthe world, outdistancing all other nations in terms of per-capita consumption. Unlikeother Saudi consumer markets, the fragrance business is not dominated by a single,
long-established brand. Expensive products with heavy, spicy, lingering smells aregenerally preferred (Field, 1986, p. 10). In 2003, the newspaper Al-Watan, reported that,according to cosmetics and fragrance market sources, the ordinary Saudi womanspends more than SR 1,000 annually on cosmetics and fragrances. Thus, the totalamount Saudi women spend on cosmetics and fragrance is one billion Saudi riyals.
Consumption of servicesThe service sector includes domestic, travel, leisure and recreation, banking and credit,and energy and water services.
Domestic helpThe domestic helper is common in Saudi Arabia. Al-Khateeb (1998, p. 183) found that76.8 percent of her Saudi sample respondents had domestic helpers, while 23.1 percentdid not. Among those who had domestic help, 47.4 percent had one helper,16.8 percent had two, 7.4 percent had three, and 5.3 percent had four. Similarly, Sager(2004, p. 242), in her study of Saudi families in Jeddah, found that 42.4 percent offamilies had one domestic helper and 29.5 percent had more than one.
Bagader (2003, p. 272) has indicated that the increase in employment of domestic helpin the Gulf countries has been phenomenal. For example, in Saudi Arabia, the number ofdomestic workers increased from 602.8 thousand in 1980 to 848.8 thousand in 1985,declined slightly to 729.1 in 1990, but reached one million in 2000.Expenditures onhousehold and domestic services increased between 1990 and 2003 by 102.87 percent,from SR 3,083.00 million to SR 6,254.43 million (Global Market Information, 2004).
Zaid (1998) indicated that the reasons for hiring domestic help in the Gulf countriesinclude increased income enabling such hires and status symbol value. Bagader (2003)adds that, in addition to increased income, the reasons for hiring domestic help in SaudiArabia include women either working or going to school or university, increasedhousehold responsibilities, and the presence of contracting agencies to import domestichelp. Other reasons are that, Saudis prefer to live in large houses since they haverelatively large families and the main traditional form of home entertainment isexchange of home visits by members of the extended family and friends.
The availability of domestic helpers and labor-saving devices has dramaticallyreduced the amount of time that Saudi women spend on housework, giving them moretime to shop. Thus, domestic help consumption contributes to consumption of durableand nondurable goods as well.
TravelDuring the 1970s and 1980s, Abdu (1992, p. 59) noted a ten-fold increase in the number ofArab travelers venturing out of the Arab countries. Money has enabled many Saudis totravel for business and/or pleasure, to send their children to study abroad, and to seekmedical treatment in other countries. On their travels, they have encountered new values,attitudes, and behavior which they have brought home to change Saudi lifestyles.
Table VIII shows that between 1990 and 2003, consumer expenditures on air travelincreased by 115.9 percent, on hotels and catering by 83.5 percent and on packageholidays by 49.1 percent. Within Saudi Arabia, long distances between regions coupledwith the country’s weather conditions boosted travel by air within the country inpreference to travel by road or rail.
According to The Economist Intelligence Unit (2004, p. 55) report, in 1999 localtourism expenditures were estimated at SR 5 billion ($1.3 billion), compared witharound SR 25 billion spent every year by the three million or so Saudis who holidayabroad.
Leisure and recreationIn Saudi Arabia today, many recreational devices are available, such as radios, TVs,videos, tapes, recorders, and satellite dishes. These goods, considered luxuries 30 yearsago, are now considered necessities. Upper-middle and upper-class Saudis in particularhave begun to acquire new tastes in music and art as well as a taste for Westernfashions and other luxury goods. They have started to adopt new habits of spendingmoney on special occasions for flower arrangements, fancy chocolates, house light
decorations, food catering, and such luxury items as silverware. Hiring a singer forweddings or DJ parties is common.
However, the most popular form of entertainment outside the Saudi home isprovided by the luxurious shopping centres, where consumers can eat, relax, and shopas their children play in designated play areas. In the absence of prohibitedentertainment and leisure activities such as cinemas and theaters, shopping (includingwindow shopping) has become one of the most popular forms of social activity in theKingdom. Overall, Saudis can be described as frequent shoppers, visiting stores atleast every other day (Leonidou, 1995).
