Time for retail changes in the UAE

Simon Hathaway knows a lot about shopping, so when he warns that retailers in the UAE are not immune to the challenges faced elsewhere in the world, it’s probably worth listening to him. The retail guru set up the London office of Saachi & Saachi X, a shopper marketing agency in 2004, and went on to run the agency’s Europe, Middle East, India and Africa region before joining Cheil Worldwide, the largest advertising agency in South Korea in 2012. The president of shopper marketing and retail operations, who was in Dubai last month for an internal workshop, reveals why UAE retailers need to change.

How do you help retailers?

It is by improving sales and improving experience. In retail you have to do three things. First, you have to drive traffic to a store, and that can be online and offline. Second, you have to increase basket size and conversion when you are in the store, so drive the sales. And third, you have to get them to come back again. That’s our job. The challenge we have now is that people can check in store what a price might be at another store. People have talked about the phrase showrooming which you may have heard; where people visit the store to check out a product or check it out online and buy it somewhere else. And there is also webrooming which is the reverse of that, where people do all of their research online. It’s been a big trend, particularly in the United States.

Has that reached the UAE?

I’m sure it has. I think the big thing in the UAE is how much e-commerce is done, because that is driving things in terms of people being able to check prices online. The interesting thing here is the big difference in the way e-commerce works; for example, cash on delivery – if you don’t pay you can send something back and that is very rare in other parts of the world.

What do retailers do well here in the UAE?

They have built great (shopping) experiences. The mall culture is fantastic. Of all the places in the world, it is probably the number one for mall culture. One of the things that retailers in other parts of the world are struggling with is relevance. Why should people go to stores when they have the online resources?

Do you think the UAE is just slow to catch up?

I think that there is the potential for that. What we are seeing though, is a tradition of going to shopping malls as a social occasion in the region as a whole. If it changed, it would be a big cultural shift. You have got to find other things to do instead. What I suspect will start happening is product categories that are less interesting will start to become more and more online focused. But the things people like to go out and buy will continue to be bought in store. The three challenges of most retailers in the world today are data, relevance and experience. I look at the UAE and think it has relevance. It is still a relevant shopping experience which is pretty good but can be improved.

But do retailers here actually need these things to remain relevant? As you say, shopping is also part of the culture here.

Generally what happens is if you have a retailer who is making anything over 10 per cent in terms of margins, they largely become complacent. Complacency is what will kill them. There are always going to be new places to go to and while that continues to happen, they do have to make sure that they are investing in their experience and staying relevant. If they don’t, it will become a competitive threat.

So UAE companies are not immune to the challenges other retailers are experiencing?

Yes, it’s certainly something they can’t ignore.


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