Ryan Harrison goes on a quick shopping trip to understand retail trends beyond the UAE.
WHILE THE UAE’s retail sector commands most of the attention, what developments are we seeing across the Mena region?
In the developing oil economies of Algeria, Libya and Iraq, markets are dominated by traditional souks and corner shops, however, an expanding and increasingly sophisticated middle class is presenting an opportunity for retailers to offer new shopping experiences.
“These gradual cultural shifts have triggered a demand for new shopping experiences, moving from traditional souks to supermarkets, hypermarkets and mall complexes,” says Florence Eid-Oakden, CEO and chief economist of Arabia Monitor. In other Arab Spring-affected countries, such as Egypt and Tunisia, Arabia Monitor’s research suggests that, surprisingly, there are companies that are still going ahead and building new shopping malls. This is interesting given the political and economic climate in these countries. However, it is perceived that investors regard developments in Arab Spring-affected countries as a long-term investment.
Meanwhile, GCC nations have been able to pick themselves up a lot quicker following the financial crash, due to the available capital and investments.
“In markets with a tourist footfall, the newest trend is building ‘hotels-in-malls’ to further capitalise on the tourist traffic. Shopping packages are being offered to hotel occupants, along with ‘personal shoppers’ from the hotel itself,” says Tauseef Anwar, senior manager at SMG MENA and media planner at Majed Al Futtaim.
Qatar has felt a slight impact, but it is recovering, while Saudi is opening up the sector to women. The Red Sea Mall in Jeddah, for instance, doubled the number of stores operated by women last year. This is significant because of women’s spending potential.
On the whole, there’s been a welcome bounce in Mena consumer confidence, according to the Middle East Council for Shopping Centres – MECSC.
David Macadam, CEO and vice-chairman of MECSC, says: “The consumption in the Mena retail sector continues to surprise me on a positive note. The growth of sales of the ‘bridge brands’ during the Eid holidays was a pleasant surprise. Shops such as Ted Baker and Bebe saw an increase in sales of more than 50 per cent year-on-year.”
Economists say that this is good news, as it indicates strong confidence in the future earning potential of shoppers. As far as consumer behaviour is concerned, there’s a sea of change taking place that retailers are noticing.
Francois Schweitzer, general manager of business development at Chalhoub Group, says: “We have seen a major change in consumers’ behaviour, especially in Emiratis, Kuwaitis and Saudis who are widely using social media platforms, such as Instagram, for posting pictures about their moods and social gatherings, but also fashion and brands they like or are buying. Therefore, the person or the ambiance is positioned first and the brand takes the second place.”
“We have seen a major change in consumers’ behaviour, especially in Emiratis, Kuwaitis and Saudis...”
It goes without saying the most recent innovative developments have come with the help of new technologies.
Dany El Zein, media director at Havas Media, says: “Mall operators in the US and Europe are starting to explore smart camera technologies and radio frequency identification systems that can recognise consumers and document purchases, so when they return, fitting rooms and store screens can recommend products in an augmented reality setting.”
The retail industry needs innovative and smart ideas to attract more visitors to malls, instead of just offering price discounts and promotions. Therefore, retailers and mall operators are facing the pressure to work together and on joint campaigns to increase footfall into the malls.
Joumana Hage, senior strategic planner at Cheil MEA , says: “For instance, the Samsung Galaxy S4 ‘Stare Down’ campaign encouraged pedestrians in Switzerland to stare continuously at the phone inside a city light poster – the longer they do, the greater the discount.
“However, to make it harder, participants were bombarded by actors asking for directions and many such distractions. In the end, those who were able to ignore the distractions for one hour got the phone for free.”
That’s the kind of experience that today’s smart consumers are after when they go shopping, something that is a pleasant surprise and encourages conversation. And consumers in the Mena region are no different.