Ramadan, Saudi Seasons, and the Saudi SME Ecosystem: Yearly Opportunities for SME Growth
Festive seasons are an occasion for the Saudi SME ecosystem to create new offerings, work on their brand awareness, generate significant revenues, and generally grow their businesses. Ramadan is definitely one of the busiest times of year for MENA businesses. Sales are at their highest around Eid as the rush for gift purchases and iftar budgets reach their peak.
Many sectors have witnessed a rise in business operations, namely the F&B and grocery industries. General consumer spending was projected to reach 66 billion USD in MENA by the end of Ramadan this year, with 6.2 billion spent on food products alone.
Tourism and hospitality also gettheir fair share of activity. Muslims from all around MENA tend to book trips and accommodations to perform the Umrah pilgrimage around Eid. This year, the Nusuk app, a booking platform for pilgrimages, had already reached full capacity 2 weeks into Ramadan, demonstrating the high demand for such services.
The race of the SME ecosystem in an evolving economy
Overcoming Hurdles: Unlocking Potential for SMEs in MENA
SMEs make up the bulk of businesses in MENA, with over 90% and 94% of all businesses being SMEs in Saudi Arabia and the UAE, respectively. But even with such significant numbers, the ecosystem for smaller businesses still faces many hurdles that prevent it from reaching its full potential.
Accommodation during festive seasons remains a concern for small business owners. Despite the 80,000 hotel rooms under construction in KSA since March 2022, SMEs in touristic areas still find themselves short on accommodation capacity. One solution brought forward by the government is setting up temporary facilities to accommodate the influx of tourists during high season, but steep pricing has left tourism SMEs in the same predicament.
The problem, therefore, is not a lack of adequate frameworks but a challenge of incentives and awareness.
The same pattern can be found in the scope of funding. Of the 900,000+ SMEs in Saudi Arabia, only about 10% relied on government and bank financing. This does not reflect a lack of funding on these fronts but rather an unawareness of funding opportunities.
Saudi SME Ecosystem Growth, an Opportunity for Every Season
Embracing Growth Opportunities: Digital Transformation and Marketing Strategies for MENA SMEs
That being said, there is little time to rest for SMEs in this particular sector, as Saudi Seasons has been a resounding success since its conception in 2019. The yearly season presents plenty of growth opportunities for business owners. Riyadh, namely, witnessed a 110% tourist activity growth rate following the first run of the Riyadh Season. Of course, small business owners greatly benefit from Saudi Seasons, as tourism and hospitality are heavily reliant on SMEs.
Of the different growth opportunities made available, digitization is the obvious first course of action. Consumers have recently gotten used to shopping for their needs online, which was exacerbated by the pandemic. Now, it is a smart investment for the Saudi SME Ecosystem to open up digital channels and increase their sales by catering to their e-commerce clients.
Of course, going digital implies a revamp to most operations, including marketing. Digital marketing is especially beneficial for MENA SMEs, as it is a way to broaden their reach and expand their client base. Perfecting the brand guidelines and planning seasonal messaging in advance can make next year’s occasions a time of prosperity for the clever business owner.
There is still a long way to go in order to build and sustain a truly capable SME ecosystem in the Arab world. But considerable strides are being made by governments, corporates and ecosystem enablers to ensure that the backbone of MENA entrepreneurship has room to grow, thrive and innovate.