ME retailers must adapt to changing consumer habits

June 11, 2015 | By RetailME Bureau

According to PwC’s latest survey, Retailers and the Age of Disruption, the most successful retailers in the Middle East will be the ones that understand regional consumers the best and adapt their models to generate unique, brand-defining experiences that keep customers coming back. Current brick-and-mortar retailers are at risk of losing market share to online retailers if they do not begin to change their strategies and offer multiple channel experiences.

The survey polled 19,000 shoppers in 19 countries on six continents. In the Middle East, 1,001 individuals were surveyed across the UAE, Saudi Arabia and Egypt. PwC believes there are four key areas of disruption facing all retailers, regardless of where they operate:

  • Mobile technology
  • Proliferation of social networks
  • Demographic shifts
  • Evolving role of the store

“Transition is never an easy thing, particularly for a sector that has enjoyed a great deal of success in many parts of the Middle East. Nonetheless, the report indicates that increasing digital encroachment into consumer trends is not simply a phase, but rather a real and relevant threat to retailers who choose to ignore it. And as the buying power of tech-savvy youths increases, these companies risk is being marginalised,” says Norma Taki, retail & consumer partner at PwC.

Online purchasing a trend not without challenges

Regional retailers need to focus on identifying a solution to the development of a local online presence that is tailored to the diverse local population that exists in countries around the Middle East. There will be challenges, given the preferences by international brands to control the online world from a central location. But based on the findings of the survey, there is clearly a growing desire from consumers to be able to browse and purchase items from a local online platform.

For instance, 33% of respondents in the Middle East prefer online shopping because they are able to shop 24/7. And 29% of respondents prefer it because it is easier to compare and research online indicating an increasing preference to use social media to track existing brand preferences as well as seek out new brands.

However, a large portion (40%) of Middle East consumers has concerns about the security of online shopping. This is especially evident for smartphone users, where 40% of survey respondents expressed that the main reason they don’t use their phones for shopping is security. A large portion of respondents indicated that they had broadband connectivity issues preventing them from accessing online stores from their phones such as a lack of a data plan or Wi-Fi connectivity.

Stores still strong, but change is coming

Global data suggests that the retail outlet isn’t going anywhere. More than half of global and Middle East respondents indicated that they still shop in-store. In the Middle East, this is perhaps even more powerful considering the strong role of the mall as a ‘go-to’ destination in its own right. And in every retail category – apart from books, music, movies, video games and consumer electronics – more than 70% of shoppers globally still prefer to buy goods at a traditional retailer.

In the Middle East, every retail category – apart from books, music, movies, video games (28%) and toys (36%) – still prefer to buy goods at a traditional retailer.

Middle East retailers will need to adapt to improve the overall shopping experience including making sure the consumer feels secure when providing personal details online; addressing logistical issues and the need for third-party services for home delivery; the need to gain rights for an online channel and compete with global websites; and to consider all online platforms including mobile and smart tablets.

“It is clear that the results of the survey represent a threat to traditional retail outlets. However, they also represent an opportunity. These results indicate that consumers prefer the convenience of online retail, but still value the immediacy and personal touch of traditional retailers. The onus is now firmly on these retailers to ensure that they are at the forefront of the current and future changing retail environment – both in terms of location viability and a multichannel consumer experience,” adds Taki.



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