We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Sun 10 Mar 2019 04:18 PM

Font Size

- Aa +

The opportunities are clear for retailers in the Middle East

Retailers in the Middle East must offer a seamless shopping experience in order to succeed in 2019, writes Panos Linardos, chairman of Retail Leaders Circle MENA

 The opportunities are clear for retailers in the Middle East
The e-commerce market in the Middle East is projected to be worth $48.6bn in 2022, according to BMI Research

The retail industry is not ripe for disruption. It has already been disrupted. Caused largely by the confluence of evolving technologies and changing consumer preferences, the tough retail climate saw many well-known brands such as Toys R Us and Sears either shut down completely or close dozens of stores in 2018. Closer to home, one of the Gulf’s oldest fashion retailers, Sana, ceased operations after 30 years.

However, this is only half of the picture with global retail spending still growing at about 5 percent per year from 2011 to 2016, according to Deloitte.

While it is true that online retail spending has grown exponentially, offline retail isn’t on a downward trend – it is just growing more slowly. But it has a larger market share. KPMG predicts that as at January 2019, 90 percent of all retail is still done in retail stores. The challenge for brands is how to increase sales in the new, highly competitive and complicated retail world and to effectively balance investment and attention of e-commerce with traditional bricks and mortar offerings to reach their customers.

By mining data, retailers can more accurately analyse customer preferences and expectations

Achieving this delicate equilibrium is no mean feat with brands having to maintain a plethora of digital channels including their website and multiple social channels, in addition to stores to capture the attention – and wallets – of consumers. Rather than being the primary point of sale, bricks and mortar stores are transforming to being just one component of a broader retail strategy used to capture and convert leads.

This is largely due to the changing way consumers make shopping decisions. BigCommerce’s latest Omnichannel buying report showed that 78 percent of global respondents made a purchase on Amazon, 65 percent in a physical store, 45 percent on a branded online store, 34 percent on eBay and 11 percent on Facebook. This shows that consumers are shopping in different places at the same time. With an elongated customer journey and multiple entry points, there is the additional challenge of how to streamline fulfilment across numerous channels. This requires a deeply integrated omni-channel approach, providing a seamless experience for customers.

The opportunity for Middle East retailers in the e-commerce market is clear. BMI Research forecasts the e-commerce market in the Middle East to be worth $48.6bn in 2022, up from an estimated $29.6bn in 2018. And while shoppers in the UAE may have been (comparatively) late adopters of e-commerce, a recent pool of UAE residents by payments company Visa revealed that 66 percent of shoppers are now happy to buy online, which increases to 81 percent for Emiratis.

And while e-commerce is here to stay, successful brands are providing not just a location to pick up goods but an experience not possible online. Experiential retail attracts consumers by giving them new and interesting reasons to visit a store. For example, Sephora’s makeup classes or Apple’s tutorials combine retail with education to further ingratiate their products with customers while sports stores such as GoSports are installing facilities including climbing walls to keep customers in their stores longer. Whatever retailers choose to do, experience per square foot is becoming an increasingly important metric.

There is an opportunity for smart retailers to increase market share by leveraging data to know their customers better

E-commerce enables brands to know their customers better. By mining data, retailers can more accurately analyse customer preferences and expectations, whether that be the most popular times for online shopping, popular product groupings or average time spent shopping. This will help to build stronger relationships and ultimately understand more about customer behaviour, helping retailers to more accurately provide and meet customer needs.

Despite the challenges, the UAE continues to attract international brands, with a CBRE report revealing that Dubai is the second top destination for new market entrants in the retail sector, surpassing historical hotspots including New York, Tokyo and Paris. However, with 1.5 million sq m of new retail space due to open in Dubai by 2020, adding approximately 50 percent of the existing inventory, mall operators are going to have to spend more time – and money – curating experiences to compete for footfall. It is true that malls in the Middle East region have the advantage of providing a cool escape from the heat of the summer but with one of the highest number of shops per capita in the world, customers are spoilt for choice in the UAE.

Yes, the retail industry is distinctly different from ten years ago. And yes, it is being disrupted. But with retail spending on the rise, there is an opportunity for smart retailers to increase market share by leveraging data to know their customers better and choosing the best channel to reach them, whether that be a traditional shopfront, a standalone digital presence or a hybrid which provides a seamless shopping experience for customers.

Panos Linardos, Chairman of Retail Leaders Circle MENA

Arabian Business: why we're going behind a paywall

For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.