By David Tripney
Digital innovation is revolutionising the retail landscape in the Middle East - and not only online
The growth of retail in the Middle East has been nothing short of remarkable. London, Paris, Milan and New York still inevitably dominate the global shopping scene, but as pioneers in the retail space, emerging markets such as the Middle East are becoming very much the watchword for innovation.
But whilst the retail scene is a crucial catalyst for attracting footfall in the Middle East, as the digital economy develops, bricks-and-mortar locations need to evolve to stay relevant for future decades. Technology clearly plays a central role in this. With the rise of e-commerce in the region, it is now more important than ever that the physical mall develops and keeps apace with the changing demands of the consumer.
Take the success story of Majid Al Futtaim’s Mall of the Emirates, for instance. One can easily spend a day inside Mall of the Emirates; you can eat, drink, go to the cinema and even go skiing all before you have even thought about shopping. And this experience is far from unique. The Beach in Dubai’s Jumeirah Beach Residences (JBR) also seamlessly integrates commerce and entertainment, combining shopping, the sea and an outdoor cinema.
With the UAE’s population expected to grow to 10 million by 2030, aided by more expats and Expo 2020 tourism, the retail destination/proposition as an integrated social, entertainment and leisure destination is likely to boom. After 50 years of operating in the region, this is something Atkins is seeing more of — both in the retail space and wider sectors.
A blurring of lines, with buildings becoming multi-functional and multi-faceted can be seen in some of the region’s most important projects, such as the Burj Al Arab, Bahrain Trade Centre, Durrat Al Bahrain and the Dubai Opera. Creating an integrated retail and leisure centre destination is critical to fuse the social and urban space. And it is the customer experience that is driving this approach.
Motorola, for example, has created a personal shopping device where shoppers can scan their items as they select them, significantly reducing checkout time. Beauty retailers such as Sephora are experimenting with a virtual reality mirror, enabling shoppers to test different eyeshadows and lipsticks without applying them to their skin.
Big data will help retailers understand and market to their consumers better, suggesting products that may be relevant even before the customer has walked through the door.
All of these aspects will make the physical retail outlet more efficient. Checkout space will be reduced because customers will be able to complete transactions virtually from inside the dressing room or on their mobile phones, eliminating the need to queue.
Whilst e-commerce is growing in fortitude in the region (bolstered by the likes of Amazon’s acquisition of Souq.com), we still see the need for interaction with the product. The Middle East has a culture that favours the personal experience, and so whilst technology won’t replace this, it can still absolutely enhance it.
What we predict in years to come is how the experience will change. For example, instead of going to a car showroom to see a range of models, customers will be able to interact with virtual car models instead of physical ones. The need for an extensive physical stock may become redundant, thus streamlining and reducing the retail space to make it more profitable.
Car parks may also become redundant. The real estate footprint for car parks alone is currently extensive and costly. In the future, we will see more sophisticated transport offerings, with an increased choice of public transport, and autonomous vehicles reducing the need for large amounts of land dedicated purely to the housing of private cars. And less space for cars means more space for retail and opportunities to generate more revenue.
But of course, whilst there are numerous opportunities that technology presents to the Middle East retail sector, this is not without its challenges. Unlike their developed counterparts, shopping destinations in the Middle East have one major issue to contend with: the climate. With temperatures well into the mid-40s in the summer months, how should retailers respond to the natural environment?
This poses both a problem and an opportunity. Whilst shopper footfall increases in the summer as tourists and residents seek sanctuary in the cool environments of the malls, engineers and designers need to ensure that all adjoining infrastructure is set up to cope with the extreme temperatures.
Customer experience and comfort fundamentally remains key. Most amenities need to be enclosed, with covered walkways and transport infrastructure located close by. Those shopping areas that have outdoor elements, such as Citywalk and Boxpark in Dubai, require careful thought and planning to ensure they remain attractive, year-round destinations.
The future of retail in the Middle East is far from a one-size-fits-all approach. The digital world is fundamentally changing the way we shop. No longer are malls simply a collection of physical stores or somewhere to go for a few hours at the weekend; they are becoming fully integrated communities that fuse together social and urban environments. For the Middle East to compete on the world stage, it will be vital that the retail sector embraces digital innovation offline as well as online.