By Panos Linardos
On the eve of the Retail Leaders Circle MENA, the industry is looking at how best to embrace technology to remain relevant
The retail industry in the Middle East today is facing the threat of disruption due to a plethora of technological innovations.
With the rise of e-commerce and omnichannels, the introduction of Aramex’s Shop&Ship, and the increased focus on personalised customer experiences that meet the changing consumer expectations and behaviour, retailers must now compete at every touchpoint.
Globally, the retail market in the GCC is in a unique position as it continues to grow as new state-of-the-art malls and destinations open. While the US has around 1,100 malls operating today, a quarter of them are at risk of closing over the next few years, according to analysis from Credit Suisse.
In comparison, the UAE alone is expected to welcome around 1,184,000 sqm of new retail space by the end of 2018. Recent announcements have been made about Nakheel’s $1.2bn mall on the Palm Jumeriah being 85 percent complete, while the world’s first nature-inspired mall, Cityland Mall, has confirmed its launch date for Q4 2018.
Consequently, the Dubai Chamber of Commerce has predicted that the UAE retail sector is projected to expand at a CAGR of 4.9 percent and reach $71bn by 2021.
So how will technology disrupt the expanding retail landscape? To answer this, we must explore the customer journey.
Again, the Middle East differs from the rest of the world in that its harsher weather conditions mean that shopping malls have become leisure destinations, featuring retail, dining, entertainment and service outlets. Additionally, rising tourist numbers and a growing population have ensured that footfall continues to rise and malls become a flourishing ecosystem of society.
Now, the main challenge for retailers is competition. Customers are visiting the mall but brands now must entice them to shop. Research has shown that the victors will be those retailers that are able to adopt technology to enhance the overall customer experience.
Zara, for example, recently reduced delivery times for their Click & Collect service by introducing robots, while Sephora revolutionised the cosmetics industry with its Virtual Artist mobile app.
At the Retail Leaders Circle event this month, Vijay Talwar, president of digital for FootLocker, will give a talk entitled, “Stores are Power: Leverage your Footprint with Current Platforms to Boost your eCommerce Business”. It will educate retailers on how they can successfully leverage locations, technology, people and processes to lead their physical store’s digital transformation and capture a new wave of consumers.
Overall, it is impossible to ignore the rise of e-commerce, which in the Middle East will be worth $69bn by 2020. However, what differentiates online purchasing from bricks and mortar is the individual shopping experience and a strong customer connection driven by superior service.
Technology can be the solution to capturing customers’ attention and securing brand loyalty. Retailers can gather information about their customers to provide a bespoke service, connect with them using omni-channel marketing and streamline business models to maximise profits, all by leveraging market innovations and adapting their corporate culture.
There are also benefits of blending these two channels. The Chalhoub Group recently announced a partnership with FarFetch, which will offer its VIPs a personal shopping service to source limited-edition items to offer an unparalleled luxury shopping proposition.
It has shown that, regardless of the purchasing method, today’s customers are focusing on value and looking for a distinctive experience, and retailers must listen, adapt and evolve in order to thrive.