Consumer Lifestyles in Iran

CONSUMER LIFESTYLES IN IRAN

Euromonitor International November 2016

CONSUMER LIFESTYLES I N I R A N P a s s p o r t I

LIST OF CONTENTS AND TABLES

Lifestyles in Iran ...... 1 Chart 1 Lifestyles in Iran ...... 1 Top Five Consumer Trends ...... 1 Pent-up Consumers Eager for Post-accord Shopping Benefits ...... 1 Social Changes Have Defined Behaviour of Young Consumers ...... 2 Consumers Flock To New Shopping Malls ...... 3 Online Shopping on the Rise ...... 3 Sophisticated Consumers Drive Demand for Luxury Products ...... 4 Consumer Segmentation ...... 4 Babies and Infants ...... 4 Chart 2 Babies and Infants in Focus 2000-2020 ...... 6 Kids ...... 6 Chart 3 Chart3 Kids in Focus 2000-2020 ...... 7 Tweenagers ...... 8 Chart 4 Tweens in Focus 2000-2020 ...... 9 Teens ...... 9 Chart 5 Teens in Focus 2000-2020 ...... 10 Young Adults ...... 11 Chart 6 Young Adults in Focus 2000-2020 ...... 12 Middle Youth ...... 13 Chart 7 Middle Youth in Focus 2000-2020 ...... 14 Mid-lifers ...... 14 Chart 8 Mid-Lifers in Focus 2000-2020 ...... 15 Late-lifers ...... 15 Chart 9 Late-Lifers in Focus 2000-2020 ...... 17 Housing and Households ...... 17 Home Ownership ...... 17 Chart 10 Home Ownership 2000-2020 ...... 18 Household Profiles...... 18 Chart 11 Household Profiles 2000-2020 ...... 18 Running Costs ...... 19 Chart 12 Household Running Costs 2000-2020...... 19 Money and Savings ...... 20 Attitudes Toward Payment Methods ...... 20 Savings ...... 20 Loans and Mortgages ...... 21 Chart 13 Borrowing and Saving 2000-2019 ...... 21 Eating and Drinking ...... 22 Eating Habits ...... 22 Chart 14 Food Expenditure Profile 2000-2020 ...... 23

Drinking Habits ...... 24 Chart 15 Drinks Expenditure Profile 2000-2020 ...... 25 Grooming and Fashion ...... 25 Female Grooming and Fashion Trends ...... 26 Male Grooming and Fashion Trends ...... 27 Chart 16 Grooming and Fashion Expenditure 2000-2020 ...... 28 Health and Wellness ...... 28 Attitudes To Health and Well-being ...... 28 Chart 17 Health of the Nation 2000-2020 ...... 30 Shopping Habits ...... 30 Main Household Shop ...... 30 Shopping for Big-ticket Items and Personal Goods ...... 31 Growing Number of Shopping Malls Attract Modern Consumers ...... 31 Online Shopping on the Rise ...... 32 Chart 18 Where Households Shop for Essentials 2000-2019 ...... 32 Leisure and Recreation ...... 32 Leisure Time ...... 33 Consumers Relax by Rock Climbing ...... 33 Vacations ...... 33 Public Holidays, Celebrations and Gift-giving ...... 34 Chart 19 Possession of Selected Home-Tech and Mobile Phones 2000-2020 ...... 34 Getting Around ...... 35 Private Transport ...... 35 Chart 20 Getting Around on Private Transport 2000-2020 ...... 35 Public Transport...... 36 Commuting ...... 36 Chart 21 Getting Around on Public Transport 2000-2020 ...... 37

CONSUMER LIFESTYLES IN IRAN

LIFESTYLES IN IRAN

Chart 1 Lifestyles in Iran

Source: Euromonitor International

TOP FIVE CONSUMER TRENDS

Pent-up Consumers Eager for Post-accord Shopping Benefits The economic realities resulting from Iran’s various degrees of isolation since 1979 largely shaped consumer behaviour. More recently, the turbulence of the last five years—marked by economic downturn and high inflation—put consumers under financial duress and motivated them to be very cautious when making purchase choices. This resulted in continual price comparisons, restraint from impulse purchases and bargain hunting. In addition, Iranians tended to save for months to be able to afford expensive big-ticket items. But despite recent economic difficulties (or perhaps in part because of them) shoppers are relatively sophisticated and now eager for what they believe will be the tsunami of high-quality Western products they expect to be available in local retail outlets now that oppressive sanctions are gradually being lifted. According to a recent article in the Wall Street Journal, “Consumers in this nation of 80 million say they are tired of lower-end Chinese and Indian goods that have flooded the market during years of restrictions... Compounding the frustration for

consumers, tastes among urbanites have gravitated in recent years toward luxury goods that aren’t always available, said Hossein Raghfar, a Tehran-based economist. When available, they are often expensive”. Website exportiamo.it noted “Iran is a country of 80 million people, with a large number of young, educated, hip urbanites. With 73% of the population in urban centers and 60% under 30, it provides a broad and accessible consumer base. Even more than this, Iran is a middle-income country with an average income of US$17,000 per head. Iranian consumers exercise more purchasing power than consumers in comparable localities of India, Brazil, Egypt and China”. In addition, as only a small proportion of consumers own credit cards, there is little consumer debt to inhibit spending once the wealth of new products become available. Indeed, according to a recent report on CNN, Iranian consumers “are gearing up for a shopping spree”. A recent survey by On Device Research compared Iranians’ consumer attitudes with those of their US counterparts. According to their report, “Iranians aspired to wealth and an enjoyable lifestyle more so than their US peers. Top of their wish list? An overseas holiday. Nearly all the Iranians surveyed were keen on international travel, and the US rated as the most popular destination. Many were excited about getting their hands on foreign goods like cars and computers. Close to 75% were interested in buying imported products, which most believe offer better quality. Half of those surveyed wanted to purchase foreign cars or motorbikes...Electronics, including mobile phones, cameras and computers, are highly sought after. Imported coffees and teas are also in demand”. A recent report from Reuters confirmed pent-up consumer enthusiasm: “From cars to fridges and televisions, shoppers are excited at the prospect of more choice and competition,” so much so that they are postponing spending in the immediate term in order to wait for the onslaught of expected new products.

Social Changes Have Defined Behaviour of Young Consumers A cultural shift in Iranian society over the past decade has moved consumers, particularly young consumers—who constitute more than 60% of the total population—towards greater personal freedom and less restrictive lifestyle choices. Just ten years ago, omnipresent ‘morality police’ would enforce proper Islamic standards on public behaviour. This often included pushing back against Western-style consumption, whether it involved music, television, food or style of dress. In fact, there used to be a time when simply wearing denim was considered borderline subversive. Now, however, by all accounts it is clear that authorities have softened their once hard line and this has had a significant influence on consumer lifestyle choices amongst the young. Indeed, more young Iranians feel comfortable going out in mixed-gender groups and visiting cafes, restaurants, malls and parks. For many years, they preferred to mainly entertain in the privacy of their homes, away from the prying eyes of the morality police, but now they prefer to go out. Groups of friends often rent villas and go to the beach or go skiing in the winter. While Facebook is banned, there is nevertheless a large group of Iranians who circumvent restrictions and participate on the social media site. Satellite television services are also popular. While the basis of the Islamic Revolution was staunch anti-Americanism, it is safe to say that a great proportion of young Iranians today are Americophiles or, at least, more open to Western lifestyles. They love imitations of American-style fast food joints such as Pizza Hat and Mash Donald’s and visit these outlets often to see and be seen. Crackdowns do occasionally occur but their frequency has declined to such an extent that the morality police now rarely influence consumer behaviour, especially amongst younger consumers. Of course, there has not been a complete liberalisation in Iran and the US still generates high levels of distrust amongst many but this is not expected to diminish future demand for Western goods and services.

Consumers Flock To New Shopping Malls There has been an explosion in the number of shopping malls across the country, with analysts estimating that 400 new centres are currently under construction, 65 in Tehran alone. A recent report from AFP news agency noted “The traditional bazaar has long been the place to shop in Iran but despite years of sanctions a new generation has discovered a vastly different consumer experience: blatant, unapologetic Western-style consumerism. Instead of meandering markets echoing with the sound of haggling, huge shopping malls boast multiple floors of retail space, enormous underground parking lots and children’s play zones...They have transformed the shopping habits of many Iranians”. A recent article in the New York Times confirmed the changing consumer shopping experience: “Not so long ago, shopping in revolutionary Iran was a dull experience, with hole-in- the-wall stores offering the same clothes, electronics and furniture. Shopping was considered a necessary evil meant to support a life of religious piety...The new malls represent a departure from all this. Customers can stroll past Nike and Massimo Dutti stores, order freshly baked baguettes in the ground level supermarket or work out at the penthouse gym overlooking the city and its majestic Alborz mountain range”. Shopping in the Palladium mall, one consumer said “It is just such a pleasant experience...They have everything under one roof. It is just like the malls I have seen in Dubai and Turkey. I feel modern shopping here”. Tehran-based brand consultant Mir Damoon Mir told website mandmglobal.com “[Iranians] love to dress up and go out to malls, to see and be seen, and even if they’re not shopping, they’re at least window- shopping”.

Online Shopping on the Rise For many years internet retailing in Iran struggled and exhibited only sluggish growth. However, Iranian consumers, particularly younger consumers, are now robustly embracing online shopping and driving significant growth, even though they are restricted to domestic sites with no official access to international giants such as Amazon. A recent report on website techcrunch.com noted “Despite the perceptions from many outside of the country, Iranians haven’t been twiddling their thumbs, waiting idly all these years for sanctions relief. The country has long since accustomed itself to be self-sufficient, and the e-commerce industry in Iran is no exception”. According to website theiranproject.com, “Ordering a product online in Iran is not different from other developed countries. Creating the culture of trust and e-shopping among the Iranians was never a simple task, and the online shops such as Digi-kala, Bamilo, and Zan-bil have been the main hubs of such activities”. A recent consumer survey by techcruch.com revealed that 23% of Iranians shop online at least monthly, 16% at least weekly and 5% shop daily. The survey also identified the most popular products bought online: apps and software (purchased by 34% of online shoppers), clothing (23%), event tickets (19%), insurance (19%) and consumer electronics (17%). For the most part, those who pay for their products online use their debit cards as credit cards are scarce. Shopping online using mobile devices is expected to grow significantly in coming years, driven by the high penetration of smartphones and the wide availability of 3G and 4G networks. According to a 2016 article on website techrasa.com, “Currently 19 million Iranians are connected to the internet via their mobile phones and the citizens of 600 cities in the country have access to 3G internet and 4G internet is accessible to more than 200 cities”. Of course, there are still unique issues with which Iran’s internet shoppers must contend that consumers in other countries do not face. According to the website theiranproject.com, “When it comes to online shopping, cyber police plays a key factor to curb criminal activities. The police

deal with crimes like fraud, libeling people, hacking and intrusion to servers. In effect, the police have defined 80 cybercrimes to consider”.

