By Sarah Gain
Despite the cancellation of January's Dubai Shopping Festival, the region's retail sector is flourishing. Sarah Gain checks out how IT is helping to create the ultimate customer experience.
|~|burjuman200.jpg|~|Using Wi-Fi in the mall, BurJuman is hoping to directly influence its customers' buying behaviour.|~|The construction boom across the region, and particularly in the UAE, offers myriad opportunities for retailers. An astonishing number of shopping complexes and malls are being planned in the next few years, and the regional industry sales volumes are expected to reach US$500 billion by 2010.
"This rapid expansion in the region's retail sector has given retail organisations more space to showcase themselves and hence more avenues to access customers," says Ranjit Rajan, marketing and channel development manager for Epicor Software Corporation in the Middle East & North Africa. "While this scenario offers retailers great opportunities, it also brings with it a great number of challenges."
In this lucrative industry, local players are transitioning from high-street shops to custom-designed shopping complexes. The market is also witnessing the expansion and sophistication of branded store networks by many major retailers. In addition, the wealth of opportunity has attracted a large number of multinational retailers into the region. According to the organisers of the annual Retail Middle East exhibition at Sharjah's Expo Centre, in Dubai alone, at current demographic levels, the available retail facilities would require every man, woman and child to spend around US$7,800 annually to sustain an overall average sales figure of US$3,500 per square metre per year.
"The boom in the retail industry makes retaining customer loyalty and ensuring satisfaction some of the biggest challenges retailers face, and these issues are high priorities for all businesses, not only in the Middle East but also on a global scale," says Wayne Hull, regional sales manager for Cisco in the Gulf, Afghanistan and Pakistan. "Customers are spoilt for choice and are becoming more demanding. So, in the battle to win market share, most businesses are turning to technology to help enhance the consumer experience."
Dubai's BurJuman shopping centre, part of the Al Ghurair group of companies, has launched a pioneering Wi-Fi network, which will enable shoppers to receive information on stores and services within the mall direct to their mobile phones, PDA's or notebook computers. The network offers a host of opportunities for mall tenants looking to promote their brands. Using interactive and rich media advertising methods available on the network, tenants can attract their target audience through ticker ads, button ads, e-coupons, games and mini-sites. ||**|||~|ranjit200.jpg|~|Rajan: Rapid expansion in the retail sector has given companies more space to showcase themselves.|~|"BurJuman's Wi-Fi channel enriches the shopping experience by making numerous services accessible and keeping the shopper informed of current events and promotions. A distinct feature of the system is its ability to serve highly relevant content to the visitor," explains Hatem Alsibai, chief information officer for the Al Ghurair Group.
"The system uses state-of-the-art technologies to determine what content would be interesting to each shopper. As customers become more comfortable, and realise how easy the system is to use, we will start to add more features. Our goal is to release one new feature every month," he adds.
The BurJuman is the only Wi-Fi mall in the world to offer localised content. By deploying this type of wireless network ahead of its competition, the mall wants to make a stronger connection with its customers and position itself to directly influence their buying behaviour. Cisco's Hull believes it will not be long before other organisations follow in BurJuman's footsteps.
"Intelligent retail solutions offer a value proposition for companies, and demand for state-of-the-art technology in the region is exploding," he confirms. "While these types of implementations deliver tremendous benefits in terms of customer service and satisfaction, retailers must ensure they have good foundations in place. Businesses need to have a strong technology platform in place in order to support any enhancement projects, and the company's systems need to be fully integrated or else costs will spiral out of control," he cautions.
Aware of this need for a sturdy technology backbone before the business is able to move on to bigger and more ambitious customer-facing projects, many of the region's retail CIOs are currently concentrating on fundamentals. "Companies need to take it step by step, and the first step is to ensure management is able to have up-to-date, accurate and detailed information about what's happening in the business," says Tarek Hassaniya, Middle East sales manager for Symbol Technologies. "From an IT perspective, the focus is on scalability and functionality."
As part of its strategic plan to improve operational efficiency, boost reporting capabilities, and support future growth across its nine retail showrooms in the UAE, Grand Stores is deploying E-Business Suite modules from Oracle. The project aims at automating a number of key business functions, including finance, purchasing, inventory management, and sales and marketing. The company, a leader in the marketing and distribution of luxury brands, hopes the improvements will provide a suitable platform on which to build in the future, according to George Matthews, the company's systems analyst. "With this implementation we are laying the groundwork for future projects," he says.
Supermarket giant Carrefour also is looking to Oracle technology to power 20 stores it plans to open in the Kingdom of Saudi Arabia as part of a massive regional expansion plan. The French chain, the world's second largest retailer, is already a global user of PeopleSoft enterprise resource planning (ERP) software and plans to implement an ERP based on Oracle's PeopleSoft JD Edwards solution to run its financials for the new stores. Currently, Carrefour has just three stores in the Kingdom, but the company intends to open a further 20 stores in the next five to 10 years, according to the supermarket's website. ||**|||~|hull200.jpg|~|Hull: Customers are spoilt for choice and are becoming more demanding. |~|
"Carrefour is going for a very large expansion in Saudi Arabia," reveals Laurent Amestoy, regional manager for the Middle East and Africa (MEA) region at R&M, the Swiss-based company that provided cabling to the three existing stores. The company has three more such projects in the pipeline. "They have done three but they are going to expand very rapidly to 12, then 20 shops," he says.
