UAE retail looks ahead to another stellar year

Anyone who has been to a shopping mall lately in Dubai will be convinced that the emirate has successfully left the dark days of the pandemic behind. Even on weekdays, the stores are choc-a-bloc with shoppers, with the sales tills ringing constantly as consumers make up for the lost two years.

Dubai as a shopping haven has truly returned on the global scene. In this scenario, retail majors in the country are busy boosting their strategy to make the most of this trend.

In this regard, Khaleej Times spoke to  Mohammad A. Baker, Deputy Chairman and CEO of GMG on the how the UAE retail landscape fared this year and his outlook for the year ahead.

GMG is a global well-being company retailing, distributing and manufacturing a portfolio of leading international and home-grown brands across sport, food and health sectors. Today GMG’s investments span across four key verticals: GMG Sports, GMG Food, GMG Health, and GMG Consumer Goods.

With the recent acquisition of the Géant supermarket chain in the UAE and expansion rights to the Géant, Monoprix, and Franprix brands in the Middle East, GMG is now a leading player in the food retail industry.

Under the ownership and management of the Baker family, it has become a leading global company, affiliated with the world’s most successful and respected brands in the well-being sector.

Working across the Middle East, North Africa, and Asia, GMG has introduced more than 120 brands into its markets. These include notable home-grown brands such as Sun & Sand Sports, Dropkick, Supercare Pharmacy, Farm Fresh, Klassic, and international brands like Nike, Columbia, Converse, Timberland, Vans, Mama Sita’s, and McCain.

Khaleej Times: In 2020, with the onset of the pandemic, we saw online retail booming. As we finally look towards a post-pandemic world, how has this trend changed?

Mohammad A. Baker: For retailers, 2022 was one of consolidation after a tumultuous two years. Online shopping or e-commerce surged during the pandemic, but once the vaccination rates increased and cases started dropping, we witnessed an uptick in brick-and-mortar shopping. This is especially unique to the Middle East, where malls continue to be a part of the social fabric.

Both formats of retail provide some unique experiences and benefits for customers, and one of the leading retail conglomerates in the Middle East, GMG, has witnessed the rise of a hybrid retail environment, referred to as ‘phygital’, and we strongly believe that it is set to define the regional retail landscape for years to come.

There’s a growing realisation within our ranks that online and offline are no longer substitutes or competitors but increasingly complementary. Then, the challenge is making the e-commerce store feel like a brick-and-mortar store where staff reacts to customers’ needs in real time.

We will then need to bridge the gap between physical and virtual retail experiences because customers no longer distinguish between online and offline shopping; they often start shopping in one and check out in either. Therefore, retailers shouldn’t differentiate between online and offline because their customers won’t.

What share of retail do you expect will remain online in the overall mix?

The results of a recent Dubai Chamber of Commerce report on the health of UAE’s e-commerce sector confirmed the upward trajectory of online shopping in the Emirates, which topped $4.8 billion in 2021 compared to $2.6 billion in 2019. So, it would be fair to say that consumers still have a strong preference for online shopping and this trend will continue into 2023.

However, the standout revelation of the Dubai Chamber report was the dominant position of domestic e-commerce players in the local market, which accounted for 73 per cent of total sales in 2021.  This clearly indicated that homegrown retailers have an advantage international competitors lack — a far better grasp of local market conditions, culture, language, and social nuance.

This is why major global brands seek local partners to take advantage of their local knowledge, expertise, and regional footprint. In fact, more than 120 brands are proud to partner with GMG as we not only pave roads for market access but also enable higher business success by leveraging our extensive, growing presence and experience across the Middle East and Asia.

Hence, while e-commerce continues to play an important part in a retailer’s offerings, they must also remember that localization is the golden key to unlocking the e-commerce potential for the UAE.

In a predominantly tropical climate like the UAE, ‘shoppertainment’ has been a major draw over the years. How much has this changed with the online sales?

We don’t view physical and online shopping experiences as cannibalising one another. In fact, the two are mutually complementary, and in the post-pandemic era, we expect an uptick in phygital shopping experiences, which plays on the strengths of brick-and-mortar and e-commerce. This phygital experience utilizes an omnichannel model to bring the best of both worlds for consumers.

We now hear a lot about omnichannel retail. How do you see this mix moving ahead in the new year?

In response to the increased interest in e-commerce, many retailers started exploring omnichannel models that leverage digital innovations and the personal connection to the business that in-store shopping delivers.

An ideal omnichannel strategy should seek to replicate the immediacy of a physical store in an online environment, with the ability to react immediately to a customer’s needs, make accurate real-time suggestions and recommend alternatives that encourage the customer to pick another option or purchase an additional item.

An effective omnichannel strategy, therefore, bridges the gap between physical and virtual retail experiences where the two complement each other, especially since buyers increasingly research products online and then visit the store to see, touch, and complete a purchase.

However, retailers should use more than a one-size-fits-all strategy for online shoppers. Omnichannel enables retailers to mine data for valuable insights. These insights are crucial to hyper-personalisation, which is key to maintaining brand loyalty in the digital age. In fact, a recent BCG study shows that retailers saw a 25 per cent  increase in revenue based on the Personalisation Maturity Index due to their advanced personalization capabilities.

• Business