Sophisticated Consumers Drive Demand for Luxury Products Iranians have always had a penchant for luxury goods, particularly goods with well-known Western brands. Jean-Christophe Babin, the chief executive of Bulgari, recently told the UAE- based newspaper The National that Iranians hold “appreciation of luxury informed by ‘centuries of culture and architecture’ ”. An Iranian blogger told the BBC Persia "After decades of austerity following the Islamic Revolution, middle-class Iranians have developed a taste for high-end designer goods, and for Tehran's young rich, shopping has become the new religion” He added “"Exposure to foreign trends through travelling, the internet and satellite television has created a desire for branded products...Showing off is a big part of the story. By spending huge amounts of money on big brands, well-off Iranians want to show they've made it". But unless they could afford to travel to and shop in nearby destinations such as Dubai, Iranian consumers had to pay premium prices to third-party importers. A recent article in the New York Times noted “Local third-party businesses always have imported goods into Iran by non-official channels, selling them at sky-high markups either in independent boutiques or in private sales behind closed doors”. If consumers couldn’t afford exorbitant prices, they tended to settle for counterfeit goods and, indeed, it appears that the cheaper counterfeit products have sparked a desire amongst consumers for the real thing. “A population of over 80 million people have had their appetite for luxury brands whetted by years of counterfeit distribution of watches, handbags and jewellery and an increasing selection of genuine product from the grey market,” according to an article in Luxury Society magazine. With the anticipated easing of sanctions, however, it appears Iran’s luxury consumers will soon be able to enjoy the same range of choice and the same more affordable prices as their neighbours. According to the New York Times, “Now, with an educated, surging middle-income population of almost 80 million — many of whom possess a budding appetite for high-end consumer goods and mobile phones — Western brands are sizing up the opportunities, and risks, of setting up shop in Iran”.

CONSUMER SEGMENTATION

Babies and Infants The number of babies and infants has experienced a considerable downward trend in recent years. In 2015 there were 4.1 million babies and infants the number is projected to decline to 3.6 million by 2020. There are several reasons behind the decline, including lingering adherence to the government’s old birth-control policies. In the 1990s there were state-sponsored billboards dotting the highways that claimed that “life is better with fewer children.” There was an emphasis on the quality of children’s lives rather than the quantity. Indeed, having large families was stigmatised in Iran as being provincial or backward. Today, many couples still want smaller families. In addition, recent high unemployment and general economic hardships have for some made having children more financially challenging. In response to the decline in the birth rate, the government has expressed great concern, now dubbing it as a ‘national crisis’ and it has proposed several measures, such as extending maternity leave and restricting contraception—in an attempt to boost the number of babies being born. As a result of the decline in the number of babies and infants, many parents find they can spend more on products and services for the children that they do have. Indeed, consumers are

becoming increasingly discerning in their choice of baby-related products. In Tehran, nearly all shops specialising in baby products are clustered together in one district. While demand for convenient nappies and diapers has grown, Iranian mothers nevertheless make toilet-training a top priority and they are determined to make their children independent as early as possible. In fact, it is very rare in Iran to see a baby over 24 months still in nappies. The majority of babies become toilet-trained between 12-24 months, according to a study published in Iran’s Paediatric Journal. The tradition of seismooney calls for family and friends to give gifts during the seventh month of pregnancy to expectant mothers for their babies. According to an article published on the website of San Diego State University, “The parents of the woman are expected to start buying the ‘first’ clothes for the new member of the family, the ‘first’ bedding and bedroom items, and the first toys. In the past, the woman’s parents would get these items according to their own personal wishes and attitudes. These days, they normally consult with their daughter and son- in-law on the items they need for the infant...In the past, these items were sent to the couple’s house in a caravan in broad daylight so that neighbours could see what the grandparents were sending for their (first) grandchild. These days relatives generally come to the couples’ house to see the items that the family has prepared for the baby’s arrival. While modern Iranians still follow the seismooney tradition, the western style baby showers are also becoming an accepted norm”. Many working mothers find it difficult to look after their children and childcare is often the responsibility of grandparents or other close family members. But as young couples increasingly move to urban centres in search of job opportunities, they are less likely to have easy access to a network of family and close friends that can provide support. In many cases, the grand-mother or the mother-in-law will move in temporarily to look after the baby or infant. It is very rare and untraditional to have strangers take on this role unless it is absolutely necessary. Indeed, infant- care facilities are quite rare in Iran. The state has tried to help working mothers overcome obstacles. Iran relies on social security systems to sustain maternity benefits (as opposed to employer liability systems) and it offers some of the most progressive maternity guarantees in the MENA region. For example, Article 78 of the Labour Law states that employers are obliged to provide working mothers with childcare facilities and time off to breastfeed. However, in practice this is not strictly enforced, unless the mother works in the public sector.

Increased demand for child-safety seats UNICEF reported in 2015 that traffic-related fatalities are the leading cause of death among those under five years-old in Iran. Increased awareness has recently fuelled demand for baby car seats, according to one shop owner in central Tehran. Safety seats are not mandated by law, and most travellers just place their babies on their laps while in their car, but increasingly those who can afford baby seats buy them. On the other hand, a recent survey found low awareness amongst consumers about the efficacy of baby seats and, in turn, a hesitation in spending much money on them. In particular, low-income households and those with lower education levels tended to dismiss the preventative impact of safety seats. “Our study showed that the amount of money that parents were willing to pay for car safety seats was associated with educational and economic status of the household,” said the report in BMC Public Health.

Mothers discouraged from using formula Among other initiatives, the government has discouraged the use of baby formula by granting extended maternity leave to women who breastfeed their babies. In 2016, the government

launched ‘milk banks’ where women who have supplemental breast milk can donate it for use by women who cannot breastfeed for whatever reason. The service is free. A press release from UNICEF quoted the head of Iran’s Breastfeed Promotion Society who said “We need to invest in our future generation to have smart children with high levels of intelligence and this will be achieved by feeding new-borns with adequate amounts of breast milk.” According to an article by the Tasmin news agency, the state has repeatedly broadcast the message that formula is detrimental to babies, contending that it leads to malnutrition and childhood obesity.

Chart 2 Babies and Infants in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Kids Growth in the number of kids (aged 3-8) in Iran has been declining. In 2015 the percentage growth was 2.3% but it is projected that there will be negative growth by 2020. The reasons for this have to do with residual effects of the family-shrinking policies of the 1990s. In the 1980s there were approximately six births per woman and had dropped to only two by 2004. Primary education is compulsory in Iran for kids aged six to 12 years-old. Many Iranians believe that to succeed in life children must do well in primary school. Thus, many parents invest a great deal of money and time to help ensure their children’s educational success. Grading is based on a scale of 0-20; when kids do well in their studies they often receive prizes for their good grades, not only from their teachers but from their parents, as well. The public schools kids attend are determined by where they live and some parents feel motivated to choose the location of their household based on school quality. Classes tend to start at 7:30am and finish around 1pm. Typically, girls are dismissed half an hour earlier than boys. Schools are gender-segregated and students must wear school uniforms. In 2008, all preschool and day-care centres in Iran were privatised with the exception of a small number of state-run centres that operate mainly in underprivileged areas. Parents incur the cost of preschool. Iran is a multi-ethnic country and many Iranians are bilingual, speaking their local dialect as well as in the standard Persian that is taught in school. In many rural regions, there is an insufficient number of preschools and this has caused problems for some children who tend to

struggle with standard Persian in the first grade. As a result, some kids must repeat the first year. Kids typically take packed lunches to school but most are home by the lunch hour. Some primary schools have been known to restrict certain snacks, particularly those with strong odours such as oranges or tangerines in order to prevent inducing cravings amongst other students. Private schools usually provide lunches for their students.

Obesity rates increasing Though Iran has one of the lower rates of childhood obesity in the MENA region, it is nevertheless on the rise, especially in urban centres. The Tehran Times recently quoted an Iranian health minister who traced childhood obesity to the soaring popularity of fast food and decreased levels of outdoor physical activity. Indeed, many parents feel uncomfortable allowing their children outside unsupervised as they did in past. Kids are now more likely to be at home in front of the television or playing computer games. A study from an Iranian university found that young girls were more likely to be overweight than boys. In 2016, Haartez reported that the CEO of the start-up Plate My Meal was contacted by a doctor linked to the Iranian Ministry of Health who expressed interest in the company’s plastic plates which are designed to compartmentalise food portions and categories. The doctor intended to use the plates as a tool to help reduce the rate of obesity in kids.

Greater demand for educational toys Iran’s education system relies heavily on the strategy of rote memorisation. However, this is changing, especially in urban centres, and there is now more emphasis on critical thinking and making learning fun for kids. This trend has generated greater demand for educational toys and games. Reports from the most recent international exhibition for infant and child-related merchandise in Tehran noted a marked increase in the number of vendors offering educational toys and educational games—digital and otherwise.

Chart 3 Chart3 Kids in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Tweenagers There are three school systems operating in Iran: free public schools, nemuneh mardomi (better quality than public schools but highly competitive) and expensive private schools. Middle school (Rahnamaei) is for students aged 11 to 14 years-old while secondary school is for students aged 14 to 17 years-old. Schools are gender- segregated and students wear school uniforms. Tweens enrolled in public schools typically bring packed lunches from home, often leftovers from the prior days’ meals, along with snacks of fruits and nuts. Those who attend private schools usually have lunch provided. Most Tweenagers walk to school with friends or are driven to school by their parents. The core curriculum teaches classical Arabic, the study of the Qur’an, as well as poetry technology, math, science and social sciences. There is a great deal of pressure on parents to ensure their children do well. Parents are often worried if their Tweens are not excelling at school and many provide their children with supplementary study materials and see that their Tweens spend their summers studying to ensure educational success. Iranian Tweens have grown up with social media but most parents feel it is important to limit their kids’ social media use. Very few Tweens have their own smartphones. On the other hand, access to smartphones might be given for an hour or so to Tweens as a reward and many use this time to play digital games or scroll through Telegram. Tweens being given a regular allowance is uncommon in Iran, but teens are given money as gifts for birthdays, Persian New Year and as a reward for doing well at school. This pocket money is typically spent on snacks and toys. Tweens love American cartoon characters like SpongeBob, Elsa, Dora the Explorer, and you will often see them taking such merchandise plastered with characters’ images to school on backpacks or pencil cases. There is no TV show more popular amongst tweens than the Kolah Ghermezi (Red Hat) show. One Iranian blogger recently dubbed it as the “multi-million-dollar puppet show”. While the show is being broadcast, nearly all Iranian households with kids will have their televisions on. The main character is a very inquisitive child who badgers adults with incessant questions. The show tackles issues of nutrition, physical activity, and general lifestyle issues.

Tweens enjoy football When not in class, Tweenage boys in Iran are probably playing football (soccer) on the street until the late hours. In recent years, many parents have limited the amount of time kids are allowed to play outside on the street due to fears of air pollution. Street football games are played with small plastic balls in alleys since public soccer fields are difficult to come by in Iran. Tweens passionately follow Iran’s national team (Team Melli) and this is often reflected in their product choices. It was a source of delight and scandal among Iran’s Tweens when an Iranian footballer was suspended for wearing SpongeBob pants in July 2016.

