FROM RETAILING TO E-TAILING
E-Tailing to dominate Middle East's retail industry with the annual online sale expected to cross US$50 billion in 2022
Online sale in the Middle East and North Africa (MENA) region is now expected to exceed US$50 billion by the end of 2022, up from the previously estimated figure of $26 billion, due to Covid-19, says DeVere Forster, Chief Operating Officer, Dubai CommerCity.
E-tail globally is a US$5 trillion business. In 2019, retail e-commerce sales worldwide amounted to US$3.53 trillion, and e-retail revenues are projected to grow to US$6.54 trillion in 2022.
Online shopping is one of the most popular online activities worldwide and most consumers now prefer contactless interactions – be it procurement, delivery, or payment. This change in consumer behaviour has forced most retailers to shift their business models to meet the growing demand in online sales.
Dubai CommerCity is the MENA region's leading freezone dedicated to e-commerce, that capitalizes on the exponential boom that e-commerce and online retailers have seen over the last several years in the UAE.
Zebra Technologies' shopper study report shows that 65% prefer shopping with online retailers that also have a brick-and-mortar location and 76% prefer retailers that offer easy returns.
The good thing is that the new business model revolves around customer convenience and exprience. Customer is now at the centre of all e-tail business activities, speakers said. According to a study by Dubai Economy, the most significant of all recent retail developments is the growth and progress of e-commerce. The UAE is currently the most advanced e-commerce market in the Middle East and North Africa, revealing an estimated annual growth of 23 percent between 2018 and 2022. Post-Covid, the retail sector relies more on tech-powered customer experiences, which has made the MENA retail industry more effective with omnichannel delivery.
Research conducted by Zebra Technologies at the beginning of this year shows that online or in-store shoppers leverage both channels for the same reasons, i.e. product availability, product selection and price.
Hozefa Saylawala, Director of Sales, Zebra Technologies, said, "We have been living in interesting times, and I think last year the indication was about the rapid changes in the retail landscape. But all the changes are around the way our customer shops and the way our customer behaves. We have seen the emergence of e-commerce. We have seen a surge online. But what is constant is the changing behaviour of the customer.
"The research by Zebra shows that 76 percent (of the customers) want to get in and out of stores quickly, 76 percent prefer retailers that offer easy returns, and 65 percent prefer shopping with online retailers that also have brick-and-mortar locations.
And all of these have to be enabled and fast-tracked with the help of technologies."
Dubai CommerCity offers a unique value proposition to help support, grow, and scale e-commerce businesses. It provides and enables an e-commerce ecosystem that can support businesses of all scales with end-to-end company formation and set-up solutions tailored to the needs of the businesses.
DeVere Forster, Chief Operating Officer, Dubai CommerCity, said, "When DAFZA studied sectors for a new upcoming free zone, e-commerce was one of the leading choices.
Earlier, the online retail market growth was to reach US$26 billion by 2022. When we set up Dubai CommerCity to help businesses transform to e-commerce and eventually become a hub for e-commerce, the numbers changed dramatically.
"I think it's all because of a pandemic. You can see the change in consumer behaviour and an increase in e-commerce demand. Online sales in the entire MENA region is now expected to reach US$50 billion by the end of next year. That's nearly double the revenue that was forecast back in 2013. Online spending is increasing rapidly and as a result, we're experiencing huge growth in the demand.
"Dubai CommerCity has a programme of providing end-to-end e-commerce solution and also offers strategy consulting guidance on regulations in the region. Increase of warehousing and last-mile delivery platform solutions, digital marketing services and other support services, including, but not limited to thesupport of studios, call centres, among others are part of the services offered by us."
When asked about the changes in the retail industry observed pre and post Covid-19, Khaled Soliman, Group CEO of Jashanmal Group, said, "Covid-19 has enforced two types of changes. First, our internal changes within the organisation
Dubai CommerCity is providing an e-commerce ecosystem that can support small businesses, where you will get relevant support.
76 percent prefer retailers that offer easy returns, and 65 percent prefer shopping with online retailers that also have brick-andmortar locations.
itself and second, the changes in the market – the customer. Internally, there's a whole culture that needed to shift. And we became much more digitally dependent on things like technology, speed, efficiency, effective communication, resilience, agility, emotional intelligence and communications.
