An unstable global economy, fraught with geopolitical uncertainty, left many wondering if retailers in the Middle East and North Africa (MENA) would struggle to turn a profit in 2016. Yet, just as challenges have come to characterize the region’s business landscape, so too have a wealth of technological advances that are rapidly changing the regional retail sector. What impact will these developments have in 2017?
The power of customer data: Developments in digital commerce and underlying predictive customer analytics promise to deliver significant opportunities to a sector that is forecast to grow by 4.6 percent region-wide this year. If seized, this opportunity could not only offset the economic pressures that retail now faces, but take the sector to new heights. But there is a caveat: to realize this potential, retailers must learn how to successfully navigate the digital space and turn the deluge of public and customer data scattered across their different business units into tangible business results at their fingertips.
Here, the target is to provide customers with a seamless, omnichannel shopping experience that will, in turn, create new revenue streams beyond the shop floor. The monstrous datasets that follow each of us around, like digital shadows, as we navigate our way through the online world, represent the single biggest opportunity for retailers to improve this seamless experience across channels. By leveraging the value of both internal (customer profiles, footfall, transactions) and external (customer social profile, traffic, weather, macro economic, and other) data, retailers can tailor their offering to drive sales, while at the same time optimizing their return on investment.
Evolving customer expectations: The rise in the appetite for e-commerce signals a huge advancement in the world of retail and constitutes a massive growth opportunity for regional retailers. However, this also intensifies the pressure on retailers to revisit their approach of engaging with customers and adapting their business models to changing preferences in the region.
International players such as eBay and Amazon have created an expectation of excellent and instantaneous service when shopping online. Whereas once, shopping online might have been considered unconventional, perhaps even risky, investment driven by the big players in this field has raised standards to the point that it has become second nature to expect reliable, speedy service to rival the best physical retailers.
In addition to that, recent developments in the region have also set new benchmarks for online retailers. UAE businessman Mr. Mohamed Alabbar announced two new online ventures targeting the Middle East, including an AED 505.5 million joint venture with Italian luxury online retailer Yoox Net A Porter as well as e-commerce firm Noon. Dubai-based Al Tayer Group has also recently launched a new luxury retail e-commerce platform called Ounass. The company will deliver goods for free, within two hours for Dubai residents, on the same day for other emirates, and within 48 hours for other GCC residents.
The MENA e-commerce market is expected to grow to USD 7.5 billion by 2020 according to Euromonitor. While there is much opportunity, this will also be a time of intense competition and the need to differentiate through customer experience.
Change is the only constant: Retail customer preferences and habits are changing, both choice and competition are increasing, and ground breaking correlations are emerging. With these and other dynamic changes in the regional economic landscape on the horizon, each of these advances can be viewed as either an obstacle to success, or an exciting chance for growth—and it is those who adopt the latter view who stand to gain.