American-style fast food in demand Tweens love Western-style fast food and they will often convince their parents to take them to outlets that serve these meals. Going out to eat fast food such as pizza and burgers is considered by many as a source of fun and amusement, particularly amongst Iran’s middle- class families. Restaurants that make references to American brands, such as Pizza Hat and Mash Donald’s, are especially appealing to Tweens. In a recent article in the New York Times a Mash Donald’s proprietor noted said that the McDonald’s logo appeals to customers: “McDonald’s means quality. People in Iran know this too. So they stop here when they see Ronald McDonald”. Immediately after the announcement of the nuclear agreement between Iran and the US, the prospect that the real McDonald’s could potentially open outlets in Iran was front page news in several newspapers and social media was buzzing excitedly with the news. It

is a common that when Iranians travel abroad they almost invariably make at least one trip to a McDonald’s restaurant.

Chart 4 Tweens in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Teens Like their counterparts around the world, Iranian Teens are very image-conscious and use social media extensively. In the past, Iran’s so-called ‘morality police’ patrolled public spaces in order to prevent male and female Teens from socialising, but this has eased significantly in recent years. It is now common to see groups of Teens of both sexes hanging out after school in parks or malls. Teens who drive and have access to a car will often take their friends out for ‘joy rides’ as a form of amusement. They are often seen crammed in cars, blasting music and aimlessly driving around town. In fact, Tehran’s Director of Municipality Traffic Control blamed young people driving around “looking for fun” as among the reasons the city’s traffic is such a nightmare. A recent article in the Financial Times noted “The widespread use of smartphones means teenagers spend most of their spare time on social media, notably Telegram, a popular messaging app, and Instagram”. In 2016 a report from CNN quoted an Iranian Teen who said “Life is very enjoyable for us. We are friends, we go out with each other, and we laugh, we have fun. And that’s it”. However, many female Teens in Iran complain of a double standard with respect to parenting, lamenting that their brothers enjoy a greater degree of leniency when it comes to socialising than they do. Teens in Iran are crazy about football and every time the national team (Team Melli) win a game the streets erupt with young people waving flags. While deeply patriotic, most Iranian Teens say that they dream of travelling abroad, with America being the most commonly cited ‘dream’ destination. At the same time, the primary goal of Teens, both males and females, is to achieve a strong academic performance. There is a particular emphasis amongst students on doing well in hard sciences and mathematics. In fact, like other countries in the region, playfully calling someone an engineer is a term of respect and affection. It is very uncommon to have a part-time job or to work/volunteer during the summer. Rather, students are encouraged to study over the summer.

Perhaps the source of greatest stress amongst Teens is the national university entrance exam called the konkur which students take at the age of 17 or 18 years-old. The test is notoriously difficult and a large percentage of students do not pass. Exam results determine not just university acceptance but also the field of study. If konkur results are poor, students will often put their lives on hold for a year in order to prepare to retake the exam. Households with teens prepping for the konkur are often said to be under ‘konkur quarantine’. This means guests are no longer invited to the home, Teens stop going out, and family members tip-toe around the house in order to avoid disturbing the studying students. Many Teens, particularly females, complain of putting on weight during konkur preparation, the result of a lack of exercise while holed up inside the house.

Crazy about emojis Emojis are called ‘stickers’ in Iran and they are used nearly exclusively by Teens on social media platforms. Indeed, one would be hard-pressed to find any social media interaction without the use of at least one emoji. In fact, one teenager in Tehran said that it was considered bad etiquette to not add a string of emojis to every post and comment on social media. Telegram, the most popular social media platform, has a diverse range of Iran-specific emojis that Teens use. Popular stickers include those of the beloved national football team as well as from popular kids show Kolah Germzi.

Iranian rap music popular amongst teens Domestic rap music, known as Rap-e-farsi, is popular amongst Iranian Teens. It has flourished in underground music scene and there are even a few female rappers, as well. Many link the popularity of rap as a natural extension of Iran’s deeply rooted love of poetry. Farsi- language rap is relatively new; explicit language had never been used in Iranian music until the mid-2000s. According to a recent article in Al Jazeera, “Iranian rap was born in the early 2000s in Tehran, led by rapper Soroush Lashkary, known by his performing name of Hichkas. Dubbed the godfather of Iranian rap, Hichkas uses traditional Iranian instruments and urban beats to create a hybrid genre, a combination of east and west. Unlike many of his counterparts, Hichkas avoids swearing and rapping about violence, drugs and women. "The rap here is very different, it's about something real," he told the Daily Show in 2009. Instead, Hichkas' music tackles social and moral issues such as drug addiction, depression, poverty and youth unemployment. ‘We feel we shouldn't have bad influences on people, he said”. And while the following is loyal, most rappers inside or outside the country don’t make much money from their music—as they make it available on Telegram or YouTube for free. Since clubs don’t exist in Iran, teenagers hold house parties where invariably rap will be playing. Technically, house parties are illegal and there are cases when police break up parties, but overall this is usually not an endemic issue for Teens. The International Business Times reported in 2016 that “Tehrani nights are rife with secret house parties.”

Chart 5 Teens in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Young Adults Young Adults (those aged 18 to 29 years-old) have been given the moniker “the fruit of the revolution” because they were born during the fertility boom of the 1980s and 1990s when large families were a revolutionary ideal, before the late 1990s when an aggressive family-planning strategy reversed the trend. The number of Young Adults is declining. In 2015 the size of this cohort reached 18.5 million and it is projected to fall to 14.6 million by 2020. A recent article in the Washington Post noted that in 2015 there were 4.5 million students enrolled in higher education. Despite the high unemployment rate among college graduates, there is still a strong cultural impetus to attend university; based on the belief that a university degree is a prerequisite to marrying well and finding a good job. A recent Al-Monitor report noted that an explosion in semi-private universities has essentially provided “anyone who is willing to pay an opportunity to attend college.” Universities with foreign ties are especially prized by prospective students. Young Adults who have graduated are often more inclined to wait for the opportunity to secure a high-status job rather than settle for a more immediate job with lower status. Many can afford to wait since most unmarried Young Adults live at home, tend to carry little student debt and are financially supported by their families. Young Adults are increasingly postponing marriage and when they do marry they opt for smaller families. This is closely connected to the feelings of financial instability caused by years of slow economic growth. Parliament, alarmed by the declining birth rate, passed bills in 2014 to extend maternity leave and limit access to vasectomies and contraceptives. Nearly all romantic courtships among Young Adults begin electronically. Facebook is blocked in Iran, but a low-cost ‘filter-breaker’ is a common method of circumvention. Instagram and the highly popular app Telegram are also easily accessible. Indeed, a report published by Al- Arabiya in 2016 claimed that as much as 60% of Iran’s bandwidth is consumed by Telegram alone. A recent article in the Financial Times discussed the divergent attitudes of many Young Adults noted by many observers. Hamid-Reza Jalaipour, a professor of sociology at Tehran University, told the newspaper “It’s difficult to explain some aspects of what’s going on with youth, because it’s a new phenomenon in Iran. The youth are different from 10 years ago...There is a big diversity: there is religious youth, there is ideological youth, modern youth and postmodern youth who live as if they were in California. Money is important to them, much more than 20

years ago. Individualism is high. They don’t live according to what their parents want; they do what they want. Even the women make decisions on their own”. Indeed, according to the article, “Iran’s young women have been a driving force of social change. Empowered by education, which is arguably the most important achievement of the Islamic revolution”.

Image-conscious Young Adults drive demand for cosmetics While young women are required to dress modestly in public, they are nevertheless greatly interested in the cosmetics and other beauty products that are so popular amongst young women around the world. A recent article in Fortune magazine noted “Despite—or perhaps partly because of—strict Islamic dress codes, cosmetics sales in Iran are among the highest in the Middle East. Women are required to wear modest clothes and headscarves, but their faces and hands are not covered, and many express their individuality with lipstick, mascara and nail polish in styles that would seem elaborate by Western standards...Iran’s fashion-forward twenty- somethings have kept up with global trends on social media and travels abroad, skirting diplomatic isolation and domestic repression. Fattahi-Dansal [nail salon owner] says they are discerning consumers. In an interview in industry journal Premium Fashion News, fashion journalist Nilufar Khalessi said “The status of women is different from what can be observed in many Arab countries. Even the way they wear their veils is more lax, as it does not completely frame their faces and allows for much femininity to be seen...Iranian women hardly go out with makeup on, because the relationship with aesthetics is strongly developed...In the city, the veil does not completely frame women’s faces. It is a real distinguishing feature: half the hair is uncovered, so women work a lot on it, often dying it blonde, and they are not keen on naturalness”.

Café culture growing In major cities Young Adults are increasingly flocking to French-style cafes that offer free Wi- Fi access. These outlets are slowing making the once highly popular ‘coffee-nets’—cramped spaces that offered desktop computers, internet access and cheap snacks—obsolete. The increased internet speeds and growth in smartphone ownership among Young Adults has made these newer cafes attractive for studying or socialising. In addition, unlike the Spartan coffee- nets these newer cafes also serve as a place for romantic encounters among Young Adults.

Chart 6 Young Adults in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Middle Youth In 2015 the number of Middle Youth (those aged 30 to 44 years-old) reached 20.8 million and by 2020 their number is projected to increase to 24.8 million. Growth is due to the lingering effect of the fertility boom of the 1980s and early 1990s. Many Middle Youth are old enough to remember more liberal times of the Mohammad Khatami era and this has affected the outlook of many. At the same time, many members of this cohort still live at home and are not yet financially independent. This is due in part to the dearth of appealing, well-paying jobs available to Middle Youth, a group that tends to be highly educated but underemployed. In addition to finding a satisfying job and financial security, marriage is a primary concern amongst Middle Youth. But there are more unmarried Middle Youth in Iran than ever before. In part, this is due to changing social attitudes. A recent article in Al-Monitor noted “A University of Tehran sociology professor, who spoke on condition of anonymity, told Al-Monitor that the youths' reduced interest in marriage stems in part from the ‘living condition of Iranian youths born in the 1980s and 1990s. Economic and cultural middle classes of society have experienced astronomical growth in technology and freedom in social relationships. Therefore, the youth have more opportunities to engage in romantic and sexual relationships while they are single. They are not willing to lose these opportunities by committing themselves to marriage’ ". Many of the Middle Youth who have decided to marry are planning on having fewer children. Parenthood is closely related to ideas of responsibility and sacrifice and it is not uncommon for some Middle Youth to explain their delay in having children as an opportunity to “enjoy our life, travel, things we can’t do with a child”. Another deterrent to marriage is the increasing possibility of a costly divorce. The divorce rate in Iran has risen sharply in recent years and Iranian media reports state that approximately 20% of all marriages end in divorce, prompting many prospective marriage partners to exercise a bit of caution. While dating websites are banned, those who advertise as ‘spouse-finding’ sites are allowed to operate. To encourage marriage, in June 2015, the government launched an official marriage website, reporting that 16,000 people had registered. However, overwhelmingly Telegram groups are the main vehicle for romantic encounters amongst Middle Youth in Iran. Even if an acquaintance introduces two people, they may spend months ‘dating’ online before they ever arrange to have a cup of coffee together.

