Tech-ing it forward
‘ 2020 is the worst year in history – as much as you think that it’s the one consensus that we can all agree on, that’s not what we got from the people attending the Middle East Retail Forum.
From being called the much-needed accelerator to the ultimate industry transformer, the optimism around what the most dreaded year brought about was pleasantly surprising. If all sugar-coatings were to be removed, the region’s retail industry wasn’t particularly known for the massive strides in innovation it made pre-covid. When compared to some of the world’s leading markets, MENA retail had been lagging behind by a few years.
The pandemic left the players in the industry with no option but to innovate, pivot, adapt, and thrive if they wanted to survive. And a big chunk of this transformation is attributed to digital technologies.
“In Q1, 37% of the orders on Papa John’s came from digital channels. Come Q2, 63% used digital means and
37% used conventional means. By Q3,the proportion had stabilised to 54% from digital and 46% from physical stores. But this 54% isn’t going down, it is only going to grow”, said Tapan Vaidya, CEO of PJP Investments kicking off the panel discussion titled Tech-ing It Forward.
The other panelists who contributed to the discussion where they spoke about rejigging operations through enhanced digitalization were Mark Tesseyman, CEO of Liwa Trading Enterprises, Marwarn Moukarzel, CEO of Fawaz AlHokair Fashion Retail, Hisham Al Amoudi, Group CEO Kamal Osman Jamjoom Group, and Hozefa Saylawala, Director of sales, Zebra Technologies.
“2020 has been one of our best years. It made us work faster, in an insightful way and procrastination didn't exist”, said Tesseyman.
Among the various issues they had to deal with when the pandemic hit - including communications, given they are a franchise operation - shift to e-commerce was one key focus area. However, unlike most other businesses, they weren’t too fussed about getting a massive head-start.
“We at Liwa hadn’t deliberately pushed on major infrastructural developments on e-commerce. If I look at legacy retailers in the GCC that may have invested in big teams for e-commerce, you don’t need that anymore. E-commerce has changed fundamentally. The primary idea of e-commerce is to make money and not a lot of e-commerce businesses make money. Our business makes money because of the business model we have adopted. The methodology of doing e-commerce has been a big learning for us”, he explained.
“Since the lockdown, we’ve seen a dramatic return to stores and sales have increased above last year for some of our brands and e-commerce sales have softened again”, he added.
While e-commerce and technology is important, according to Tesseyman, many retailers forgot about their priority. “One thing many companies stopped doing is talking to their costumers and asking them what they want. We are starting to do some listening groups. We see some significant opportunities in our vertical brands – brands we own – because of how the consumers have been behaving”, he said.
The ‘do or die’ wake-up call
Saudi-based Fawaz Alhokair Fashion Retail accepted that they were late in joining the digital transformation journey not out of choice, but out of a laid back mindset of both the customers as well as the industry leaders. However, the pandemic was the right kind of push that made them realise that the only way they can survive is by making the shift.
“Before the pandemic, our online sales were 0.5%. Today, a prime brand we operate is 15% of our sales daily. How did this evolve? We found out that this was an opportunity that was missed because of the size of the Saudi market. It was a mindset that changed from online is a threat to retailers to it is a great opportunity to grow”, said Marwan Moukarzel.
“It was a wake-up call for us. In a way I am glad it happened as it pushed us beyond the limits”, he added.
The primary idea of e-commerce is to make money and not a lot of e-commerce businesses make money. Our business makes money because of the business model we have adopted.
“We had no choice”
When the crisis hit, Hisham Al Amoudi was faced with four main challenges: safety and welfare of their people, cost and cashflow, migration of sales from offline to online, adapting to WFH.
However, what helped them is preparedness, both in terms of knowing what to expect and a long term vision the company had incorporated and were working towards.
“The crisis didn’t happen overnight. If you worked with Chinese manufacturers you would’ve gotten a heads-up at least two months before it (the pandemic) hit the region. But we didn’t imagine that we would have to shut 700 stores”, he said.
“Luckily our digital transformation journey started 2-3 years before the pandemic hit. So when the stores were shut down some of our e-commerce arms and digital marketing were running in full swing. There was some sense of continuity. We had no choice but to move at a 10X speed. The decisions that took six months pre-covid had to be taken in six days as we realized the importance of agility and speed”, he added.
Undoubtedly, what has had to happen this year is an overall realignment of strategy and goals and for most retailers it has been possible by integrating and intertwining technology and customer experience to facilitate the success of a business. Technology providers have had a very busy year so far as they had to cope with the exponential surge in demands from their retail clients.
“With the transformation, digitization and virtualization that is happening now, we are creating history. The adoption of technology that was planned to happen three to five years from now has become a reality and mainstream today”, said Hozefa Saylawala.
We had no choice but to move at a 10X speed. The decisions that took six months pre-covid had to be taken in six days as we realized the importance of agility and speed.
The adoption of technology that was planned to happen three to five years from now has become a reality and mainstream today.