R&M is working with a local partner, systems integrator Softnet, to implement Category 6 structured cabling systems, a level of standard which future proofs the installation so that, if new applications come out in the future, the cabling system will support them. Softnet is now working on installing cable at Carrefour's fourth store in Jeddah.
"Using the R&M cables we have linked together all the different points of sale to the computer system to control stocks and sales," says Wissam Ashker, sales manager of Softnet. "For the networking we've installed all the switches and connected all the supermarkets to the head office in Riyadh. They have everything electronically controlled," he explains.
One of the long-term strategies that most Middle Eastern retailers are building towards is the capacity for e-commerce. Once the base technology is in place, and both front- and back-end systems have been fully integrated, attentions will turn to catching up with Europe and the US in terms of their online trading activities, although companies will have some distance to go, and a number of hurdles to overcome, before this line of business really takes off.
"I would estimate that it will be another 12 to18 months before the majority of stores in this region become more sophisticated, and before they have the necessary systems and integration in place to begin to consider other trading platforms," says Cisco's Hull. "But e-commerce offers a number of logistical and financial benefits and is undoubtedly an avenue that many will explore."||**|||~|rae200.jpg|~|Rae: For many businesses a complete revamp of their IT infrastructure will be necessary.|~|Despite the recent establishment of a Gulf Committee for e-Commerce, which will be based in the UAE, e-commerce turnover in the region is still relatively low. According to findings from the UAE Ministry of Economy and Planning, the total turnover is around US$10 billion a year in the Gulf and Arab region - about 1.5% of total GDP for the region, compared to a global average of 5% to 10%.
Possible reasons for these disappointing figures were discussed at the GCC Conference on E-commerce in November 2005. Suresh Rajagopalan, senior vice president and head of IT at First Gulf Bank (FGB) and a speaker at the conference, says there are several key areas to focus on in order for e-commerce in the region to move ahead. One is the automation of organisations' internal processes, which he agrees is needed before firms can offer truly personalised services to their customers. Another is the need for greater e-commerce understanding and awareness, through more comprehensive education programmes. Finally, there is what Rajagopalan calls 'straight-through' processing - having systems in different organisations, such as banks or government departments, directly linked rather than exchanging files manually.
"[Another] very important task is building a legal framework across the GCC region," says Rajagopalan. "It's vital that laws across the countries are all aligned towards the same goal, otherwise it becomes very hard for enterprises to operate in several different countries, or offer e-commerce services throughout the region, instead of in just one country."
Perhaps the most significant barrier to internet shopping is the low PC penetration in the region as a whole. Dubai-based Madar Research found that 500,000 more PC units would have to be purchased in the Middle East for the region to meet the global average ratio of 472 PC unit sales for every US$100 million gross domestic product (GDP). If companies want to get around this issue they have to think of ways to tailor the traditional e-commerce models to regional strengths and preferences, according to Ronaldo Mouchawar, managing partner of Souq.com, an online auction house in the UAE and Jordan.
"The traditional model [of e-commerce] may have worked in Europe and the US, but at this time, I don't believe this region is ready to take the same approach -not yet, at least," says Mouchawar. "For instance, internet penetration may be low in this region, but mobile phone penetration is very high - this is why we've integrated mobile services with the website to keep our customers up-to-date on the auctions even while they're offline," he explains.||**|||~|mouchawar200.jpg|~|Mouchawar: Alterations are needed for e-commerce to fit the Middle Eastern market.|~|Souq.com is one of the Maktoob Group of companies to have been a pioneer in a number of diverse e-commerce fields. The organisation launched the world's first Arabic/English online auction, 'MazadMaktoob', in 2000. This has since evolved into Souq.com, with the help of another of the Maktoob Group's innovations, CashU, an online payment card developed with the demands of the Middle Eastern market in mind and which now is generating millions of transactions worldwide. The website also offers a cash on delivery option.
"There is still a lack of trust [in the Middle East] when it comes to paying with credit cards online. Personally, I believe this is groundless, but we have simply had to accept this and work with it," Mouchawar explains. "While we are still working to build the company's reputation, and concentrating on building customer satisfaction and familiarity with the site, our current methods of payment work well for us. We will start to introduce a credit card payment option, hopefully by the second quarter of this year, and I'm confident it will take off, but we have to take things gradually for now."
For retail CIOs, the message is clear: don't try to run before you can walk. Experts agree that understanding the market you aim to serve, and the limitations of your existing systems, is the only way to ensure profitability in the long term.
"Retail organisations require a robust management system and IT investments need to be aligned with the company's expansion plans. For many, this will have to start with a complete revamp of the IT infrastructure," advises Chris Rae, director of SourceIT Distribution Solutions. "While it is tempting to try to keep pace with the big retailers in the US or Europe - especially as more of these players enter the market - this will only lead to greater pains in the future. Local retailers have to remember that their local knowledge is their unique selling point."||**||