By Bernd Debusmann Jr
Faced with dwindling numbers of customers at brick-and-mortar locations, retailers have had to adapt to new digital realities in the age of the coronavirus
“Nobody was prepared for a worldwide, pandemic crisis that would disrupt the whole system,” says Hani Weiss, the CEO of Majid Al Futtaim Retail. “But what we’ve seen is changing customer habits.”
Majid Al Futtaim Retail, which in 1995 launched the venerable Carrefour franchise in the UAE, is currently in a situation that will likely feel familiar to the bulk of the country’s retailers amid the ongoing coronavirus pandemic: falling numbers of in-store customers and rapidly rising demand on e-commerce platforms.
Faced with customers wary of entering crowded shopping centres – and who are now in many cases formally forbidden by authorities – retailers around the country have been forced to adapt by increasingly turning to e-commerce in an effort to make up for losses.
Take Jumbo Group, the decades-old UAE electronics retailer that has more than 50 locations across the country. Despite a precipitous drop in in-store customers, the firm has seen an approximately 200 percent rise in online orders during the virus outbreak.
Forced to adapt, the chain has recently launched a curbside pick-up option in which online options are prepared within two hours of notification and employees meet customers in parking areas – away from other people.
“We launched this across all our stores several weeks ago, and we immediately saw a surge in orders,” explains Pankaj Kumar, the head of omnichannel retail at Jumbo Group.
Other retailers – particularly those dependent on now shuttered shopping centres – will be increasingly forced to turn to online retail in the weeks and months ahead.
Recognizing this need, Emaar Malls has offered retailers at The Dubai Mall a place as a Noon.com-powered ‘virtual store’, as well as on Namshi.com.
The initiative is expected to move to other malls in the coming weeks, particularly given the fact that UAE authorities have closed malls as part of a larger effort to stem the spread of the virus.
“The Covid-19 situation and its impact on the global economy call for us to rally our strengths and identify new measures that take into consideration the social and economic realities,” an Emaar Malls spokesperson explains. [The virtual store] will particularly benefit SMEs and start-ups that do not have an active online presence, as well as larger retailers who now have an added channel to drive sales.”
In other cases, the rapidly changing situation has forced retailers to think on their feet and find new ways to provide what their customers want. Nowhere has this been more apparent than at Carrefour, which saw online orders surge a whopping 300 percent year-on-year as a result of UAE residents stocking up on supplies – ranging from food and hygiene products to freezers and printers - as a result of the Covid-19 virus outbreak.
Faced with the prospect of worried customers facing delays – or shortages – the company quickly moved to change the way it operates to reflect the realities of the challenging era.
“We had to change our operating model. In my opinion, this crisis is clear evidence of how leadership can be agile enough to cope with rapid changes,” Weiss explains. “What we’ve done is increase our capacity.”
To do so, Carrefour transformed the majority of its supermarkets and hypermarkets into “mini-fulfillment centres” that cater to orders of all sizes. “One of the things I’m proudest of is that the team was agile enough to transform 2,000 metres in one of our stores – which wasn’t performing very well – into a fulfillment centre that can cater to 2,000 additional orders,” Weiss adds. “We had to do that in less than five days. We had to make sure we live up to our commitment.”
In Carrefour’s case, Weiss believes that the changing habits of its customers is a new reality that the company will continue to have to live with, even long after the looming prospect of the coronavirus and the restrictions that have come along with it are long gone.
“Nobody [around the world] has recovered yet, and nobody has been able to come back to their previous life. But what’s for sure is that in the UAE we have a great opportunity to change customer habits,” he explains hopefully.
“Customers are now used to mobile apps and web stores, and I [foresee] that it will be very difficult for them to come back to enjoy normal shopping experiences as they did in the past. They’ll find [online shopping] much more convenient.”
In the short-term, however, many retailers will be struggling to offset the losses being suffered at brick-and-mortar locations. Jumbo Group’s Kumar, for example, says that even the company’s 200 percent increase in online orders is far from enough to compensate for the declines the company has faced as a result of the coronavirus.
In value terms, that value loss is not equivalent to the value gain in online sales,” he says bluntly. “The scale is very different.”
So what can retailers do to get through this difficult period? At a wider level, there have been increasing calls for more collaboration between retailers and landlords to soften the blow caused by the coronavirus. As Gulf Marketing Group chief executive Mohammed A. Baker explains, landlords and retailers alike are facing “exceptional challenges”, including drastic fluctuations in footfall, changing labour requirements and rescheduled brand campaigns.
While there is little retailers – and landlords – can do about the business fluctuations caused by the outbreak, they can, however, change the way they work with one another.
“Many retailers, for example, have signed annual or long-term rental agreements with landlords based on expected footfall,” Baker says. “Of course, these landlords are no longer able to guarantee the same level of footfall that they may have anticipated even just a month ago.
“That reality alone should be bringing retailers and landlords together to review tenancy contracts and decide what is a fair and acceptable way forward,” he adds.
“No one knows how long this health pandemic will last, but through close collaboration, we can better safeguard public health as well as the future of the industry.”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.