The UAE has a unique retail landscape compared to other countries. Be it the superabundance of retail malls all over the country, or online stores – shopping in the UAE is more of a leisure activity than a necessity.
Retailers in the UAE are optimistic about the pace of growth in 2015 and, based on current sentiments in the market, are prepared to further capitalize on expansion. The phenomenal booming retail sector highlights that the disposable income in the UAE is far above its counterpart countries worldwide. Especially during summer time, as the temperature soars to over 50 degrees Celsius, most residents flock to malls to beat the heat, and at the same time entertain themselves.
On the basis of turnover, between 2014 and 2013, Retail and Lifestyle has seen a growth of 12 percent, whereas Consumer Industry showed an overall growth for eight percent. On the basis of net profit, Retail and Lifestyle has exceeded the budget by 72 percent, whereas Consumer Industry has exceeded the budget by 14 percent in 2014 compared to 2013.
March of technology
While operational efficiency remains important, retailers are leveraging data and new technologies to optimize demand processes, attract and retain more customers, and drive future growth. To create marketplace advantages in the future, retailers will need to know their customers intimately, including their needs, wants, preferences, and values, and re-design their business processes and in-store technologies to ensure customer expectations are fully satisfied.
Wireless technology promises to transform the customer shopping experience, providing a powerful competitive tool as retailers strive to build stronger customer relationships.
Easa Saleh Al Gurg Group LLC, has been a long-time participant in the retail business of UAE, having opened our very first retail distribution in 1962 with Grundig televisions.
Our retail portfolio includes flagship stores in home appliances, furniture and clothing many of which have completed nearly 20 years in the business. Throughout the many years of operation, we are cognizant of the fact, that while operational efficiency remains important, leveraging data and new technologies are equally critical to optimize demand processes, attract and retain more customers, and drive future growth.
Recently, the SAP mobility solution has been introduced to increase the efficiency and productivity of the sales force on the field; with quick access to information such as customer status, availability of materials, pricing of the product, product catalogue, which allows them to function without too much support from the back-office. The solution also enables these users to create transactions like enquiry, quotation, sales order on the field or within the showroom on a much simplified screen by using a mobile device.
Social media and retail
Social media has been a game changer with its impact on the retail sector. According to a survey by Mohammed Bin Rashid School of Government (MBRSG), over 135 million individuals are using the Internet across 22 Arab countries, with over 71 million active users of social networking. Mobile penetration is at a rate of approximately 110 per cent on a regional level, with the most popular apps being for social media.
The retail industry in the region has grown at a fast pace and at the same time consumers have become increasingly sophisticated. The GCC consumer is a well-travelled and savvy one, therefore retailers in the region have to start customizing concepts with these in mind. There is a significant maturity of the social buyer; decision making and shopping today comprises of a sequence of online and offline activities.
The impact of social media is thoroughly apparent in the retail sector, as customers engage with their favorite brands directly and receive feedback from them. This platform allows customers to leave behind a clear digital footprint that retailers can keep track of and interact with. The more retailers invest in listening to, understanding and engaging with customers through social media, the more successful they will be.
Re-alignment of malls
Middle Eastern malls are leading change by re-aligning their value proposition. The mall of the future is no longer a shopping center, but a leisure destination that turns a shopping trip into a day out with family or friends. Shoppers are seeking new experiences, entertainment, relaxation and customer service that pamper them. Buyers in the MENA give equal consideration to product quality and price, and are willing to delay their purchases to bag the best deals.
With the help of retail designers, boutiques are turning into mini galleries that tell a bespoke story with colors, textures, shapes, art pieces, and memorabilia. Evocative and aspirational environments not only showcase the products, but also provide an aesthetic treat to the shoppers’ senses. Shoppers enjoy the artistic expression and uncluttered space, love the pampering experience and ﬁnd it easier to justify the purchase.
Today, in the retail industry, we see a lot of repetition; similar merchandise and even the same decoration and window displays. A great retail experience that customers aim to find combines the physical experience in a store with the digital experience and the human experience with the staff.
The Tourism factor
The retail sector is also expected to profit from the effect of rising tourism in the UAE, which has put the country on the world map as a destination known for its shopping, leisure, and entertainment. Abu Dhabi was named amongst the top 10 travel destinations for the year 2015 by CNN, and the exponential rise in visitors to the country will significantly benefit the retail sector, especially with EXPO 2020 around the corner. As a positive outcome, the retail and hospitality sector in the UAE will see noteworthy progress, attracting not only visitor traffic into retail outlets, but also resident traffic.
On the whole, the retail industry in the UAE needs to be prepared to adapt to rapid changes in the upcoming years. 2015 will be a year of growth, but will also be a period of consolidation and developing a solid CRM platform.
The better that retailers can serve their customers by enhancing their customers’ shopping experiences and lowering their costs, the better the chances of success are over the next decade.
Abdulla Al Gurg is the group general manager of UAE’s Easa Saleh Al Gurg Group