In addition, along with the rest of the developing world, Saudi society has adoptedWestern eating habits. A plethora of new fast-food chains and high-quality restaurantsis becoming part of the Saudi people’s daily eating regime, especially among the young.It is believed that 70 percent of the Saudi population eats outside at least once a day,particularly in the evening (Global Market Information, 2004). Young people may eatout as a form of escape from the parental home, as a social activity, or as an assertion ofindependence from their parents. Wedding services, event facilities, and restaurantsare also becoming lucrative areas of investment as society comes to accept thepropriety of women entertaining outside of their own homes (Doumato, 2003, p. 252).According to a Global Market Information (2004) report, consumer expenditures onhotels and restaurants increased over a period of ten years from SR 2,840 million in1990 to SR 4,231 million in 2000. Consumer expenditures on catering also increased,from SR 4,450.00 million in 1990 to SR 8,161.38 million in 2003, growth of 83.4 percent(Global Market Information, 2004).
Most home entertainment revolves around watching television and videos andplaying video games in addition to the traditional exchanges of home visits by familymembers and friends. The national sport in Saudi Arabia is football (soccer), which isenjoyed primarily by men.
Table IX shows that consumer expenditures on leisure and recreation rose from SR11,652.0 million in 1990 to SR 20,633.5 million in 2003 – an increase of 77.08 percent.Retail of toy and game expenditures doubled between 1998 and 2003. The number ofsporting goods, toys, and video game outlets increased slightly over the 1997-2003period.
Banking and creditBanking operations in Saudi Arabia are controlled by the Saudi Arabian MonetaryAgency (SAMA). Several of the major commercial banks are wholly Saudi-owned, andall others are in partnership with major international banks. Several advances havebeen made in banking since the first bank opened in 1926. A number of specializeddevelopment and investment banks have been set up to stimulate private investmentand to offer international aid.
Despite being the largest economy in the Arab Middle East, Saudi Arabia still hasrelatively few banks. In 1997, it had only nine private commercial banks, far fewer thanthe UAE 40 or so institutions and Lebanon’s 70-plus. In 2001, Saudi Arabia had tenlocal and one foreign commercial bank (Cordesman, 2003, p. 435). The Saudicommercial banking sector is becoming more modern: retail banking is becoming thefocus of most banks, and credit card and ATM business is booming. There is a jointcredit card venture between American Express and a Saudi investment bank.
The rise ofconsumerism
95
Lei
sure
and
recr
eati
on19
9019
9519
9719
9819
9920
0020
0120
0220
03P
erce
nta
ge
ofg
row
th
Con
sum
erex
pen
dit
ure
son
leis
ure
and
recr
eati
on(S
Rm
illi
ons)
11,6
52.0
14,7
22.0
17,8
56.0
19,0
96.0
18,9
66.0
19,3
24.0
19,0
21.0
19,6
44.0
20,6
33.5
77.0
8T
oys
and
gam
esre
tail
val
ue
(SR
mil
lion
s)–
––
11.2
16.0
16.3
18.8
21.0
22.5
100.
9T
oysh
ops
(No.
ofou
tlet
s)–
–22
3.0
245.
027
2.0
305.
031
7.0
331.
334
7.8
55.9
6S
por
tin
gg
ood
sou
tlet
s(N
o.of
outl
ets)
––
439.
048
5.0
512.
055
0.0
559.
056
9.1
571.
930
.3R
ecor
d/v
ideo
gam
eou
tlet
s(N
o.of
outl
ets)
––
857.
090
1.0
955.
010
10.0
1035
.010
61.9
1091
.627
.37
Source:
Glo
bal
Mar
ket
Info
rmat
ion
(200
4)
Table IX.Leisure and recreationgoods consumption,1990-2003
IJCOMA17,1/2
96
Despite the growing number of bank cards, the Saudi people are accustomed tocarrying cash and still use it in more than 70 percent of transactions (Global MarketInformation, 2004). Nevertheless, the credit card market is becoming very active. Visaand MasterCard are the most dominant cards in Arabia. In the Gulf states, the use ofthe Visa card more than doubled within a year, reaching 5.3 billion dollars in charges in1997 compared to 2.6 billion in 1996. The use of credit cards in the Gulf states is thehighest in the world (Al-Hayat, 1997). Between 2002 and 2003, the use of consumercredit gradually increased in Saudi Arabia. Expenditures by MasterCard cardholdersrose from $420.00 million to $460.00 million, the number of MasterCards issued rosefrom 2,660 to 3,090 million, and the number of MasterCard transactions rose from 1,860to 2,150 million (Global Market Information, 2004).
