Reviewing the latest retail trends & developments in the Middle East.

The retail industry in the Gulf Cooperation Council (GCC) is undergoing a period of significant

disruption. But this isn’t news, as we are all too aware the industry is experiencing seismic changes and facing unprecedented pressures on a global scale. What is interesting is the unique challenges the GCC is currently facing and the rapid pace of these changes.

One of the biggest developments that will impact every part of the retail industry is the introduction of ecommerce as a major sales channel. This isn’t likely to be a slow and gradual foray into ecommerce but a big bang launch led by some of the industry’s biggest players. Amazon signalled the start of the serious ecommerce battle with their acquisition of souq.com, which Goldman Sachs referred to as the “biggest M&A deal in the Arab world”.

The digital savvy and well-connected customer in the GCC will have high expectations for this new sales channel and how retailers use it to engage with them, inspire them and make their shopping experience more personal and convenient. It’s unlikely they will settle for second best.

This ongoing shift is going to lead retailers to ask themselves some difficult questions around the future of their business, including how they deliver the required business transformation and digital capabilities, how this is likely to impact their established store estate, and how this will impact their supply chain operations. It’s going to be a demanding few years ahead, but for the early movers and those that are willing to take calculated risks it’s all to play for.

FOREWORD

When attending The Retail Summit in Dubai, we were reminded that whilst some GCC

countries are continuing to experience enviable growth (Dubai predicts its retail industry will grow from $55bn today to $63.8bn in 2023), others are struggling with the effects of slowing oil prices, consumers’ declining disposable incomes and rising overheads. This slowing growth means many retailers will need to take quick action to adapt to the changing landscape to grow revenue and increase profits.

At the summit, we heard from retailers of all sizes about the transformations

and innovations taking place across their business and how they are responding to the changes in economic conditions and customers’ growing demands. We also heard about how they are nurturing diversity within their workforce and empowering women at all levels to help drive innovation.

Whilst in Dubai, we also took some time to complete a mini Store Tour to see for ourselves how the retail landscape has changed over the last few years and to compare it to the results of our Store Tours in New York and London.

We hope you enjoy our findings.

INTRODUCTION

Hannah TharpBJSS Business Consulting Senior Retail Consultant

the agenda and vision and show their teams there is a new way of working and creating products.

The second idea is that staff should feel engaged and empowered to drive change. This should initially be an easy sell as staff want to be proud of the organisation they work for, making it part of their day-to-day role and listening to and implementing the best ideas is the more challenging part of the conversation.

These two approaches are both crucial in creating and maintaining a sustainable business, however we fundamentally believe they must be implemented together to achieve the best results and long-term success. The CEO must walk the walk and talk the talk, incorporating sustainability into the business strategy. However, they must also listen to their teams and embrace and implement ideas that will help to change the business.

PEOPLE & TECHOLOGY AS CO-CREATORS AND CO-ENABLERSWe all know retail is a people business that is being heavily disrupted by technology. The most successful businesses we work with recognise that people are at the centre of their business and invest in and empower them. They then embrace technology to enhance their abilities and efficiency to deliver an improved product or customer experience. It is vitally important both people and technology are valued, developed and nurtured together.

Christian Meyer, from Tiger of Sweden, spoke about creating a winning culture and celebrating the big and small

wins. He spoke passionately about the importance of empowering staff and making sure they can contribute to something bigger.

Asil Attar, of Damas Jewellery, shared her powerful view that strong company cultures are built on trust. She also spoke of the importance of senior staff spending time on the shop floor to remain close to the business.

The flipside of this is that our industry is changing rapidly and companies need to balance their investment in people with their investment in technology. The right investment - and right is a key word here will allow companies to harness the power of technology and data to tap into insights about sales, customers and team members, which will allow them to deliver their business objectives.

People and technology are co-creators and co-enablers of future business models, products and services. One cannot succeed without the other and this makes for a fine balancing act.

