Retail sector urged to adapt quickly to e-commerce shift to survive crisis
Bricks-and-mortar retailers must adapt quickly to the shift towards e-commerce amid the coronavirus pandemic as a month-long lockdown of malls prompted users to increasingly shop online, according to a new report from the Dubai Future Foundation.
The report on retail, the eighth in the foundation’s “Life After Covid-19” series, addresses the challenges and opportunities that the UAE and the Arab world will face in the aftermath of the global crisis.
It highlights the effects that restrictions and stay-at-home directives have had on retailers around the world. For example, about 630,000 outlets in the US have been forced to close, the
Financial Times reported. “The pandemic is forcing the closure of ‘bricks-and-mortar’ retailers around the world as consumers switch to online shopping, and this represents an urgent call to action for landlords and governments to provide a lifeline for struggling offline retailers,” the report said.
On the other hand, online retailers have thrived amid the temporary shutdown of store and malls due to the outbreak.
Amazon hired 175,000 workers to meet demand, including over 1,500 in the Middle East while Majid Al Futtaim, which operates 24 malls, experienced a 59 per cent year-on-year increase in online customers in March, the report said.
Saudi retail group BinDawood registered 200 per cent increase in online sales over the past few months.
“This shift towards online shopping driven by the pandemic is consequently accelerating retailers’ plans for digital transformation,” the report said. “Brick-and-mortar retailers with plans to develop an online presence now need to address this immediately.”
In the UAE, where shopping malls closed for a month between March 25 and April 25, some mall operators have helped stores migrate online. Emaar Malls set up a virtual Dubai Mall on noon.com and Majid Al Futtaim introduced an online marketplace through carrefouruae.com.
The report also provides short-term recommendations during the Covid-19 outbreak and long-term recommendations to help the retail sector after the health crisis ends.
In the short term, it urged banks to restructure maturing loans in the retail sector as needed, shopping mall operators to waive rents for their tenants and companies to shuffle and reskill workers to manage the surge in e-commerce demand.
In the long term, to encourage consumers to return to the malls, the report suggested that retailers introduce tax-free shopping, in addition to the certification by relevant authorities of malls as “Covid-19 free” and the introduction of the contactless shopping experience, including self-checkouts.
“Despite the extensive challenges retailers are facing today, there are grounds for optimism about retail in the region in the long term, as long as we act rapidly,” the report said.
“Regionally we have a culture of spending time at shopping malls for leisure and entertainment, and this is expected to return post Covid-19.”
Previous topics in the Life After Covid-19 series include financial technology, community, innovation and entrepreneurship, telecoms, commerce, education and workspaces.
The foundation was established in 2016 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, to position Dubai as a leading city of the future.
Mall operators were called on to extend a lifeline to struggling offline retailers