The importance of Innovation in the UAE Retail Landscape

By Alexandra de Kerros Boudkov Orloff

Editorial and released on Dxbuzz magazine May 31st 2012 with the Khaleej Times newspaper.

I have been travelling to Dubai before it was known for being the most opulent retail destination in the world. However, I have increasingly been observing that since 2009, there has been a significant shift in the retail market. Whilst travelling to Dubai this month, my belief that the end of ‘malls as we know it’ has come to a close. The luxury mega malls boom in 2011 should be seen as a sign that some of the existing retail concepts are maturing. Nonetheless to sustain this growth, and adapt to more complex consumer habits, innovation and creativity should form the basis of new retail trends to maintain Dubai’s position in the retail sector.

The robust fundamentals of the UAE consumer market is a fact. Emiratis and GCC consumer have got a higher purchasing power than their European counterparts. Nonetheless, the saturation in the retail sector is leading to questions on how new retails concepts and infrastructure designs can respond to consumer needs. Astute moves by mega-retailers such as Emaar has focused on making retail central to the concept of ‘lifestyle entertainment’.  Malls no longer just offer retail spaces and shops, but consumers are able to enjoy aquariums, water features, skiing, ice-skating and leisurely activities. This not only enhances the consumer experience, but provides much needed activities in a region where nine months out of twelve need to be spent indoors.

The evolution of the retail sector in Dubai and Abu Dhabi has not stopped competing retailers from opening new malls, although primarily a ‘copy and paste’ model is being adopted; modelling on what has worked and not projecting how demographic, social and purchasing power affects consumer behaviour and expectations. For example, Wafi Mall, one of the first malls to open in Dubai is undergoing a complete refurbishment to attract the consumer base it has lost to Dubai Mall or smaller, more local retail spaces. In addition, Dubai Mall is adding thousands of square meters to its existing space in response from the growing demand of international commerce to have a retail space in Dubai.

The desire to be the biggest and most powerful will come at a cost and will outpace market growth. New retail stores will have to drastically shift their marketing strategies to attract consumers, which in turn will off-balance their competitors who will find it difficult to maintain their profit per square meters.  .

Immediate and fairly cost-effective steps can nonetheless be taken by retailers in a segmented approach. First and foremost, investing in consumers is crucial, as they remain their unique assets and is the only manner to spur consumer retention and growth. To achieve this, efforts should be geared towards enhancing the knowledge and skills base of sales as well as sales staff. Employees are the first and sometimes only representation of the retail brand, and regularly lack the necessary brand and company awareness that can then be transmitted to the target consumer. Aside from improving customer services, retail brands have to focus on generating best-practices in the processes and operations. This can be achieved by understanding customer needs through loyalty schemes and rewards, an understanding of the customer mix and segmentation and the promotion of products according to local trends. 

Dubai retailers need to consider seeding new foundations of vertical sources of growth, outside of their existing core business. Whilst brick and mortar are a sound approach, click and mortar is also another source of growth.

In the UAE only, there is vast e-commerce gap, where online purchase could reinforce a healthy competition between malls and virtual retailers. There is enormous share to gain of the modern consumer; who is e-willing to physically and virtually shop.

Other options are organic and modern convenience stores, cash and carry, discounters, and outlet malls mixed with business areas. For an active and busy professional like myself, I enjoy the buzz of the trendy business concept of ‘Make Business Hub’ on JBR; where I hold regularly my meetings with the who’s is who of the  GCC digital scene from Google to Wamda. However, these options are not developed to the fullest in the region, some UAE retailers also have a great potential for implementing changes and innovation in their core businesses enabling to diversify their vertical business structure. Seizing this potential will require astute strategies; with strong organizational development and management to succeed in implementing a more complex business model.   

©Alexandra de Kerros Boudkov Orloff

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1 Comment

Filed under Consumer, eCommerce, Luxury Middle East, UAE

One response to “The importance of Innovation in the UAE Retail Landscape

  1. Very good article, congratulations!

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