CONCLUSION To us the key message underpinning these three themes is the need to constantly challenge yourself as an organisation - whether that’s to innovate, become sustainable or to produce the best products you possibly can. In good economic times the retailers that don’t challenge themselves are likely to remain stagnant or possibly deliver small growth, but in the bad times they will potentially become unprofitable or be disrupted by someone that will challenge them.

This isn’t a new message, and it’s something we are clearly seeing play out in Europe and America. Against the changing economic backdrop of the GCC this is a hugely important message, and one that retailers need to pay attention to and quickly.

The mix of brands, variety of different retail models and differing heritages made for a lively and interesting debate across the two days. Despite this diverse mix there were common themes across organisations, and we took away three standout messages which we think are hugely applicable to retailers, regardless of their size or location.

DON’T BE AFRAID TO INNOVATE AND DISRUPT YOUR OWN BUSINESS Innovation must be part of your company’s DNA. Any retailer that neglects innovation will fail to be relevant or successful. But balancing the scale of a large organisation and the benefits this brings with the need to be agile, innovative and to fail fast is a hugely challenging task for retailers and one that takes great skill to navigate.

Julien Callede from made.com shared his view that start-ups are so good at disrupting industries as they have nothing to lose. Once companies start to scale, make revenue and profit, and have a loyal customer base they naturally become more cautious - one wrong move and it could all be over. This cautiousness then makes way for younger companies to disrupt them as they have nothing to lose and no fear.

To survive, it’s crucial that companies push themselves to innovate. He recommends choosing a KPI that will be delivered through innovation. For example, 10% of your turnover for the year will be delivered through a service you don’t currently have. This helps to drive constant, measurable innovation.

Julia Goldin spoke about how LEGO has remained a hugely successful brand

due to their commitment to innovation and the mindset and culture within the company that helps innovation thrive. It’s of course expected that a toy company will continue to innovate, but LEGO go beyond this in the new experiences they create for their customers.

She also showcased the impressive way they harness the excitement and passion of their customers. Through LEGO Ideas customers are able to recommend sets they would like LEGO to make; if their idea gets enough votes from other customers LEGO will make the product. This is a pretty impressive way to get new ideas and deliver innovation you know your customers will love. One of the most impressive sets has to be the Women in Science Research Institute.

BUILD AN ENVIRONMENTALLY SUSTAINABLE BUSINESS This is a topic that has quite rightly been gaining momentum for several years, and it featured in many conversations and debates throughout the event.

There were lots of views on how to implement and embed sustainability within an organisation and to make it part of everyday culture. There were a number of fascinating ideas that retailers have implemented within their own organisations, however there were two that really resonated with us as absolute must haves.

The first idea, shared by Patrick Chalhoub and Richard Branson, is that the sustainability initiative must be driven from the top. This means that senior leaders must have the right approaches, ambitions and mindset for their organisation. They must set

The stats show women are under-represented at senior levels within the industry and my personal belief is that having more diverse boards and senior leadership teams leads to much more successful and interesting companies.

This was a hot topic throughout The Retail Summit, and there were many moments where I felt hugely inspired by women who have achieved great things in their careers and there were a few key messages that really resonated with me.

KNOWLEDGE, AMBITION AND SELF CONFIDENCEAsil Attar of Damas Jewellery, shared her view that success can be distilled to three core elements. Be the best you can be at your job and profession – there is no substitute for this; be ambitious and aim for the top; be confident in who you are and your own opinions and be authentic.

SOMETIMES SUCCESS IS FAILING We can’t fear failure. Jo Malone and Holly Gagnon shared their valuable advice that we will stub our toes, fall over and bruise ourselves but we will get up and try again the next day. Fighting for something creates resilience and strong leaders, and failing at something is success as it means you’re trying. We must remember this and stop expecting perfection in everything we do.

BE NICE An opinion that was shared by many women I spoke to at the event, and many women I have worked with. Sometimes it’s easier to work with men because they are perceived as being more straightforward. Women need to work together and support, motivate and inspire one another if we are to succeed. To use the words of Asil Attar, ‘we need to stop being bitches’ to each other.

