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Middle East retailers increasingly relying on data-driven retail models to woo digital age customer: study

Consumer expectations and behavior are continuously changing in the Middle East and retailers are leaving no stone unturned in keeping pace with evolving trends and buying habits, a latest research by Orient Planet Research (OPR), the market research unit of Orient Planet Group, and Galal &Karawi Management Consulting (G&K Consulting) has discovered. The lines between online and offline shopping are blurring, as consumers prefer to switch between online and offline across the different touchpoints of their retail buying experience. This is why brick and mortar retail showrooms are still relevant despite the steady growth of e-commerce in the region. However, overlooking the significance of online presence could cost retailers dearly, says the study.

In their attempt to stand out from the market clutter and attract the attention of buyers, retailers are increasingly focusing on enhancing the customer experience journey. Nevertheless, brand loyalty is diminishing as customers tend to move away from their preferred brands to options that promise better value for money nowadays. These findings are in agreement with insights from McKinsey, which indicated that Middle East consumers are increasing their online spending, while also emerging as more price conscious and fewer brands loyal. In response, brands are increasingly relying on data-driven, intelligent retail models to design highly customized shopping experiences for their consumers.

In terms of demographics, online shoppers are more between 25 and 44 age band, even though this continues to expand. Retailers consider paid advertising as a powerful tool to reach out to this target pool and leverage additional targeting features of advertising platforms such as display, remarketing and shopping ads. Besides, Artificial Intelligence (AI)-powered highly personalized product suggestions on these platforms are offering retailers with great results, as cited by the Microsoft and PSFK in their Retail Trends Playbook 2020.

MENA is the fastest growing region in e-commerce markets with an annual growth rate of 25 per cent in accordance to market reports. Convenience, speedy deliveries, an array of payment options and the ability to check reviews and ratings by other consumers before making the purchase are the factors driving this growth. The UAE is considered the most developed in the region, followed by the Kingdom of Saudi Arabia. An e-commerce study by Visa Inc in June 2019 reported that the UAE retail industry, which includes its in-store and e-commerce engagement can bring revenue growth as much as USD 63.8 billion by 2023.

Nidal Abou Zaki, Managing Director, Orient Planet Group, stated: Given the fast pace of developments in the GCC and Middle East markets, it is always essential to pay attention to market trends such as e-commerce and new methods that address the increasing role of digital technology in engaging customers and winning brand loyalty. We continuously monitor and explore these developments in the region to promote more awareness and shed light on new strategies which expand throughout sectors.

Abou Zaki noted: The ongoing digital transformation continues to bring about innovation in customer engagement and will continue to have an effect on marketing and communications with customers. Businesses ought to remain aware and up to date of these trends and explore ways to adopt them if they want their brands to enjoy a better understanding, and thereby increase sales, loyalty and better position of their products and services. The regions retailers are aware of these improvements to a great extent and are being recognized for their growth performances worldwide.

This is evident in the continued growth of leading retailers in the region such as the UAE's Emke Group and Majid Al Futtaim Holding LLC, which were ranked by Deloitte among the top 250 companies achieving the strongest growth rates in FY2017 in its 'Global Powers of Retailing' report.

Asem Galal, Managing Partner of G&K, said: Brick and mortar retailers have no option but to rise up to customer expectations and deliver an excellent customer experience by embracing omnichannel sales and marketing, in order to survive and compete with global and regional e-commerce powerhouses. Omnichannel requires a new strategy that is modeled around the new customer: the Omnishopper. It calls for restructuring of processes, re-training of staff, and keeping pace with technology advancements, which typically includes designing and launching of a mobile application.

Galal added: Our findings show that businesses can no longer ignore the growth potentials of e-commerce platforms and must find ways to blend these various platforms to offer customers with a seamless shopping experience and win their loyalty. Consumers are now omnishoppers who engage in both webrooming and showrooming. This was evident during the recent Black Friday and Cyber Monday sales as offline retailers who adopted an omnichannel approach recorded better results at the time of promotions. Many customers who went to experience the products in the stores before the sales ended up buying them online from the stores mobile app or website during the promotions to avoid the sales traffic and parking inconveniences.

The OPR and G&K study noted that retailers in the Middle East are increasingly catching up to new ways of adapting to the continuously changing consumer behaviors, which have high level of access to digital technology and social media platforms. However, shopping experiences and retail events in the region such as Black Friday, Yellow Friday and White Wednesday, among other retail promotions have revealed that while more people now buy things online, the existence of brick and mortar or the physical retail stores continue to flourish.

Webrooming means a shopper would browse the online stores, read and watch the reviews on social media platforms or websites before deciding to buy it in the actual store. The Showrooming, on the other hand, refers to shoppers visiting the stores, and see the actual product and then buy them online, even using their smartphones, while still within the store, to get it for a cheaper price.

The study recommended that to maintain competitiveness, it would be a wise move for retail owners to implement an omnichannel strategy, a marketing strategy which offers integrated and continuous brand engagement to consumers using connected multiple channels, which include websites, mobile apps, and physical stores. He further cited that one main aspect of an omnichannel approach is the ability to provide a special customer journey experience to shoppers.

OPR and G&Ks analysis further mentioned that the growing popularity of mobile apps for grocery shopping within the region reveal a new trend indicating shops can no longer ignore e-commerce and that being online or in a mobile marketplace or having an individual mobile app as they add strong value to the business while providing convenience to shoppers. Brands are improving the customer experience at every touchpoint and every interaction of the customer to the brand whether it is in a digital platform or in physical stores, the study concluded.

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