Concomitantly, bank claims on the Saudi private sector show an increase in debt.Between 1990 and 2003, private sector debt to banks rose by 221.9 percent, from SR70,985.7 to SR 228,486 million (Global Market Information, 2004). According to thenewspaper Al-Sharq Al-Awsat (2003), the Saudi Arabian Monetary Authority reportedthat the total value of consumer loans provided by Saudi banks grew to SR 60.2 billion($16 billion) in the third quarter of 2003, up from SR 49 billion ($13.1 billion) in thecorresponding period of the previous year, which is a 22.7 percent growth. As loans toconsumers increase and credit cards become more widely accepted and available, theywill serve as incentives to consumers to spend more.
Energy consumptionWith urbanization, infrastructure improvement, and the spread of electricity, SaudiArabians began to consume more energy. Saudi figures indicate that national electricitydemand increased by 35 percent in the period from 1990 to 1995 (Cordesman, 2003,p. 294). Al-Megren (1994, p. 29) indicates that in the city of Riyadh, urbanization created aneed for the use of electricity. Its increasing availability and relatively low cost led to anincrease in electricity consumption, particularly for air conditioning in the hot weather.
Al-Mofeez (2002, pp. 2, 17) indicates that in Saudi Arabia, housing, commercialbuildings, government buildings, hospitals, charitable organizations, and streets usemost (more than 70 percent) of the electric energy consumed. Most consumption takesplace during the summer time because of the heat. He also notes that mosques aremajor users of electricity. Traditionally, the courtyard was an important element in thedesign of mosques and was utilized as a secondary space for performing prayers.Nowadays, new mosques have almost eliminated courtyards, enabling all prayers to beperformed inside the air-conditioned mosque. This has led to high power demand andenergy consumption during the hottest (April through September) season and accountsfor 75 percent of total annual energy consumption by mosques in the Eastern Province.
Al-Megren (1994, p. 50) observed that Riyadh, the capital city of Saudi Arabia, hadwitnessed a drastic increase in the consumption of electrical energy during theprevious ten years, with buildings accounting for most of the increase. Small amountsof this energy were expended for industry, agriculture, and service purposes.Consumption for commerce (trade), industry, agriculture, lighting roads, and servicesremained relatively stable.
To meet consumers’ demands for electricity, as Table X shows, the Kingdom’sproduction increased from 2,082 billion kilowatt hours (kwh) in 1970 to 137,388 billionin 2001. The Kingdom steadily raised its electricity generating capacity from
The rise ofconsumerism
97
344 megawatts in 1970 to 23,230 in 2001. The peak load increased from 300 megawattsin 1970 to 23,582 in 2001.
Electricity consumption increased by 315 percent during the 1982-2000 period,rising to 110,611 million kilowatt hours (Cordesman, 2003, p. 12). Total consumptionmultiplied at an annual rate of 4.2 percent between 1994 and 1998, while the peak loadgrows by an annual average of 2.7 percent (Ministry of Planning, 2004, p. 222). Table Xalso shows that total energy consumed increased from 1,690 megawatt hours in 1970 to122,944,162 in 2001. Per capita consumption has also increased substantially; from321.3273 kilowatt hours in 1970 to 5,116.843 in 2001. Consumer expenditures onelectricity almost doubled, rising from SR 3,370.00 million in 1990 to SR 6,704.75million in 2003 – an increase of 98.95 percent (Global Market Information, 2004).
Water consumptionAl-Tarabulsi (1998, p. 152) reports that Arab countries’ water problems result from thegeographical location of these countries in semi-dry and dry areas, overpopulation, andlack of efficient use of water in agriculture. Abdu (1992, p. 60) further explains thatwasteful agricultural consumption of water occurs in the Arab countries because oflack of efficient irrigation systems. He estimates that almost 50 percent of water,around 80 million cubic meters, is wasted yearly.