Increasing number of start-ups by Middle Youth since nuclear agreement The recent nuclear agreement between Iran and the West has injected a boost of optimism amongst many Middle Youth frustrated by the stagnant job market. Some are eagerly awaiting what they believe will be the increased number of well-paying jobs coming as a result of rising foreign investment. A growing number of other Middle Youth, however, are set to unleash their entrepreneurial skills. A recent article in Fortune magazine described what it called Iran’s Start-up Spring. “The number of Iranian startups has rocketed, from almost none at the beginning of this decade to at least 400 in Tehran alone, according to TechRasa, a local equivalent of TechCrunch, which tracks the sector. These startups occupy a tiny portion—less than 1% of GDP, by some estimates—of Iran’s oil-dominated economy. But their impact is potentially huge. If they succeed, they could foster a different vision of what the country could be, and help reverse years of brain drain, in which millions of bright Iranian youth have left, many for the US...Two- thirds of Iran’s 80 million people are younger than 35 and their share of the population is growing...They’re also vastly more connected to the outside world than their parents’ generation—despite being raised under sanctions”.

Saeed Mohammadi, 36-year-old Co-CEO of ecommerce platform Digikala, Iran’s most successful startup, told the magazine “This generation, the post-revolution generation, we don’t accept extremism...We want practical solutions, not slogans...And there are lots of us. We have a lot of potential. We have the potential to revolutionize this country within a decade”.

Gym memberships are growing Culturally, making explicit references about a person’s weight is very common, particularly amongst singles. Indeed, Iranians have always valued their appearances and as Middle Youth socialise more frequently and delay marriage there is even greater emphasis on looking good and healthy. As a result, gym memberships are growing amongst Middle Youth, particularly among those who are unmarried and have the time and resources to invest. Of course, gyms are segregated by gender so, unlike in other countries, gyms tend to be less of social venue.

Chart 7 Middle Youth in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Mid-lifers The number of Mid-Lifers (those aged 45 to 59 years-old) reached 11.4 million in 2015 and as the population ages their number is projected to increase to just more than 13 million by 2020. Compared to other cohorts, Mid-Lifers tend to have the greatest purchasing power as many workers are in their peak earning years. However, this cohort is often divided into two segments, i.e., those whose children are financially independent and living in their own households and those whose children have not yet left the family nest. At the same time, many Mid-Lifers support their elderly parents and sometimes their grandchildren. Clearly, these additional financial responsibilities affect and often restrict the purchasing decisions and choices of many Mid-Lifers. Many Iranians retire in their fifties. At this age, many still desire to work, whether part-time or full-time. Due to concerns about the funding of pension programmes, many Mid-Lifers, particularly the less affluent, find that they must work and be cautious in their spending. Members of the Mid-Lifer cohort are old enough to have lived a good proportion of their youth during the Iranian revolution, as well as during the eight-year war with Iraq (1980-89). These experiences tend to motivate many to take advantage of Iran’s currently internal stability to travel around the country as well as enjoy greater amounts of leisure time at home. Indeed, Mid-

Lifers often have the necessary time and resources to travel. Furthermore, they are unlikely to have small children, often an obstacle when planning road trips. Restaurants are few on Iran’s major highways, so most holiday-makers pack their food and have roadside picnics on any green space they can find.

Mid-Lifers’ average gross income set to increase after years of sluggish growth In most countries, Mid-Lifers tend to enjoy their peak earning period after years of toiling and progressing in their jobs and professions. In Iran, however, it is younger workers; those aged 35 to 39 years-old, who account for the largest share of top income earners. Indeed, in a country already suffering from high levels of income inequality, it is often older workers who struggle with declining incomes. Between 2010 and 2015, the average gross income of those aged 45 to 49 years-old increased by only 1.7% (in real terms) to reach IRR188.2 million in 2015 while the income of those aged 50 to 54 years-old increased by 1.4% to reach IRR167.5 million in 2015. Older Mid-Lifers aged 55 to 59 years-old saw their average gross income increase by only 1.3% to reach IRR146.2 million in 2015. In contrast, the average gross income of those aged 35 to 39 years-old grew by 2.6% between 2010 and 2015 to reach IRR213 million in 2015. However, the financial difficulties Mid-Lifers have faced are expected to ease in coming years, due in large part to the anticipated benefits brought about by the lifting of economic sanctions. Indeed, between 2016 and 2020 average gross incomes of those aged 45 to 49 years-old are projected to increase by 9.7% (in constant 2015 values) while those aged 50 to 54 years-old are projected to see growth of 8.2%. Older Mid-Lifers aged 55 to 59 years-old are projected to enjoy a 7.1% increase in average gross income. While income growth will spur increased spending by some, it is expected that most Mid-Lifers, cautious from years of financial struggle, will instead increase their savings and investments.

Chart 8 Mid-Lifers in Focus 2000-2020

Source: Euromonitor International from national statistics/UN

Late-lifers The number of Late-Lifers (those 60 years-old and older) is rapidly rising as life expectancy increases. In 2015 the number of Late-Lifers reached 6.5 million and this is projected to reach 8.2 million by 2020. Members of this cohort are typically retired and living on their state pensions. On the other hand, not all Late-Lifers receive pensions, which are based on having

worked a minimum of 19 years. If they qualify, men are eligible to receive their pension when they reach 60 years-old and women are eligible when they reach 55 years-old. If they have worked at least 30 years, men are eligible when they reach 50 years-old and women are eligible when they reach 45 years-old. The amount of the pension depends on the wages earned over the years. Together with pensioners, the government is alarmed about the solvency of its pension programmes. The leading economic paper, Donya-e Eqtesad, recently noted that the country will face a major funding problem in coming years. A recent article in Al-Monitor cited pension experts who believe that Iran needs to significantly raise the current retirement age in order to ensure solvency. The fixed income that pensioners must live on are typically very low and as a result many Late-Lifers find they must get financial support from one or more of their children. At the same time, most are very cautious consumers. Late-Lifers often have many children as big families were the norm when they were younger. Thus, there is often a large social network from which they can draw support. Some Late-lifers move in with their grown children and take the responsibility of helping to care for their young grandchildren. Most, however, still prefer to live in their old homes in their old neighbourhoods. Old-age care homes are very expensive in Iran and not commonly used except by the affluent. Late-Lifers tend to be conservative when it comes to their eating habits and they are not particularly adventurous when it comes to new cuisines or exotic foods. State-run media channels continually promote the benefits of physical activity for members of this group. A study from 2014 in Tehran revealed that the majority of Late-Lifers who avoid physical activity due so out of a fear of falling. This is particularly a problem for those who live in older apartment buildings that don’t have elevators. According to UNFPA- United Nations Population Fund, the employment rate among the elderly population is high, with the economic participation rate for men 65 years-old and older reaching 37% and the rate for women reaching 5%. The same report noted that 69% of the elderly live in urban areas. The report went on to note “The proportion of the aged population living alone is increasing, with remarkable provincial differences. At a country level, the percentage is 10% and there is a difference between males (15%) and females (5%).

Religious tourism popular with older consumers As they get older many Iranians become more devout. If they can, many travel to visit religious sites, either domestic or international. According to Hotelier Middle East, the trend of religious tourism is growing. Iran’s most-visited city is Mashhad, an important pilgrimage site where the eighth Shia imam, Imam Ali, is buried. Approximately 23 million pilgrims—from Iran and abroad—visit each year. There are also many ancient Armenian churches and Jewish synagogues that attract many visitors each year. Islam decrees that all able-bodied Muslims must make at least one trip to Mecca in their lifetime and most Late-Lifers strive to make this pilgrimage. A lottery is held to determine who is eligible to go since there is a quota of Iranians that may attend. All-inclusive Hajj packages are reasonably priced, which allows many less affluent Late-Lifers to participate. However, in recent years, Iranians have been reluctant to undertake the pilgrimage due to political conflicts between Iran and Saudi Arabia. Rather than going to Mecca, many Late-Lifers visit sites in the Iraqi cities of Karbala and Najaf, other important Shi’a sites. A recent article in Al-Monitor cited an official who said that in September 2016 one million pilgrims visited Iraqi shrines, with 75% coming from Iran.

Parks popular amongst seniors Iranians are amongst the world’s most avid park goers. The parks are always bustling in the evenings and are a central part of Iranian leisure time for all age groups, particularly Late-Lifers. To encourage female Late-Lifers who are reluctant to exercise in a mixed-gender park in 2008 the government Mother’s Park, the first-ever woman-only park. It includes fitness equipment, a bike trail, playground, day care, library and a health centre. It is more likely to attract Late-Lifers, and some refer to it as Grandmother’s Park”.

Chart 9 Late-Lifers in Focus 2000-2020

Source: Euromonitor International from national statistics/UN Note: Old-Age Dependency Ratio: % of persons older than 65 per persons aged 15-64

HOUSING AND HOUSEHOLDS

Home Ownership There is a strong preference for home ownership amongst Iranians. This cultural ideal is reflected in the popular proverb “four walls, your own discretion”. The majority of people live in houses, though the number of apartment dwellers has increased over the years. In 2020 the number of those living in apartment is projected to reach 8.87 million, up from 7.76 million in 2015. The number of those living in houses is also on the rise and is expected to hit 18.19 million by 2020, up from 16.57 million in 2015. Years of economic stagnation and high inflation rates have reinforced the idea that owning property is one of the safest investments. By all accounts, the real estate market has been in the throes of a three-year recession. Al-Monitor reported in September 2016 that “the housing and construction industry is perhaps the one sector of the Iranian economy that is suffering most from the dual challenges of record-low demand and oversupply of residential units in past years”. In a separate article, however, the newspaper noted that many analysts are optimistic about projected growth, though a sudden sharp increase in prices is unlikely. When families grow, the usual response is to add more rooms to the current house rather than moving into a new dwelling. As family sizes become smaller and the available space in the city becomes scarcer, families are increasingly opting for smaller dwellings.

In 2011 the state attempted to help low- and-middle-class residents get on the property ladder by providing special loans to first-time buyers. To be eligible for the maximum loan, houses had to be constructed within the past three years and could not exceed 75 square meters. However, critics say these measures do not do enough due to their restrictive eligibility requirements and the ineffectiveness of this and similar schemes, coupled with growing joblessness and increased inflation, has made first-time home ownership out of the reach of many young Iranians. To be sure, first-time home ownership is closely linked with marriage. Typically, buying one’s first home comes after marriage when traditionally the groom’s parents buy the house and the bride’s parents pay to furnish it. Cohabitation before marriage is illegal but is nevertheless a growing trend. These couples tend to rent apartments and lie to their landlords about their marital status. These couples tend to be financially independent from their families. As more young couples delay marriage, they also delay entering the housing market.

