ramadan

The Business of Ramadan

Increased consumer spending during Ramadan helps offset any slowdown in workplace productivity.

By Nada Atieh

A study published in the Quarterly Journal of Economics in 2015 looked at data from almost every country over the past 60 years and found that longer fasting hours had a pernicious effect on economic growth in predominantly Muslim countries throughout the year. If the average Ramadan fast were to increase by one hour, output growth in that country for the year would decline by about .7 of a percentage point.

But the researchers conducting the study also found that the biggest reason for the lower growth was that Muslims chose to work fewer hours and reported being happier in years where the days are longer, despite the economic costs.

In contrast to the slowing productivity, many retailers do better around Ramadan thanks to the increase in consumer spending on food, dining out, and shopping for clothes.

TV Advertising Sales

Although Ramadan is typically associated with praying, fasting, and religious observance, it is also the time of the year that people become glued to their TV screen. Viewing spikes during Ramadan, said Basma Rihan, head of sales at Roya TV. This shift in activity is reflected in the programming lineup channels run during Ramadan.

“The programming is changed to match the consumers’ behavior and the amount of time they spend on television,” she said. Consumer patterns change during this month. Since work schedules slow down, people tune more heavily into traditional television programming, including more cooking shows and dramas. People also watch more religious programming in general, so these entertainment options are made more frequent, added Rihan.

This is also advertising season, Rihan stressed. The most concentrated advertising happens during Ramadan, especially from food and telecommunication companies, she added. It depends on the placement and sponsorship, but every second of advertising spent on a spot on Roya TV is between JD35 and JD50 in Ramadan, as opposed to the usual JD20 to JD25 rate. That, multiplied by the amount of seconds the ad runs and the duration of time it stays up, makes Ramadan a crucial time for viewers, broadcasters and advertisers.

Groceries

Analysts have said that consumer behavior changes during Ramadan. It’s mainly packaged food consumption and Ramadan-specific promotions and launches that see an uptrend, while other categories are normally down. Items that are generally popular during the season are concentrated and powdered juices, dry desserts, yogurt and pastries, according to Gulf News newspaper.

But in Jordan, Chairman of the General Association for Foodstuff Merchants Khalil Haj Tawfiq said that isn’t the case anymore. The basic food items available in the local market is able to meet public demand throughout the month. And although some demand increases for specific Ramadan products, consumption during fasting days is becoming similar to ordinary days, he added.

This is because of the economically challenging situation Jordanians are facing. Ramadan used to see an increase in consumption of at least 50 percent but this has not been the case in the last few years. Citizens’ income has been going to pay off services like electricity, education, and rentals, and consumption habits have changed.

Ramadan Tents

One staple activity that takes place during the month is the socializing throughout the night in cafes, restaurants, and the Ramadan tents that liven up the setting and add to the festivities of the holy month. They are operated by licensed restaurants, hotels and coffee shops, or attached to those venues, and begin operating at sunset, when people break their fast. They serve Ramadan sweets, broadcast entertainment programs, and some even serve hookah as well.

These tents stay open throughout the night and are an extremely popular resting- place for those who are looking to spend time with friends and loved ones. This year, Roya will have two tents up during Ramadan, said Rihan. One will be at the Crown Plaza and the other at Kaan Zamaan Art Gallery, but so will numerous other businesses. The cafes and tents will have an added bonus as well. This year, they will be broadcasting the world cup to draw crowds into these venues.

Online Shopping

Since family dinners and outings become more frequent through the month of fasting, wardrobe preparations for family, friends, and Eid celebration begin even before Ramadan does.

Criteo, a marketing analysis website, looked at some past data that reflects consumer spending habits during the month of fasting. According to its report, there is an average 55 percent increase in fashion sales during Ramadan, when sales are 90 percent higher. Not only are consumers buying more fashion but they are buying more fashion online and using the Internet and social media to find the best deals.

The data painted a clear picture of the online retail sales, which were at their peak the week before Eid-al-Fitr. Over 35 percent of weekly retail visitors were from the Middle East. In the week of Eid-al-Fitr, sales and visitors declined but remained higher than in an average week before Ramadan.

“That’s true. It definitely goes up,” said Farah al-Lama’, owner of Shopziy, a Jordanian based online women’s fashion store. “When Ramadan starts, you sit at home, go online and start browsing. You are looking for things to buy for Eid and family dinners, and you spend so much more time looking.”

Decorations

During Ramadan nights, Amman comes alive with all the colorful crescents and rustic lanterns decorating streets and houses. Vendors begin showcasing their goods several days ahead of the holy month, setting up tents in several of the capital’s main streets like Abdullah Ghosheh near 7th circle, Medinah Munawara and Mecca streets. Tents and shops are adorned with hanging illuminated crescent decorations and lanterns worth just JD5. Although sellers begin showcasing their products a few weeks before the holy month starts, the peak season of sales is in the last few days before it begins.

When the trend to buy and put up decorations began a few years ago, these tents and shops were few and far in between and the amount of vendors were limited. These days, they’re much more common and popular. Traders mainly import these decorative pieces from China and Egypt and supply tent owners. For many, particularly children, they encapsulate the spirit of Ramadan.