Hejazi and Deyabi (1997, pp. 108-109) focus on the demand for water in Arabcountries as a result of population increases and increased use of water in householdsand for trade and industry purposes. They indicate that home use of water in citiesis almost 50 percent of total water consumption. Water consumption increases incities with high-density populations.
According to Cordesman (2003, p. 301), water use in Saudi Arabia is extraordinarilyhigh for a nation at its overall level of economic development. Many experts say itaverages about ninety gallons per person per day – about twice the internationalaverage.
Hejazi and Deyabi (1997, p. 112) found that average water consumption in the fivemajor cities in Saudi Arabia (Riyadh, Jeddah, Dammam, Madinah, and Taif) was78,412 million cubic meters yearly. Residents of Riyadh consumed the most water,followed by residents of Jeddah, Dammam, Madinah, and Taif. Water use by
Sources: aWorld Bank (2004); bMinistry of Planning (2002, 1983, No. 19, p. 315); cMinistry of Planning(1983, No. 19, p. 315, 1995, No. 31, p. 288, 2002, No. 38, p. 288, 2001, No. 19, p. 324)
Table X.Electricity production,generating capacity, peakload, and energyconsumed, 1970-2001
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households in Saudi Arabian cities was expected to continue to increase until the end ofthis century despite a government plan to raise the cost of water, a decline in building,and decreased subsidies for water, electricity, and telephones. Table XI shows thatbetween 1990 and 2002, the largest increase in the consumption of water was inMadinah and Makkah, which increased by over 74 percent, while the lowest increasewas in Qaseem and Riyadh. Table XI also shows that in 2002, residents of Riyadhconsumed the most water, and followed in order by residents of Jeddah, Makkah,Dammam, and Madinah.
According to the newspaper Al-Watan Newspaper (2004), the bottled water marketin Saudi Arabia has recently witnessed remarkable growth. Annual consumption ofbottled water rose to 2.5 billion liters, of which 1.5 billion liters, or 60 percent,is consumed in the summer season alone (June, July, and August). Saudi Arabia iscurrently the biggest bottled water producer in the Arab world, exceeding Egypt’sproduction by tenfold.
ConclusionA consumer lifestyle and consumerist attitudes in Saudi Arabia are increasinglyevident. Global and local economic, social, and governmental forces have colluded toturn Saudi Arabia into a society preoccupied with material consumption. Commercialtelevision and the internet, marketing strategies, relentless and manipulativeadvertising, urbanization, and proliferating shopping centers, are all components ofglobalization promoting emulation of the Western lifestyle. The national government’sgiveaways and subsidies during the oil boom years, public job availability, anemerging middle class, liberal import policy, increased female participation in familypurchase decisions, a burgeoning youth market, and increased per capita income havealso enabled Saudi Arabia’s transformation into a consumer society. Statisticspresented for a variety of durable and nondurable goods and services amply testify torampant Saudi consumerism.
Excessive consumption in Saudi Arabia is a threat to the social order. It isexacerbating economic, environmental, social psychological, and health problems.The situation becomes even more problematic in Saudi Arabia than elsewhere forseveral reasons. The country is vulnerable to oil price fluctuations; the decline of oil
City 1990 1995 2000 2001 2002 1990/2002 percentage of growth
prices that began in the mid-1980s diminished national resources even as populationgrowth led to increasing demand for social spending. Accordingly, average householdincome has declined. Compounding declining real oil revenue in affecting per capitaincome has been Saudi Arabia’s continuing high population growth rate.Saudi Arabia’s oil income will not be sufficient to meet its social and economicneeds forever. It is estimated that the nation has only some 80 years of proven oilreserves, and the Western industrialized nations are exploring alternative sources ofenergy. The demand for water and electricity will also increase with populationgrowth. Future water and electricity related projects to meet the rise in demand will bevery expensive.
As Saudi Arabia seeks sustainable development, more research is needed to identifyand address problematic aspects of consumption. As part of this process, policymakers should distinguish what constitutes consumerism from healthy consumptionpatterns. Excessive consumption should be minimized as a way to avoid economicminefields and sustain economic growth.
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Further reading
Al-Watan Newspaper (2003), Al-Watan Newspaper, July 27.
Asiri, A. (2000), “Saudi children career aspirations in rural and urban areas”, Social Affairs,Vol. 28 No. 1, pp. 137-61.
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Corresponding authorSoraya W. Assad can be contacted at: [email protected]
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