Chart 10 Home Ownership 2000-2020

Source: Euromonitor International from national statistics

Household Profiles Traditionally, Iranians have lived with their extended families and it was not uncommon for up to three generations of family to live under a single roof. Living with in-laws on a permanent basis, however, is now generally considered to be undesirable. With large courtyards, spacious interiors and numerous bedrooms, these houses reflected traditional lifestyles. In recent years, urbanisation has boosted an increase in residential multi-family complexes and apartments. Young couples are opting to have fewer children and having them later in life and the number of couples without children at all is increasing, driving changes in the standard housing profile. Pet ownership is very limited and tends to be the exclusive domain of the more affluent. Feeding and taking care of stray cats is common but keeping dogs in the house is rare as it is contrary to Islamic tradition. It may be also safe to generalise and say that a significant proportion of Iranians have a real fear of dogs, due to their lack of exposure to the animals. There have been occasional crackdowns against dog owners in Iran because it is viewed as a vehicle of “Western cultural invasion”.

Chart 11 Household Profiles 2000-2020

Source: Euromonitor International from national statistics

Running Costs Energy costs in Iran reached a peak in 2007 but since then they have been relatively stable. In 2010 the government introduced a Subsidy Reform Plan that aimed to replace food and energy subsidies with targeted social assistance. According to a report from the World Bank in 2016, a second phase of reform is being considered that would “involve a more gradual fuel price adjustment than previously envisaged and the greater targeting of cash transfers to low- income households”. Broadcasts from state-run media channels are reinforcing the idea of reducing energy consumption. Press TV reported in 2016 that new construction techniques such as fibre- reinforced concrete were picking up steam, making homes more affordable and lowering energy costs. Home renovation, especially the renovation of older home, usually first targets the bathroom, replacing traditional Iranian ‘squat’ toilets with modern Western toilets.

Iranians retreat to vacation villas For Tehran residents, having a beach house in ‘shomal’ (north) is one of the best ways to escape the oppressive summer heat and pollution. As well, older Iranians will often prescribe going north as a way to remedy a multitude of medical ailments. Intense demand for beach houses has resulted in a somewhat haphazard construction boom with little centralised oversight. During the holiday season of the Persian New Year, millions of Iranians head north, causing severe traffic congestion.

Chart 12 Household Running Costs 2000-2020

Source: Euromonitor International from national statistics/UN Note: In constant 2015 prices

MONEY AND SAVINGS

Attitudes Toward Payment Methods Consumers overwhelmingly use cash to buy and pay for products and services. Financial cards are used to withdraw money from ATMs and rarely for day-to-day purchases. With the lifting of sanctions in March 2016, Iranian banks became reconnected to the international SWIFT system which increased the ease of bank transfers. The local electronic banking and automated payment system (the Shetab model) was introduced in 2002. This system is typically used by consumers at banks to pay utility bills and rent. Currently, international transactions cannot be processed. There seems to be some confusion about when international credit cards will be made available to consumers.

Savings Iranians are traditionally big savers though saving habits tend to follow a generational divide. Having experienced a revolution and an eight-year war, older Iranians tend to believe that ‘saving for a rainy day’ is a worthwhile pursuit. The most common way Iranians save is by using bank savings accounts. In 2015 the savings ratio reached just over 36% of disposable income. However, a weak currency and high rates of inflation have convinced many Iranians to forego saving, a situation made worse by the impact of the weak job market and low wages. Younger unmarried Iranians are less likely to practice the frugal ways of their parents, in large part because they do not have the responsibility of a family and children. A recent article from The Guardian quoted an Iranian business executive who said his unmarried employees “view their pay cheques as pocket money”. Until 2012, before the run on Iranian currency, many Iranians injected their cash into financial institutions that promised lucrative returns, offering interest rates of 27% or even more. The practice is now illegal and the Central Bank of Iran said in 2015 that the institutions should not offer a deposit rate of more than 22%. Investing in the Iranian stock market is not a common way to save for most people. Indeed, over the past several years “most stocks hit rock-bottom values,” according to a report in 2015 by Al-Monitor. Investing in gold and silk carpets has traditionally been considered a safe

investment. Gold coins are traditional for wedding gifts, typically eight-gram coins minted by the Central Bank. Al-Monitor reported in 2016 that the government is trying to discourage consumer saving in order to jumpstart spending and, in turn the economy. “The Rouhani administration’s fiscal and budgetary policies, coupled with the CBI’s quantitative easing policies, are expected to enhance production and productivity while stimulating consumer spending and investment,” according to the article.

Loans and Mortgages Consumers rarely take out loans to purchase needed household products and services, other than car purchases. Although many households will take out loans to pay for wedding celebrations. Veterans of the Iran-Iraq war as well as families who lost family members during that war are often eligible for favourable loan terms from the banks. In addition, many households needing money borrow from more affluent family members when necessary. Rather than borrow, consumers typically save for months before purchasing big-ticket items. For the most part, mortgages are unavailable to prospective home buyers. The government does offer some first-time buyer mortgage loans but the requirements are fairly stringent and most cannot meet them unless they have sizable deposits in the bank for at least a year.

Young Iranians circumvent mortgage loans The unavailability of mortgage loans is particularly worrisome for young Iranians in the current tight job market. A recent article in The Guardian newspaper by their Tehran Bureau correspondent noted “In Iran one cannot get a mortgage, they practically don’t exist, and even limiting my hopes to a one-bedroom on the capital’s outskirts, the largest available bank loans would cover no more than half the cost...Even if eligible [for a mortgage loan], I would need to put down around a fifth of the money six months before the loan was issued...Although this might sound troubling, to the average Iranian it is not a concern at all. Getting a place is very simple, and the method has not changed for generations: just find a spouse. Assuming all parties consent to the marriage, the parents of the groom will then buy the house and the parents of the bride will furnish it”.

Wedding loans popular Weddings in Iran are typically extravagant and can be very expensive. For many, holding a ‘no-frills’ wedding would not be an option and would be considered a source of shame. Putting together a bountiful dowry can also be an obstacle for many households. Traditionally, the bride’s family is responsible for furnishing the marital home and many Iranians feel that their honour is at stake when it comes to funding this task. A recent article in The Guardian newspaper noted “Rich, poor, or middle-class, families spare no expense to outfit their daughters with elaborate sets of kitchen gadgets, glitzy home décor and luxury chinaware”. As a consequence, many of those who cannot afford top-of-the-line household furnishings would rather simply disengage rather than downgrade. Alarmed by the low number of marriages, the government has asked banks to offer clients ‘wedding loans’. An Iranian newspaper reported that in 2016 a circular was issued to Iranian banks to ensure they issued 150,000 marriage loans per month. These loans would be interest- free and provide a repayment period of four years. These loans are intended to cover the expenses associated with the wedding ceremony as well as the traditional gifted home furnishings.

Chart 13 Borrowing and Saving 2000-2019

Source: Euromonitor from trade sources/national statistics Note: Outstanding balance in constant 2015 prices

EATING AND DRINKING

Eating Habits Iranian cuisine varies depending on the region but dishes generally include fresh herbs and nuts, pomegranate, yoghurt, sumac, turmeric and saffron. Eating raw vegetables is not common but fruit consumption is very high. A recent article in Iran Daily noted “Persian cuisine or the cuisine of Iran is diverse, with each province featuring dishes, culinary traditions and styles distinct to their regions. It includes a wide variety of foods ranging from 'Chelo Kabab' (barg, koobideh, joojeh, shishleek, soltani, chenjeh), 'Khoresht' (stew that is served with Iranian rice: 'Qormeh Sabzi', 'Qeimeh', and others), 'Aash' (pottage/thick soup), 'Kookoo' (vegetable souffle), 'Pollo' (white rice alone or with addition of meat or vegetables and herbs, and a diverse variety of salads, pastries, and drinks specific to different parts of Iran. The list of Persian recipes, appetizers and desserts is extensive. The main Persian cuisines are combination of rice with meat, lamb, chicken or fish and some onion, vegetables, nuts and herbs”. In Iran, conventional wisdom classifies food into two groups, i.e., ‘hot’ and ‘cold’. This dates back to the pre-medieval period, with Avicenna’s grouping of foods based on metabolic process. Foods that are considered ‘hot’ are lamb, chicken, fish, sheep’s milk, mint and generally all sweets. Foods that are considered ‘cold’ are beef, cow’s milk, lettuce, spinach, and generally all sour things. In everyday vernacular, Iranians will refer to this classification. For example, pregnant women or women trying to conceive are advised not to eat too many ‘hot’ foods. In general, a balance between ‘hot’ and ‘cold’ foods constitutes the ideal dietary regime. Offering visitors fruit bowls, typically including oranges, apples, bananas and cucumbers, is considered mandatory when entertaining, even among the most modest households. Rosewater is also a quintessentially Persian ingredient, typically used in deserts, but it also figures prominently for treating cramps and as a homemade makeup remover. Iran is a religious country and dietary laws influence consumers’ eating habits. For example, Islamic decrees forbid eating pork or animals that don’t have vertebras, with the exception of shrimp. Shi’a jurisprudence outlaws the consumption of caviar; however this ruling was overturned after the Iranian revolution. For some, eating habits may be influenced directly by the specific religious leader they follow. There are close to sixty religious legal authorities in the

Shi’a world (called marja) and each has varying stances on lifestyle choices. Perhaps the most prominent example of this is when Ayatollah Bourjerdi declared publicly in the 1970s that he wouldn’t drink what he referred to as ‘black drinks’. In turn, many of his followers refused to drink Pepsi or Coca-Cola. Nearly every meal, with the exception of breakfast, includes large portions of white basmati rice topped with saffron, although some young Iranians are now eating brown rice (called ‘Chinese rice’) with their meals as a healthier substitute. Iranians cook their rice so that there is a pan-fried layer of crust at the bottom, a national speciality called tahdig. The crust is removed from the pot and served separately. Many Iranians have at least two rice cookers in their house, a large one and a small one. Some models of rice cookers are designed to prevent the rice from burning and these are shunned by Iranians since they can’t make tahdig. There has been increased demand by consumers for high-quality packaged foods. Preparing traditional Iranian dishes can be very time-consuming and consequently members of younger generations seek the convenience of prepared foods. Yoghurt and yoghurt-based drinks are increasingly purchased in packaged form rather than made from scratch at home. Traditionally, Iranians would have laid a spread on the ground for their meals. Some continue to adhere to this tradition, insisting it is better for digestion and prevents over-eating. However, most now eat from tables covered with a specific meal-time table cloth which is removed and washed after each meal. Most tables are set with only a spoon and fork. Most Iranians eat their meals at home rather than in restaurants due to the high cost of dining out. In fact, for many years the country’s fine dining scene, even in Tehran, was vastly underdeveloped. In recent years, however, a growing number of restaurants have opened in the capital in response to demand from affluent consumers. According to a recent article in the Financial Times, “While the capital once boasted just a handful of fine restaurants popular with foreign diplomats and Iranian expatriates, over the past year [2013] more than a dozen new restaurants have opened and most of the diners are Iranian. There are few options for socialising in Tehran, thanks to a ban on clubbing and bars serving alcohol and a limited choice of cinemas and theatres. Increasingly, the city’s elite choose to eat out”. In contrast to fine dining venues, many Iranians enjoy cheaper street food bought from stalls and kiosks. Popular street food includes falafel, Persian pizza (using pita), shish kabob and a range of cold and hot soups/stews.

