Retail: money, time, frustration...
Cheil MENA’s strategic planning director Olga Kudryashova says mobile purchasing power in UAE is underestimated
In 2011, when only 11.9 percent of Koreans shopped using their mobile phones, Tesco Homeplus of South Korea opened its first virtual store network in sub- way stations. By 2013 this number reached 62.6 percent, according to Korean Chamber of Commerce and Industry survey. While the idea of a virtual store travelled the world, surprisingly, it has not made it to the UAE yet.
I think the mobile purchase power of the UAE residents is largely underestimated. I say this because Google and Ipsos research in 2013 suggested that as many as 38 percent of UAE smartphone users made a purchase via their phone. This figure will shoot up even further if all the incomplete transactions were to be considered - that is when mobile phones were used to aid the shopping process and purchase deci sions l i ke comparing prices, s earching f or products or checking the store location.
UAE retailers are very close to realising that they are in a perfect position to benefit from the consumers’ demand for an omnichannel retail experience.
We all know that technology is changing shopping behaviour at a faster pace than ever before. ( You’re never alone with a smartphone and this modern day shopping partner is informing our decisions on how, where and when we shop. The result? Retail is now in the age where selling has to be everywhere, instant and personal.)
The unique mall culture of the Middle East often puts experience ahead of convenience. But technology in retail is not only about convenience. In South Korea, the change i n shopping habits is staggering and offers a salutary view of where t he high streets and fashion avenues of the rest of the world could be heading.
Smart players have realised that we don’t shop l i ke we used to. And they’ve gone one step further: they’re starting to understand that real people – you and I – are constrained by not one, but three budgets when we shop. Of course there’s the financial one; but there’s also the time budget. And i ncreasingly, most of us have a frustration budget – if something’s not easy and straightforward, we’ll move on.
All three of these elements add yet another layer of complexity to what is no longer a single, or linear, path to purchase. Today, shopping i s an i nt er t wining j ourney of searching shopping and sharing – fuelled by mobile. But the complexity we face in retail is not an excuse, we must deliver simplicity in our retail experience. If we don’t we will exceed our shopper frustration budget.
Technology is simplifying shopping. Take show rooming for example, this is not new. Shopkeepers at traditional souqs say that in the times of their grandfathers people would be shopping around for the best value. The same can be said today, but technology has made it much easier and we can shop around at home or in-store.
This shift has fundamentally skewed the price/ quality value equation. Whereas once it was limited to price x quality, now it is ( price x quality) ÷ convenience. And technology constantly manages to reset our expectations of convenience. Every time we experience something new that makes our shopping experience more convenient or personal, it resets our expectations of what other retailers should be doing for us.
Does this fast- moving, ever-blurry landscape mean the end of the high street? Well yes, maybe, and certainly in its current guise. But not completely.
Sure, the customer is king, and he is a more demanding ruler than ever before.
But globally, lessons from the demise of many wellknown retailers in the past few years are being learned; we know that retailers holding on to formats which have outgrown their relevance are ignoring the l i ghts in the tunnel coming towards them. Stores still have a big role, but only if they serve the customer and are relevant to how they want to live and shop. They have to put the person at the heart of t he equation and activity has to i nspire ‘Search’, ‘Shop’ and ‘Share’ among consumers.
Layering search, shop and share with the new ‘ budgets’ – financial, time and frustration – together to deliver change is what could make part of an agile f uture- f acing retail landscape.
This year two leading malls of Dubai, The Dubai Mall and Mall of The Emirates, have made a step change and broken the ice by giving f r ee wifi access to their visitors. Beam technology has been a hot topic among retailers and their agencies. Souq Planet promises to bring the first digital retail e x peri e nce to Abu Dhabi in 2015. That’s a recognition that the modern age consumers have different expectations when it comes to service and that the 78 percent smartphone penetration in the UAE ( as revealed by 2014 Nielsen Smartphone Insights survey) can no l onger be ignored.
The year 2015 is set to mark a new page in the history of Middle East retail.