How has Covid-19 affected retailers in the Middle East as stores start to reopen?

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by ShopperTrak on 23-06-20

Retailers, buying groups and franchisees in the Middle East have all been impacted by Covid-19 and the gradual reopening of stores will simply add to their costs as they look to guarantee the health and safety of their staff and customers. However, they are adopting a range of initiatives to cope as well as position themselves for the future as true omnichannel businesses.

According to our Middle East figures, both Dubai and the United Arab Emirates (UAE) as a whole, have seen similar footfall drops and recoveries. During week May 12-18 footfall in UAE fell by 100%, such was the impact of the lockdown, and even as some countries emerge from lockdown, footfall was still down by over half in week June 7-13. In Dubai, the May figures were the same, and in week June 7-13 they were slightly worse than UAE. Even allowing for a surge in on line retail, luxury brands were worst hit, with a slump of 90% from the 1st week of April.

Shift to on line

Supermarket chain, Bindawood has kept its 72 stores open, but massively ramped up home delivery from on line orders. As early as March, the company said that its average sales on a 10-day basis had increased by 200%, while its average order value rose by 50% and app installations by 400%.

Further evidence of a shift to on line comes as the government of Dubai builds a new free trade zone for e-commerce named “Dubai Commercity,” which will provide a base for online retailers. The $870 million development, next to Dubai International Airport, is the first of its kind in the region. The developers say the coronavirus pandemic has spurred rather than stalled their progress.

“The need for world class e-commerce services has never been greater,” said Mohammed al Zarooni, director general of DAFZA. “Having previously identified the region’s growing e-commerce market and given the traction witnessed by clients (going) online due to the pandemic, we are on track for the scheduled opening by the end of 2020.”

Ecommerce giant Amazon is also taking advantage of the growth in on line retail and launched Amazon.ae, a rebranding of Souq,com which it acquired in 2017 and already includes 14 warehouses in Saudi Arabia. Meanwhile, bank HSBC, through its C3 Social Impact Accelerator Program, has already attracted 600 entries from startups betting on an on line future in the region.

Traditional retail development has slowed during the crisis. Dubai had been developing seven new malls in the last three years, shrines to the new generation of malls balancing retail, entertainment and hospitality. For instance, Cityland Mall will feature an open-air garden in the centre, a 12-screen cinema, 75 restaurants and space for 350 shops over 2.2 million square feet, anchored by a Carrefour hypermarket.

During the crisis, most retailers with on line businesses were able to pivot and continue to accept and handle orders, but as stores reopen, not all that uplift will return to bricks and mortar but stay on line. So, retailers will have to think doubly hard about how to deliver both a safe and a rewarding experience to customers who do come back into store.

Retailers that are closed have used the time to put procedures in place, buying relevant cleaning and personal protective equipment and communicating to both staff and customers. As stores reopen, we can see the results of this focus; health and safety measures in Dubai malls include increased disinfection, temperature checks, thermal screening tests and ‘sanitisation tunnels’. The Nakheel mall has required that all customer service desk staff get tested for Covid-19, increased security staff by 30 per cent and installed sanitisation tunnels at larger malls for key workers.

The future is blended

The gradual blending of shopping journeys between on and offline that had been going for some years will now accelerate, as consumers embrace click & collect and so avoid coming into the store. In response, some retailers are offering home delivery following a store visit, or kerbside delivery straight into the customer’s car, whether they ordered in store or on line. Dubai-listed Shopandship.com has seen orders rise sharply as it enables shoppers to source goods from all over the world and have them delivered to their homes or shopping mall.

Franchisees and buying groups that rely on foreign brands have been hard hit because they are at the mercy both of landlords and franchise owners. Now is a good time for them to better understand their customers’ buying behaviours and footfall trends so that they can adopt the right mix of people, processes and technology to take advantage of them.

Communications with consumers need to become more personal, still digital but more peer to peer, particularly to handle things like appointment retailing where customers book their store visit in advance, knowing that they are expected. Customers will also be secure that the environment will be safe for them when they arrive and that stock has been definitely put aside for them.

In order to avoid touching stock, customers will be able to take part in virtual store visits, enabled by technology that connects them to a member of staff who can take them on a store tour and show individual items to their best advantage.

Closer customer connections reap rewards

A further advantage of this personal approach for retailers is that they are making closer connections with customers that will make it easier for marketing to keep in touch with communications based on preferences and previous purchases. Personalised services can then be added to ensure a complete experience, including mini fashion shows, special delivery, hospitality and personalised products.

In order to have more certainty that their initiatives will actually work as well as deliver a profitable return, collecting data on store traffic and analysing it will become more important than ever, because of the growing range of behaviours displayed by customers post Covid-19. For instance, consumers that always liked to shop in store and did not trust ecommerce, have had no choice during their lockdown but to buy on line.

Many have discovered that they quite like it and are embracing it; what this might mean in store is that they shop both channels for a single order so it will be important for the retailer to understand how the store should be designed, laid out, stocked and staffed to ensure that new customers with new behaviours and new expectations are given the best and most relevant service.

So what might this blended retail actually look like? Emaar Malls has partnered with Noon.com to open The Dubai Mall virtual store, providing support to retailers and the community during the pandemic. Orders will be delivered by Noon.com’s distribution and delivery network, and its fulfilment centres. The delivery service is free, safe, cashless.

Hypermarket chain, Carrefour has seen online orders surged 300% during the crisis so it has turned some outlets into mini fulfilment centres, so cater for 2,000 additional orders. And in UAE, retailer Majid Al Futtaim (MAF) has launched an online shopping service through Carrefour’s website and mobile app. The marketplace lists more than 250,000 products, with sales reaching up to 1,300 orders daily.

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