Speciality desert bars attract consumers Restaurants specialising in Western-style desserts (rather than traditional Iranian desserts such as baklava) are becoming increasingly popular in urban areas. Nutella bars are the latest permutation of this trend and they have sprung up around the country. A basic Nutella crepe cost roughly IRR11,000. In 2016, Nutella bars were in the newspaper headlines after incurring the wrath of the state- run Academy of Persian Language and Literature, Iran’s answer to the Academie Francais, an institution meant to safeguard the national language. Most speculate that the problem had less to do with the word Nutella and more with the word ‘bar’. Some Nutella bars have already rebranded. For example, one prominent Nutella bar has recently been renamed Sinatella.

Chart 14 Food Expenditure Profile 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices

Drinking Habits Alcohol consumption is forbidden in Iran. Smuggled alcohol usually enters the country through the port town of Kish from Dubai. Penalties for possesson and consumption of alcohol are serious. Iranians enjoy soft drinks, especially carbonated colas such as Pepsi and Coca-Cola and cola variants such as the domestic Zamzam, named after the well of Zamzam in Mecca, Saudi Arabia. Zamzam is considered the Muslim alternative to American branded colas. Consumers pair soft drinks with meat-heavy meals as it is said the drink helps with digestion. There is growing demand for so-called ‘diet colas’ as a healthier alternative. Any orange-coloured fizzy soft drink is referred to as ‘kanada’. The host at most dinner parties offer guests a choice between what are colloquially referred to as ‘black’” versus ‘orange’ soft drinks. Most devout Iranian Late-Lifers tend to prefer orange drinks rather than black ones, a result of the influence of an influential Ayatollah. Parents tend to admonish kids not to drink soft drinks on an empty stomach, and soft drinks and other carbonated drinks are rarely consumed between meals. Another drink popular during mealtime is ‘dough,’ a yoghurt-based mint drink that comes in carbonated and non-caronated versions. Many make dough themselves at home or buy it in stores. Consumers enjoy drinking tea and drinking it is considered a national pasttime. Tea is consumed for breakfast and throughtout the day, immediately after each meal (to help with digestion) and even late in the evening. No business discussion would ever begin without a cup of tea. Store owners offer patrons tea and it is served in the bazaars. Iranian tea is prepared strong and drunk black, sweetened with tiny sugar cubes that Iranians keep in their mouths as they drink. Another way to sweeten tea is with nahbat, a sugar rock candy tinged with saffron. Nahbat is considered a gentle cure-all and consumed to improve overall health and wellness. It is not just the taste that matters to tea drinkers but also valued is the rich red hue of the tea. For this reason Iranians never drink tea from mugs, perferring dainty glasses that reveal the colour. Iranians enjoy drinking fruit juice but they rarely drink it during breakfast or other meals. Fresh fruit juices are typically consumed in the afternoon between lunch and dinner and in the evenings. In the hot summer months Iranians drink Sharbat, a mix of cooked sugar and water and a sweet fruit, to cool down. Tehran is packed with fruit juice stands that are always bustling during the afternoons and evenings. It is rare in Iran to see anyone walk and drink in public. For

example, if consumers order orange juice from a juice stand they drink the juice right there on the street rather than walk and drink.

Drinking milk considered good for health While the consumption of yoghurt-based drinks is very high, drinking milk on a daily basis has not been a traditional element of Iran’s food culture. However, there is now greater awareness of the importance of daily milk consumption, especially since calcium deficiencies affect a great number of Iranians. The government has promoted milk benefits, especially for kids. In 2016 a radio programme featured a government representative who told listeners that children should try to drink milk at least twice a week to help with growth and that adults should drink milk in order to “protect against pollutants in the air”. In fact, a common refrain amongst Iranians that Diaspora Iranians tend to be taller and better built because they drink so much milk. While awareness exists, the high cost of fresh milk discourages many consumers from buying and consuming it every day.

Greater demand for bottled water There has been greater demand for bottled water in recent years, with consumers drinking it both at home and when they are out and about. In the past, Iranians would boil water to sanitise it and then keep it in the fridge. Bottled water offers a convenient alternative. Single-serve water bottles are growing in popularity. The link between drinking greater quantities of water and weight loss has become well-known amongst younger health-conscious Iranians. The perceived connection between drinking water and promoting healthier skin has also gained traction among younger generations.

Chart 15 Drinks Expenditure Profile 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices

GROOMING AND FASHION

Female Grooming and Fashion Trends Regardless of whether they are devout or secular, Iranian women tend to a great interest in adhering to beauty standards. Notions of ‘ideal’ beauty in Iran often revolve around eyes and eyebrows. Iranians tend to prefer a dominant, strong, well-groomed brow and many work hard to achieve this. The ‘devil look’ is very popular and is achieved by shortening ends with a razor and tattooing the tail of the eyebrow to obtain a gravity-defying look. This is sought-after because of the effect of ‘opening up the face’. Some may forgo the tattoo and just use an eyebrow pencil to get the same look. In Tehran many women are daring in their fashion and hairstyle choices, often opting for a flashy style rather than a subdued look. In 2015 the trend that was all the rage was a hair style made ‘big’ with the use of hair clips (like Bumpits – a plastic hair accessory used to create better volume) under the headscarf. Known for their fashion consciousness, Iranians sometimes joke that the world’s fashion trends start in Tehran. Undergoing hair-removal procedures is popular. The most common method is visiting a salon where two or more women wax the entire body. Shaving is considered the worst thing a women can do to remove hair. Depilators and laser hair removal procedures are also growing in popularity. Fragrances are very important to Iranian women and many women will not leave the house without putting on a scent. Use of deodorant is more common among younger Iranians and less so among older Iranians who might only use it if they are leaving the house for an extended period of time or a special occasion. Face creams and anti-aging creams are very popular. Demand for sun care products is growing, particularly amongst younger consumers. Women generally spend more time outdoors when the sun sets. Consequently, use of sun care products is usually reserved for days that include extended time outside, such as during picnics or going on hikes. Traditionally, women have preferred fair skin but recently looking ‘bronze’, achieved by visiting tanning salons or using fake tanner, has become all the rage. Some girls wear very dark makeup, sometimes three shades darker than their skin tone, to achieve the look of a deep tan. Many Iranians wear the mandatory headscarf way back on their heads, revealing the front of their hair. Brightly coloured hair, striking highlights, perms and other styles are prominent. There is a great deal of variety in Iran when it comes to hair and women often change their hair styles. The styles of the hijab change with the seasons and it can be difficult to keep up. Generally, it is difficult for average consumers to find quality makeup in Iran. Nevertheless, women enjoy visiting salons to get their makeup applied and their nails done. Reuters reported in 2016 that “Many [women] express their individuality with lipstick, mascara and nail polish in styles that would seem elaborate by Western standards”. Indeed, first-time visitors to Iran are often bemused by the degree of adventurousness in the application of makeup. There is no real distinction between ‘day’ makeup and ‘evening’ makeup styles. Older women tend to keep their creams and liquid makeup in the fridge to increase their shelf-life.

Women getting cosmetic tattooes Even though tattoos are technically forbidden in Islam, cosmetic tattoos (or ‘permanent makeup’) are growing in popularity amongst women, particularly older women, both secular and conservative. The most popular procedure is to tattoo eyebrows, but demand for tattooed lip liner and eyeliner are also growing in popularity. Demand for permanent makeup is greatest among women over 40 years-old, the age when eyebrows naturally become thinner, and as demand has increased the prices have come down so more women can afford it. As thick eyebrows are a beauty ideal in Iran, having them tattooed is in no way considered an act of vanity. As one religious leader explained “Anything that constructs a ‘normal appearance’ in a

woman is permissible”. Older women who have undergone tattooing often say that “lifts their spirits” and offers convenience. Nearly all salons offer this service.

Rise of Iranian instagram models Many fashion-conscious women are looking to Instagram for their inspiration, especially Iranian-American models who are often based in Los Angeles where there is a large Iranian community. Women tend to prefer Western models that look like them, with quintessentially Middle Eastern features emphasising rimmed eyes and prominent eyebrows. Kim Kardashian is a huge influence on current Iranian fashion and beauty trends. Turkish soap stars are also very popular as they often resemble Iranians. There is also a growing number of local Iranian Instagram models that have garnered legions of followers.

Cosmetic surgery remains popular Cosmetic surgery is very popular, particularly rhinoplasty. According to recent data from the Rhinology Research Society of Iran, more than 80,000 rhinoplasty procedures are performed in Iran every year, so many that several media outlets have dubbed Tehran the ‘nose job capital of the world’. A recent article in The Economist magazine noted “The phenomenon is perhaps surprising in a country far more conservative than plastic surgery hotspots such as America, Brazil and South Korea. But there is a good reason why Iranians have a penchant for the alteration. ‘For ladies who cover themselves apart from the face, it is the only thing they can show,’ says [cosmetic surgeon Ali Asghar Shirazi]. A boob job will only get you so far if you have to spend most of the day shrouded in a manteau, the mackintosh-like outer garment almost all Iranian women wear”. Other popular procedures include lip augmentation, breast augmentation, Botox, liposuction and eye lifts. Cosmetic surgery is now considered a status symbol and it is not stigmatised. The Economist went on to say “Sitting in his brightly coloured surgery in Tehran, Ali Asghar Shirazi explains that the majority of women—and an increasing number of men—are most preoccupied by the size of their snout. “Iranian noses are generally bigger than European ones,” says Mr. Shirazi. “They don’t want Western noses; they want smaller ones’ “. Al-Monitor reported in 2015 that rising demand for cosmetic surgery has led to growth in the number of unlicensed surgeons.

Male Grooming and Fashion Trends Iranian men, particularly younger men, tend to have a great interest in fashion and their outward appearance. Many keep meticulously groomed with hair gel. Indeed, men’s hair is the main point of grooming focus and the prospect of a receding hairline or grey hair prompts many to take preventative action by using special shampoos or using herbal products. Young Iranian men are also big fans of accessories and most wear bracelets, necklaces and rings. The most popular symbol worn around the neck is the Fravahar, a glyph of ancient Persia. Scents are also very important in Iranian culture and men are known to use fragrances generously both day and night. Eyebrow plucking is a common beauty ritual for well-groomed men. Even reluctant men will often get coerced into ‘cleaning up’ their eyebrows by wives or female relatives. A recent article in the Washington Post newspaper noted “Hair gel and eyebrow plucking are staples for many Iranian men, who have plenty of hair to tame”. Men often sport elaborate hair styles and while there are reports of crackdowns on ‘funky’ styles the reality is that modern hair styles are so ubiquitous that restrictions would be impossible to enforce.

