POLES APART

The Mena re­gion’s re­tail sec­tor is more di­ver­gent than ever, re­ports Ryan Har­ri­son.

Gulf Marketing Review - - SECTOR ANALYSIS -

THE MENA re­gion’s re­tail sec­tor is po­larised as never be­fore. From tur­moil in Egypt and Le­vant to the UAE’s eco­nomic re­cov­ery, 2013 will be a year of ex­tremes. Con­sumers are be­com­ing more shrewd and knowl­edge­able, and are de­mand­ing more per­son­alised ex­pe­ri­ences, whether it’s in-store, in malls or on mo­biles. Brands con­tinue to reach out us­ing so­cial me­dia, al­though online shop­ping is still nowhere near the lev­els seen in western mar­kets.

While some GCC coun­tries have seen solid growth this year, the af­flu­ent mar­kets in Saudi Ara­bia, Qatar and Kuwait vie for a piece of the UAE’s re­tail supremacy.

So what are the new mar­ket­ing ap­proaches? Firstly, brand ad­vo­cacy is be­ing picked up by mar­keters and re­tail­ers, even if they’re new and still find­ing their way. Ac­cord­ing to McKin­sey & Co, a rec­om­men­da­tion from a friend is 50 times more likely to trig­ger pur­chase than a low-im­pact en­dorse­ment.

Du­biz­zle – the UAE-based com­mu­nity web­site of­fer­ing clas­si­fieds and fo­rums for the GCC re­gion, Egypt, Jor­dan and Syria – has cham­pi­oned this ap­proach as part of its rapid growth in the Mena re­gion dur­ing the past decade.

“The most im­por­tant thing is to de­velop a fun­da­men­tal un­der­stand­ing of what will mo­ti­vate your cus­tomers to ad­vo­cacy. If done cor­rectly, your ad­vo­cates will be your vol­un­teer mar­ket­ing army,” says Barry Judge, UAE mar­ket­ing man­ager of Du­biz­zle.

“Un­for­tu­nately, there’s no sil­ver bul­let so­lu­tion, but [com­bin­ing] the mar­ket­ing into user ex­pe­ri­ence is a great place to start. Out­stand­ing user ex­pe­ri­ences are deliberate and de­signed. They do not hap­pen by chance,” he adds.

In fact, some in­ter­na­tional brands – for in­stance, cof­fee pod gi­ant Ne­spresso, which launched an online bou­tique this year – are im­port­ing th­ese prac­tises into their Mena mind­set. The firm says that more than 50 per cent of its new club mem­bers ex­pe­ri­ence Ne­spresso for the first time through friends or fam­ily. Of course, since 2005, its brand am­bas­sador Ge­orge Clooney, has charmed fans and cof­fee afi­ciona­dos alike.

In the Mena re­gion, the on­go­ing rise of ‘smart con­sumers’ has seen the more em­pow­ered shop­pers want a greater say in how they ex­pe­ri­ence ser­vices and to be ‘ac­tive al­lies’, rather than be­ing ‘pas­sive con­sumers’. There­fore, shop­ping is now shift­ing from be­ing just a phys­i­cal process of exchanging goods for money to a type of ex­change in which re­tail­ers add an ex­tra value be­yond the ac­tual ben­e­fit of the prod­uct or ser­vice.

Joumana Hage, se­nior strate­gic plan­ner at Cheil MEA, says: “Since al­most any­thing can be a re­tail chan­nel, thanks to mo­bile tech­nol­ogy, brands have am­ple op­por­tu­ni­ties to get in­creas­ingly cre­ative and de­velop value ex­changes – by en­gag­ing con­sumers in con­ver­sa­tions.”

As far as online shop­ping is con­cerned, many are still miss­ing a trick when com­par­ing the in­ter­net pen­e­tra­tion in places such as the UAE, where it has reached 71 per cent, in line with sev­eral de­vel­oped economies at 70 per cent and com­fort­ably above the Mena re­gion’s av­er­age of 29 per cent, ac­cord­ing to Ara­bia Mon­i­tor.

E-com­merce, which is worth ap­prox­i­mately $11 mil­lion in the re­gion, has more ground to cover in or­der to catch up with Europe, the largest world­wide at $309 bil­lion. The Mena re­gion is yet to break out of the ‘flash sale’ men­tal­ity of online shop­ping. Mean­while, Ara­bia Mon­i­tor says that more than half of GCC in­ter­net users have se­cu­rity con­cerns when shop­ping online, while 16 per cent pre­fer the ‘phys­i­cal shop­ping ex­pe­ri­ence’.

