The GCC retail sector, estimated to be valued at $308 billion in 2023, is expected to continue its robust growth in the foreseeable future, according to experts.
While the positive impact of post-pandemic reopening on the sector is indisputable, the role of timely governmental reforms in women’s workforce participation, ease of doing business, and inducing macroeconomic stability is equally noteworthy. Such factors have had a knock-on effect on retail spending and consumer confidence. And as such, retailers have made conscious efforts to keep pace with those changes.
Retail strategies are being reshaped with customer-centricity at the core. In the context of widespread digitalisation, that shift involves harnessing customer data and personalizing brand communications and services. Leading brick-and-mortar retailers have systematically embraced e-commerce and integrated different channels for consistent customer experiences.
The implications of such developments for the sector’s future are profound, Shehbaz Shaikh, chief retail officer of Redtag, a leading value fashion and homeware brand in GCC, told Khaleej Times in an interview. Regional retail, Shaikh says, is undergoing a “great reshape”.
Excerts from the interview:
What is customer-centricity in the context of the GCC retail sector?
Customer-centricity fundamentally boils down to staying in sync with customer movements, be it with their shopping behaviours or preferences. In GCC, internet penetration at 98 per cent has led to an uptick in e-commerce. At the same time, this is not the expense of brick-and-mortar retail. There is structural demand for both, with the same consumer preferring online and offline shopping under different circumstances. Under that scenario, customer-centricity is about catering to a shopper’s unique preferences.
For retailers, the crux here is understanding the distinctive preferences of a multitude of customers. That is perhaps where Big Data and AI analytics come in. By integrating data from functions across the retail value chain, we can understand what a customer wants, when they want it, and how they like it delivered. In other words, customer-centricity is a paradigm shift from traditional vendor-driven retailing — we now offer what customers want; not what we/vendors can.
Why is the integration of online and offline retail paramount today in GCC?
Multiple studies have suggested that about 55 per cent of the Middle East’s population is well-acquainted with the workings of omnichannel retail — which translates to roughly 265 million people. So, there is a strong business case for retailers to deliver “phygital” experiences to customers. Redtag’s e-commerce launches in the last couple of years were rooted in the same rationale. Those who are averse to omnichannel retail run the risk of an increased customer churn — unviable in a sector already susceptible to a high churn rate of up to 7 per cent. That said, a mere e-commerce channel will not help traditional brick-and-mortar retailers to differentiate themselves from the competition. The omnichannel strategy must strive for consistent experiences and service efficiency across customer touchpoints.
What are retailers doing to achieve a successful omnichannel strategy?
Customer data is the lifeblood of omnichannel retail. So, the first order of business is to harness the data. Typically, it involves bridging the silos between various retail disciplines to create a single source of truth. Redtag incorporated a customer data platform (CDP) for the same, unifying information from across channels to get a comprehensive view of a customer’s journey and behaviour.
The next crucial step is to contextualise the data and derive valuable insights. A customer experience management (CEM) platform finds application here, turning raw data into “connected intelligence”. The deep-learning models, integrated with other software such as enterprise resource planning (ERP), will help brands optimise their inventory in line with evolving customer expectations and demand. The derived insights will help marketing teams segment the audience as per demographics, interests, and preferences and deliver personalised recommendations and services. Personalisation is indeed a hallmark of a successful omnichannel strategy.
What makes product/service personalisation an inescapable element of present-day retail in GCC?
High consumer awareness is the driving force behind the emphasis on personalisation. GCC is undergoing visible socio-cultural shifts, especially in terms of women’s workforce participation and their increasing spending power. Concurrently, millennials and Gen-Z — a sizable majority in the region — are gradually increasing their share in retail spending, thereby influencing the sector’s strategic direction. Those customer segments are digital natives with a profound awareness of various market offerings, price points, and value propositions.
By virtue of their awareness and digital dexterity, these segments tend to harbour distinctive shopping preferences. So, they expect brands to personalise their engagement with them. Though they are prone to churn at the slightest disengagement, tech-savvy shoppers are extremely loyal to brands that understand them. For present-day retailers, that is an opportunity to build long-term customer relationships by prioritising personalisation.
How does the growing FinTech adoption tie in with omnichannel retail and the personalisation priority?
As FinTech, by design, seeks to improve and automate the delivery of financial services based on end-user requirements, it lends itself perfectly to present-day retail. Retailers have wholeheartedly embraced full-stack financial solutions, hoping to simplify and streamline critical functions such as e-billing and refunds. Most importantly, FinTech platforms have enhanced transparency and accountability in retail operations, thus reinforcing consumer confidence and incentivising spending. The growing FinTech-retail synergy in GCC will pave the way for more customer-centric loyalty programmes in the future. With digitalisation in retail showing no signs of stopping anytime soon, more use cases will continue to emerge.