Men look for hair removal solutions Iranian men are naturally hairy and there is a growing trend among young men to maintain a hairless body, waxing their arms, chests, backs and legs. Most men who wax tend to do it at home with the help of a female relative as it is difficult to find salons that will offer the service. Those without the skill to wax at home often resort to shaving, despite the deeply held belief that shaving with razors will increase the thickness of hair when it regrows. The newest and most sought-after tool for some Iranian men is the epilator as using it takes less time and involves less hassle. Salons also offer epilation services for men.

More men undergo cosmetic surgery Iranian men are increasingly sporting the post-surgery bandages on their noses that broadcast that they have cosmetic surgery done. In years past, men would have been reluctant to have surgery or would hide it if they did. But there has been a significant shift in attitude in recent years. What is fuelling the demand is difficult to pinpoint, but many say that men want to look good and present the best version of themselves on social media where their romantic courtships often begin.

Chart 16 Grooming and Fashion Expenditure 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD

HEALTH AND WELLNESS

Attitudes To Health and Well-being Healthcare consumers can access private healthcare clinics as well as publicly funded clinics. Those covered by public insurance can apply by going to Iran’s social security organisation. If they are not covered by public insurance they can apply to the Imam Khomeini Relief Fund, a welfare organisation run by the Labour Ministry. It is estimated that 90% of the population has health insurance. In 2014 President Rouhani ushered in reforms that he nicknamed ‘Rouhani-care’ which ensured that public health insurance would cover 70% of drug costs and 90% of hospital costs. The Guardian recently reported that after this reform was enacted hospitals saw huge spikes in the number of patients. Before the introduction of reform, if patients required medication it was

up to the family to purchase it before the treatment. Now costs are completely covered by the hospital. Depending on the drug, prescriptions can be very costly in Iran. During sanctions many drugs were so scarce that prices tripled. Many have since hoarded medications to safeguard against another possible shortage. To be eligible for this coverage, patients must be hospitalised, but there are plans for coverage for out-patient treatments, as well. That said, many Iranians prefer to self-medicate and only see a doctor as a last resort. Public hospitals are run under the auspices of public universities. More affluent Iranians opt to use more expensive privately run hospitals. Many of the doctors who work in public institutions also work in private practices where they can charge much more for the same treatments. The Health Ministry has recently tried to intervene by making it easier for patients to issue complaints against doctors who charge excessive fees. The Guardian reported in 2015 that this intervention has had “little success in overcoming doctors’ opposition and in some cases lack of co-operation”. Obesity is a serious health issue in Iran. In 2015, 23% of the population was considered obese. Health experts trace this growing trend to consumers’ increased appetite for fast food combined with lower levels of physical activity. Diabetes is also a growing problem. A report from the government in 2015 projects that by 2040 nine million Iranians will have diabetes. The report also revealed that currently only one-half of the obese population are receiving treatment for obesity-related complications. In addition, according to a 2014 study, about 80% of Iranians have Vitamin D and calcium deficiencies. In 2014 schools began providing vitamin D and iron supplements to school age girls. Generally, daily vitamins consumption is growing in popularity. In 2016 the smoking ban—introduced first in 2007—was tightened and expanded to cover all public places, including parks, hotels and government buildings. Smoking in cars has been banned since 2006, but this is largely ignored. Smoking is fairly common in Iran (Bahman cigarettes are the most popular brand), but female smoking carries some stigma and is considered subversive behaviour. Despite an aggressive public health awareness campaign, smoking prevalence increased in 2015, reaching 26% of men and 4% of women. In 2014 Al- Monitor reported that the average age at which Iranians start smoking had fallen to 13 years-old. Very few young people in Iran would feel comfortable smoking in front of their parents, even if their parents are smokers, as it would be viewed as disrespectful.

Herbal medicines remain popular Iran has a strong tradition of using herbal medicines and in recent years there has been a sharp rise in their use. For example, rather than buying over-the-counter (OTC) flu medications, consumers are increasingly buying brewed pennyroyal, small-leaved plants of the mint family, an inexpensive, homemade remedy. According to a 2016 report from The Guardian, “Traditional medicine retains a prominent status in modern Iran: most households reserve a shelf for herbal essences, powders and tinctures”. Herbal medicine and modern medicine have coexisted in Iran for many years but after 2012, when sanctions made imported medicines scarce, there was a sudden spike in ‘attaris,’ shops that specialise in medicinal plants. The Guardian also reported that younger consumers were gaining a greater appreciation of herbal medicine.

Growing number wearing pollution masks In recent years it has become common to see more and more people wearing pollution masks in Tehran. Indeed, Iran suffers from some of the world’s worst air pollution. As VICE reported in 2015, “The air in the Iranian capital of Tehran has gotten so hazardous, the government is now cancelling school, banning outdoor sports, and urging all who can to stay inside”. Pollution is linked not only to bad health but many believe it makes people look older than they are. It is a

common belief that girls look older in Tehran than they do in the rural villages as a result of breathing ‘bad air’. Recent data reveals the Iran ranks 16th in the world for annual total deaths— 26,000—due to air pollution emitted from a combination of coal-fired plants, car emissions and the proximity to deserts.

Chart 17 Health of the Nation 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices

SHOPPING HABITS

Main Household Shop Generally, women are responsible for household food shopping. An interesting feature of the Iranian food shopping landscape is that only 3% of the country’s retail sector is ‘organised’ with the remainder consisting of traditional bazaars and small shops run by independents. Most consumers still shop at traditional small grocers. Some of these grocers do not even present prices on their products, although in the past year shops have been warned by the government that they risk fines if prices are not displayed. Bargaining between the consumer and the retailer is common during shopping in independent shops. A growing number of consumers are doing their food shopping at modern supermarkets and hypermarkets, enjoying the wider range of products on offer and the one-stop approach. While prices tend to be higher and there is no room for traditional bargaining, consumers nevertheless value the quality and the convenient locations, usually in busy residential areas or inside malls. The novelty of these modern food shopping venues is for many a source of fascination and excitement and has prompted some to simply window shop. Iranian consumers typically always buy fresh produce, usually from neighbourhood fruit vendors who they know and with whom they have developed long-term relationships. Fruit and vegetables are almost always bought in the morning hours for optimal freshness. Prices of fresh produce can vary greatly depending on the demographics and affluence of the neighbourhood. Online grocery shopping is essentially non-existent.

Shopping for Big-ticket Items and Personal Goods When considering big-ticket items, such as furniture, consumer electronics or silk carpets, consumers tend to do a lot of research prior to the purchase since there is a great deal of variation in prices and the fact that retailers rarely offer refund policies. Thus, a good deal of time is spent comparing prices and consulting with friends and family members in order to secure the best deal. In addition, consumers expect to realise further savings through the time- tested practice of bargaining. Consumers have a wide range of choices when shopping for personal goods. A recent article in the Financial Tribune noted “Depending on what you are looking for, there will be a multitude of places to go and many chances to compare prices in a highly competitive retail market. Every residential area in each city and town is mixed in with shops for at least everyday needs and usually more. In shopping, convenience is important to Iranians, but many go to extra lengths to get precisely what they’re after, forgoing the one-stop shop. If you need something specific, there are multiplexes full of arcades specialising in a particular commodity. Areas of each city are known to be ‘the place’ for computer parts and mobiles, ladies’ and men’s fashion, household goods and furniture, or children’s accessories. If it’s fashion and a particular brand you’re after, there are boutique-lined streets such as Jordan in Tehran or Chaharbagh Bala Street in Isfahan as well as Western-style malls uptown”. On the other hand, “the Iranian bazaar is still the beating heart of the economy, politics, society and, of course, shopping, in every city”. Shopping for clothing, footwear and personal items is considered by many consumers to be an enjoyable social activity and is an opportunity to solidify family and social bonds as Iranians rarely shop alone. Stores close fairly late in the evening (usually around 11pm) and are often closed for a few hours in the afternoon, especially during the hot summer months.

Consumers shopping for new cars face high prices and low-quality issues Iran’s domestic car industry is protected by government through high tariffs for imports and other means. But consumers shopping for new cars still find domestic automobiles expensive and, in many cases, plagued by low quality. A recent article in Al-Monitor reported the results of a consumer survey conducted by economic newspaper Donya-e Eqtesad which revealed that more than one-half of Iranian car consumers believe that the quality of domestic cars do not justify their prices. As a result of consumers’ perceptions, the two leading Iranian automakers, Iran Khodro Co. (IKCO) and SAIPA, suffered declining sales. According to Al-Monitor, “The situation began to deteriorate after a nationwide campaign called on citizens to boycott new domestically produced cars in protest of their low quality. Eventually, the government offered a stimulus package providing loans for potential consumers of Iranian-made cars. The package boosted sales without manufacturers needing to cut prices”.

Growing Number of Shopping Malls Attract Modern Consumers Consumers travelling abroad have often flocked to shopping malls to satisfy their demand for a wide range of personal products. Now, there has been an explosion of shopping malls across the country and analysts estimate that there are 300 new centres currently under construction, including boutique malls, mid-size malls and large ‘mega’ malls such as the Iran Mall in Tehran that offers shoppers an ice rink, hotel, exhibition centre, concert halls, gardens and multi-level food courts. According to a recent article in the Wall Street Journal, “Among Iran’s mall developers, the hope is to capture the boom in consumer spending at home before it goes to better-developed shopping destinations abroad”. Malls that cater to affluent consumers seeking luxury products can be found in the northern area of Tehran and they offer such brands as Cartier, Burberry and Tag Heuer. Many shops are designed to resemble those in Western malls and though the merchandise is authentic retailers

do not actually represent the brands. Rather, these retailers are resellers and the merchandise they offer is often double or triple the price consumers would pay abroad. This situation is expected to change as international retailers begin to enter the post-sanction Iranian market. A recent report from the BBC noted “After decades of austerity following the Islamic Revolution, middle-class Iranians have developed a taste for high-end designer goods, and for Tehran's young rich, shopping has become the new religion. ‘Exposure to foreign trends through travelling, the internet and satellite television has created a desire for branded products," says Bahar, a 30-year-old fashion blogger, adding ‘Showing off is a big part of the story. By spending huge amounts of money on big brands, well-off Iranians want to show they've made it’.

Online Shopping on the Rise A recent article in the Financial Tribune reported “With the largest number of smartphone and internet users in the Middle East, [Iran’s] e-commerce is growing faster than any other in the region. Using an old Iranian delivery method, shoppers can order online and expect delivery within hours by speedy motorcycle delivery man—the peyk—for a cost not more than postage”. But internet retailing still accounts for a small proportion of retail sales. A great number of consumers, particularly older consumers, are still wary of online financial transactions or lack the skills to shop online. While many use their debit cards to pay for their online purchases, many others continue to be frustrated by payment schemes which sometimes require them to literally take bags filled with cash to pay for the big-ticket items that they have bought. What e- commerce there is has been facilitated by partnerships with Iran’s National Post system. Only recently a tracking consignment system was introduced to help consumers track the purchases they make online.