But driven by an in­creas­ingly dig­i­tally lit­er­ate and con­nected youth pop­u­la­tion, the online mar­ket in the UAE could soon be the next fron­tier for the re­tail sec­tor. It cer­tainly has a huge scope in the Mena re­gion. Even malls across the re­gion are ex­pand­ing, whether it’s the es­tab­lish­ment of newer malls, or in­ter­na­tional re­tail­ers up­grad­ing their lux­ury cre­den­tials for the ‘wow’ fac­tor, or older malls play­ing catch up.

Ac­cord­ing to Euromon­i­tor: “With new malls open­ing up in Abu Dhabi, it is be­lieved that ex­ist­ing malls may suf­fer in the next few years, un­less they do some­thing to up­grade their im­age.

...em­pow­ered shop­pers want... to be ‘ac­tive al­lies’ rather than ‘pas­sive con­sumers’.

“If you look at Dubai, for ex­am­ple, BurJu­man is now up­grad­ing its older sec­tions in or­der to keep things fresh.”

Other malls in the Mena re­gion also have a strong pres­ence in their re­gional mar­kets. The Red Sea Mall in Jed­dah, for ex­am­ple, is a pop­u­lar re­tail cen­tre in Saudi Ara­bia. A new re­tail mix and shift in fo­cus to bet­ter food and bev­er­age of­fer­ings have en­abled the mall to en­joy a stronger pres­ence in the Jed­dah mar­ket. And when mea­sured against other malls in the UAE, the Red Sea Mall com­petes more favourably.

Mean­while, most re­tail­ers have latched on to con­sumers’ ap­petite for greater am­biance and richer ex­pe­ri­ences.

For in­stance, Ish­war Chugani, man­ag­ing di­rec­tor of Gior­dano Mid­dle East FZE and ex­ec­u­tive di­rec­tor of Gior­dano In­ter­na­tional, says: “This year we have em­barked on an ag­gres­sive up­grade of our stores, with the first roll­out of the new con­cept de­sign at the Dubai Mall.

“Gior­dano’s new flag­ship Mid­dle East store in The Dubai Mall re­de­fines sim­plic­ity and em­braces a clas­sic, pol­ished and re­fined de­sign. Space is max­imised for prod­uct dis­plays and cus­tomer in­ter­ac­tion, in­clud­ing wider en­trances and larger, more com­fort­able fit­ting rooms.”

In th­ese re­vamped stores, wood ac­cents have been added to in­crease the feel­ing of warmth and nat­u­ral space; en­ergy ef­fi­cient lights to en­hance cus­tomer ex­pe­ri­ence, while min­imis­ing the store’s carbon foot­print.

“Thus, with the up­graded de­sign, shop­ping ex­pe­ri­ence will hope­fully be more fluid, ef­fi­cient, con­ve­nient and com­fort­able,” adds Chugani.

Nas­sim Nasr, GM of TBWA\Raad shop­per mar­ket­ing agency, In­te­ger ME, says: “Brands such as Hol­ster and A&F are look­ing to open in this re­gion, which is a good sign for re­tail­ers. The size of th­ese brands al­low them to be se­lec­tive. They are only choos­ing to work with re­tail­ers that can get them into the top malls. An in­ter­est­ing de­vel­op­ment of late is big re­tail brands tak­ing the fran­chise and op­er­at­ing them­selves.

“We are see­ing an in­creased me­dia spend, brands are opt­ing for and spend­ing more on so­cial me­dia strate­gies, events and spon­sor­ship deals ver­sus us­ing tra­di­tional chan­nels such as out­door.”

As shop­pers are spend­ing more time in malls, op­er­a­tors are look­ing for new and ex­cit­ing ways to keep peo­ple en­ter­tained for longer pe­ri­ods, since malls are also about so­cial­is­ing.

Fos­ter­ing an emo­tional bond, there­fore, is es­sen­tial for cre­at­ing an en­joy­able shop­ping ex­pe­ri­ence and nur­tur­ing cus­tomer loy­alty be­yond just sales.

James Tracy-Inglis, MD for shop­per mar­ket­ing spe­cial­ists Saatchi X, says: “While malls are keep­ing shop­pers en­ter­tained with live shows and branded en­ter­tain­ment, in­ti­macy in the re­la­tion­ship be­tween re­tail­ers and shop­pers is weak­en­ing.

“Re­tail­ers need to con­sider that shop­pers come to their stores with three ba­sic types of stress that ul­ti­mately af­fects pur­chase – time, bud­get and frus­tra­tion,” he adds.

A few years ago, it was ex­pected that re­tail­ing would see a steady rise in the Mena re­gion, es­pe­cially the UAE. While this has def­i­nitely oc­curred in the re­cov­ery mar­kets, con­tin­ued dis­rup­tions have seen stunted growth else­where. It’s led to a more vi­brant, in­creas­ingly cre­ative, yet bipo­lar en­vi­ron­ment.

Bar­gain hunt­ing: Mena con­sumers are yet to break out of the ‘flash sale’ men­tal­ity of online shop­ping

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