"All these became crucial elements to embrace within your organisation, a culture which it was not prepared to accept. So companies needed to undergo massive change.
"For external changes, shopping used to be a pleasant experience before - a form of entertainment. Now, post-Covid, a customer will only go to a store and shop if they really need something.”
Another fascinating trend that played out in the sector was a new type of categorisation - the home Vs non-home product categories.
Speaking about these new trends in "the new normal", Atul Bhatia, CFO, Splash, part of the Landmark Group, said, "We have a solid offering for lounge wears and what you wear at home. After talking to our customers about it, we started using many new technologies in our garments to make it biodegradable. It made us realise the renewed focus on the importance of some of these trends.
"Another obvious trend is the customer's migration towards more digital purchases, which has evolved into merging of the physical and digital spaces. Today, when you see people shopping in the stores, you will see many people using apps in there. In most cases, they're comparing prices so they keep the apps open in front of them. So, even in the physical retail world, digital is playing a major role.”
While talking about customer's trust in retailers and customer loyalty in today's online retailing, Nick Vinckier, Head of Growth, Faces, part of the Chalhoub Group, said, "Trust is super important. You look online or offline; we want to add value to a person's life. On the one hand, you have availability; you need to have the product. On the other hand, there's transparency or information. So, we (retailers) need to make sure that you offer that to the customer. Number three, you see a need for convenience. For us, it was super important to nail these three domains.
Customers now are spending more time online looking at discovering products online. They're trying to understand the product and acquire the knowledge, so they are more informed when they come inside the stores nowadays and have done their research, which was not the case before.
When they enter a store now, they have mostly identified the product they would like to buy.
Shopping used to be a pleasant experience before - a form of entertainment. Now, postCovid, a customer will only go to a store and shop if they really need something.
Today, when you see people shopping in the stores, you will see many people using apps in there. So, even in the physical retail world, digital is playing a major role.
Trust is super important. You look online or offline; we want to add value to a person's life.
What started as an online discovery concludes as a physical purchase once they walk into the store.
Kuruvilla Markose, COO International Business Division, Titan Company Limited, said, “For us, 99 percent of our jewellery happens physically. But in categories like watches and fragrances, we have as much as 25 percent of our sales coming from online.
"We found that a good 50 to 60 percent of people end up discovering products online and this is a result of a lot more people spending time online researching what they want to buy. So, by the time they end up coming to the physical store, they've already made up their minds about what products they're looking at."
Traditional supply chain designed to deliver supplies only in-store must now have an omnichannel approach, which requires a lot of investment.
While talking about stock management and supply chain in the retail industry Khaled Soliman, Group CEO, Jashanmal Group, said, "It's always been an issue with stock management and slow-moving items. Also, it's always been a serious issue for crisis management. Covid-19 is a crisis and it changed all our business forecasts and expectations.
“Supply-chain is the most tested part of the operations we have in our current new business approach. The serious supply chain challenges retailers face is that it traditionally serves the offline business, and suddenly now it is serving omnichannel. And that's a major shift in our capabilities. So, it would help if you made serious investments in your warehouse technologies, utilisation and efficiencies significantly.”
To summarise the session Hozefa Saylawala, Director of Sales, Zebra Technologies, said, "It's not only in terms of the customer embracing technology, but it's also about what the organisations are doing internally. And when we say transformation, it means the way we used to do business and how we need to do business.
So, it affects the workers inside the organisation as well.
"What we are seeing is a change in focus. Customers are demanding a contactless, frictionless, seamless experience inside the stores. A recent study showed that the customers want to walk in quickly and don't want to get caught up in the queues. So, it's about self-scanning technologies How soon can I conclude my payment through the contactless method? How you can provide me with the information?"
Physical stores are now integrating technology to make the customer’s shopping journey as seamless as possible, while e-commerce is proving to be a strong transactional arm of businesses. At the end of the day, the digital, physical, multichannel and omnichannel experiences need to all be centred on the everevolving customers. The retailers who understand and cater to their customers’ best will lead the way in retailing and e-tailing.
The webinar is a series of such initiative by Images RetailME – to reflect on the changing market dynamics. ■
We found that a good 50 to 60 percent of people end up discovering products online and this is a result of a lot more people spending time online researching what they want to buy.