Chart 18 Where Households Shop for Essentials 2000-2019

Source: Euromonitor from trade sources/national statistics Note: In Constant 2015 prices

LEISURE AND RECREATION

Leisure Time Iranians tend to spend the majority of their leisure time at home with their families. Popular activities include watching television and, more recently, visiting social media sites on their home computers or their smartphones. The Telegram app is the most popular social media platform, followed by Instagram. Facebook and Twitter are blocked, although ‘filter breakers’ are easily obtained. Indeed, nearly all Iranian politicians, including the President and Supreme Leader, have official Twitter and Facebook pages. A recent article on the website techcrunch.com assessed the digital landscape in 2016. “Consumption levels of social media have completely changed gears in the country. Twenty- nine percent used to spend at least 1 hour a day idling away through myriad postings. That figure has now skyrocketed to 62%, of which 22% spend more than three hours a day on social media. Posting photos at least once or twice a day has multiplied threefold, from 7% to 25%”. The article went on to note “Instant messaging has taken the country by storm, just as it has the rest of the world. Thirty-eight percent are using instant messengers like Telegram and LINE several times a day, compared to 12% back in 2012 when 3G had yet to be fully released across the telecom sector...Smartphone activity in general has spiked across the board for everything except checking emails (55% versus 40% in 2012), which has grown modestly through the years compared to other activities. Iranians are using their mobile device daily for instant chat (60%), downloading apps (60%), reading the news (60%), watching video clips (59%), playing games (54%) and streaming music (45%)”. Satellite television services are banned but nearly everyone has access. Iranians watch state- run channels as well as Farsi-language news and entertainment shows that broadcast from Los Angeles and London. Hollywood films, dubbed in Farsi, are also available on satellite channels. For the most part, Hollywood films are not shown in Iranian cinemas, which nevertheless attract a large number of movie-goers by showing domestic films. When Iranians are not at home with their families they are usually out in parks during the evenings. Nearly every neighbourhood in Tehran has a park and they are typically brimming with people.

Consumers Relax by Rock Climbing Mountain hiking has long been popular as it is considered a way to escape the stress of urban life. The latest trend is rock climbing as a form of exercise, especially among women. There are 200 professional female rock climbers in Iran. Iran has two main mountain ranges, the Alborz and the Zagros. In 2016 a video of an Iranian athlete, nicknamed Spiderwoman, winning a competition in Spain went viral in Iran. For those who can’t make it to the mountains, an increasing number of clubs offering indoor rock climbing continue to open.

Vacations Iranian holiday-makers tend to take domestic vacations. Among the most popular destinations are the religious city of Mashhad and the cultural capitals of Esfahan and Shiraz. Iranians also love to go by the beach and ski in the winter. Again, destinations are nearly always domestic. Travel by car is the most common means of reaching vacation destinations. Entire families are often packed into cars and regularly stop in green spots on the highway for lunch and breaks. The peak holiday travel season occurs during the two-week festivities of Persian New Year, which begins on the first day of Spring. On average, 35 million Iranians travel during this period. Many Iranians, especially young Iranians, aspire to travel to the West. However, visa restrictions make that very difficult. When travelling abroad, Iranians tend to visit holiday destinations in visa-free countries such as Turkey and the United Arab Emirates.

Public Holidays, Celebrations and Gift-giving The most important national holiday is Persian New Year and festivities of this two-week celebration drive the high point of consumer spending during the year. The holiday falls on the first day of Spring, March 21, also the first day of Iran’s calendar year. Among other purchases, Iranians follow tradition and invest in an entire new outfit to be worn on the first day of the year. In addition, demand for hair styling and other beauty treatments is high. As for children, tradition dictates that adults give them cash as New Year’s gifts. This is also the time of year that most workers receive bonuses from their employers. These and other factors contribute significantly to traditional high levels of consumer spending during this period. There are numerous religious holidays and commemorations celebrated throughout the year, including Ramadan and Ashoura. Religious holidays are usually marked by the sacrifice of a sheep on the street and the resulting meat is distributed throughout the community, especially to the poor. When Iranians visit friends’ homes for dinner parties or other gatherings, they never go empty-handed. Typically, they bring small gifts for their hosts, often flowers or a dessert to be enjoyed later in the evening. Greeting cards have been popular in past years but they are increasingly being replaced by e-cards.

Ski resorts are popular leisure destinations For middle-class holiday-makers, skiing has long been a much-beloved leisure activity. Two hours north of Tehran is Dizin, the most popular ski resort in the country. Dizin offers visitors only two hotels but it is surrounded by smaller chalets which are popular and affordable. CNN recently reported that Iranian ski resorts Dizin, Shemshak and Tochal are up to international standards. Many young Iranians have said they love skiing because up in the slopes Islamic restrictions on dress are relaxed and some feel a greater sense of social freedom.

Travellers increasingly taking luxury rail trips Overnight luxury trains have been gaining in popularity in recent years, notably the Golden Eagle which travels between Tehran and Moscow. The Golden Eagle provides old-Hollywood glamour and leisurely travel. The service is the first European-operated luxury train available within Iran. The Financial Times reported in 2014 that luxury train travel is a draw for tourists as well as locals who can afford the experience. Equally charming but less expensive is the Trans Asia Express, a luxury train that travels between Iran and Turkey.

Chart 19 Possession of Selected Home-Tech and Mobile Phones 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices

GETTING AROUND

Private Transport Iranians in rural areas tend to rely on private transport more than their urban counterparts. Parking is free or inexpensive in Iran but difficult to find in the congested downtown Tehran core. Generally, congested fraffic is one of the biggest frustrations amongst consumers. To try to remedy congestion, certain zones in Tehran operate car ‘rationing’ based on license plate numbers, i.e., whether they end with an odd or even number. While there is a domestic car manufacturing industry in Iran, consumers generally prefer foreign cars—if they can afford the the significantly higher prices—due to perceived quality issues with domestic cars. In an attept to boost demand, according to a recent article in Al- Monitor, the government is offering loans to consumers who buy domestic cars. Regardless, driving a foreign-made car is considered a sign of affluence. Indeed, import taxes can increase the price of a car by 150%. Officials occasionally publically stigmatise those who drive foreign luxury cars. In a Friday sermon in 2016 Ayatollah Khemenei (Iran’s Supreme Leader) derided young people who drove expensive cars, saying that the preference for expensive foreign cars was due to “identity crises and bad education”. In March 2016 a new law that guarantees that women and men receive equal compensation from car insurance companies, a welcome development for Iranian women drivers. Most drive smaller cars and motorcycles to get around due to their cheaper prices. While illegal, it is not uncommon to see a small family riding on the back of a tiny motorcycle on Iran’s freeways. There are laws mandating helmet use but they are rarely abided by. Pedestrians constantly complain about reckless motorcycle drivers and there are often stories in the media about how reckless motorcyle drivers make the roads unsafe. Women do not ride motorcycles.

Chart 20 Getting Around on Private Transport 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices

Public Transport Travellers consider Tehran’s metro, with five operating lines covering 180 kilometres of track, a convenient way to get around. By 2018 two more lines will be added, expanding the coverage. Iranians generally take pride in the metro and its cleanliness and reliability. Fares are about the equivalent of US15 cents. On certain religious holidays, the metro is free for travellers for a few hours. The metro offers both mixed-gender sections and women-only sections. During rush hour, passengers often find the mixed-gender section packed to capacity, with the women-only section offering many seats. Other cities in Iran also have metros or are in the midst of building them. In urban areas, Iranians can also use the bus system to get around. In 2008 the Tehran Bus Rapid Transit system was opened with eight routes and it now serves over one million people a day. Trains and buses that travel between major cities are very affordable with one-way fares usually priced between US$5 and US$15. Economy-priced rail services between Iran’s urban centres are known for being very comfortable, reliable and safe for women travelling alone. Overnight trains offer meals and are particularly attractive for large groups travelling together. Press TV reported in 2015 that the government intends to invest US$8 billion over the next six years to expand the country’s rail network. Travelling by taxi is very affordable. There are official taxis and unofficial taxis, i.e., drivers who stop and pick up passengers and negotiate a price for the journey. These unofficial taxis are very popular, especially during the daytime. Passengers can also ask street taxis for the ‘closed door option which is pricier but guarantees that no other passengers will be picked up until you reach your destination. These shuttle taxis are generally considered safe, highly affordable and convenient. The cost of ordering a taxi to come pick passengers up (called agence taxis) is about triple the price of a street taxi. Many opt for agence taxis during the evenings because they are considered safer. Additionally, women may request a female driver when they order an agence taxi.

Commuting The time commuting to school or work can vary considerably depending on traffic. When the roads are gridlocked in Tehran, for example (which is common), a trip normally taking 20

minutes by car can take up to two hours. Indeed, congestion is a problem regardless of the time; gridlock can even occur well past midnight. Travelling between cities, domestic airfares are relatively cheap but flights can be very stressful due to the dismal safety record of Iranian airlines. Sanctions did not allow airlines to update their Soviet-era planes. Indeed, one of the reasons Iranians were so keen to see the nuclear deal succeed was that it could potentially pave the way for Boeing to enter the country, a prospect that is highly appealing to all Iranians. Tehran residents often complain that walking around the city can be a stressful experience. Pedestrians must always be on high alert to avoid aggressive drivers when they walk on sidewalks or cross the street. Some opt to take taxis, even for short distances, to avoid this stress.

Car-Free Tuesday campaign promotes cycling Few if any commuters ride bicycles to work. In fact, a religious decree issued in 2016 forbade women from riding bicycles in public at all. It remains to be seen whether this decree will actually be enforced. Regardless, a campaign called ‘Car-Free Tuesdays’ has been developed in an attempt to convince Iranians to walk or ride their bicycles to work to combat air pollution. In 2016 Isfahan became the first city to implement this Car-Free Tuesdays. The municipality banned vehicles from a major street from 4pm to 10pm to encourage residents to walk or ride they bicycles. The Tehran Times reported in 2016 that Isfahan, which is the second most- populous city in Iran, is projected to become a “city of bicycles” with plans are underway to enhance awareness of the benefits of cycling and the creation of bicycle-friendly streets and roads. It remains to be seen whether the recent ban on female bicycle riders will continue or be overturned. The campaign is now being introduced in other cities.

Big motorcycles are back Motorcycles with engines greater than 250 cubic cm were banned after Iran’s 1979 revolution, and only members of the police force and army could use them. In 2015 these strict laws were relaxed to allow bike enthusiasts an opportunity to buy and ride bigger bikes. Restrictions still exist. For example, big bikes can only be driven in certain areas of Tehran and only during daylight hours. Owners need a special license and need to give their bikes security checks. Since the restrictions were relaxed, it is not uncommon to see Harley Davidson and BMW motorcycles on the high-end streets as big bikes have become the newest status symbol. Ordinary Iranians love these big motorcycles and if one passes them on the street they stop and stare and kids wave. Reuters reported in 2015 that the Tehran Motorcycle and Car Racing Association is “lobbying to bring down import tariffs on sports bikes to 6% from 100%”.

Chart 21 Getting Around on Public Transport 2000-2020

Source: Euromonitor International from national statistics/Eurostat/UN/OECD Note: In Constant 2015 prices