WE MUST WORK WITH MEN, NOT AGAINST THEM We can’t do this alone. We need to work with men to change the industry; we must treat them as allies and bring them on the journey with us as colleagues, partners and friends. We need to work together to find a balance; together we are stronger and will create more successful organisations.

CONCLUSIONWe should be hugely proud of all of our achievements and how much progress we have made since our grandparents’, or even parents’ generation. There’s a way to go still, but if the honest conversation continues and we support each other we can look forward to a very exciting future.

WOMEN IN RETAILAs anyone in the BJSS Retail team will tell you, I am a big believer in empowering women in the workplace and supporting them to fulfil their potential.

DUBAI STORE TOUROur mini BJSS Store Tour attempted to identify the most innovative, varied and interesting stores in Dubai. As always, during our tour we reviewed the stores based on our three top criteria; brand, digital and experience.

METHODOLOGY

Stores were rated against three categories:

Brand

The ability to surprise and delight customers, offering a differentiated experience which creates a genuine and authentic relationship with customers, based on trust and integrity.

Digital

Delivering relevant and individual interactions across all touchpoints, subtly introducing technology to reduce friction and be in a position to respond quicker to customer needs.

Experience

Becoming a seamless, customer-centric organisation which reacts and adapts to the individual customer’s needs, combining customer service, convenience, comfort and personalisation.

OUR SCORINGMarks were awarded for each category:

Lagging

Where corrective action is required, the distance between these retailers and the pack will slowly widen unless action is taken. Followers are faced with the strategic choice between investing in capabilities to achieve parity with the industry or investing significantly in transformational initiatives.

Industry Average

On par with the industry, these retailers risk missing the boat. They need to focus on outmanoeuvring competition by identifying and investing in strategic foundational capabilities to increase the opportunity for growth.

Best in Class

Ahead of the industry pack and leading their formats, they have a strong understanding of their target market and offering and deliver upon it.

Industry Leader

Significantly ahead of the industry, they are raising the bar across the retail industry. Industry leaders may not necessarily excel in all areas but do so at those which matter the most for their business.

OUR FINDINGSOur main takeaway from the Store Tour was that the physical store in Dubai hasn’t seen much change or innovation in the last few years. On the whole, it was an underwhelming experience and lacked the new and exciting stores and experiences we are used to seeing in cities like London or New York. It reinforced the point that Dubai isn’t even a fast follower, it is behind the curve.

Perhaps as retailers in this region begin to fight for customers and market share they will be forced to innovate to attract new customers and build loyalty with existing customers. We might then see interesting stores like Roman and Williams Guild appear in the vast shopping malls and begin to challenge the status quo.

From our mini Store Tour, we have selected three stores that we think are attempting to achieve great things with their branding, use of digital and customer experience. We’ve taken a look at their ambition versus the reality and, as always, provided our honest opinion.

As a loyal Samsung customer I left the store feeling disappointed. The new Samsung flagship promised so much and delivered so little. According to Samsung, the store boasts a multi-sensory experience showcasing the future of connected homes and the latest tech, with spaces for product workshops and a specific customer service area. In reality, we found the experience to be a little different.

The areas of immersive tech designed to convince us we need to live a Samsung life failed miserably. These areas weren’t intuitive enough for us to dive in and play with on our own and the staff were not engaged or interested in guiding us through the journey, despite there being an alarming number of them in the store. The result? We can’t imagine what

the future holds and we certainly aren’t inspired.

The hugely frustrating thing is the store had so much promise. With beautiful products displayed everywhere you turn, opportunities to see the tech in action, a feature accessories wall and interesting workshops designed to help customers to get the most from their products. But, when your customer offer is so simplistic you can’t afford to have indifferent staff, products covered in fingerprints or a thing out of place.

To us this felt like an Apple store that lacked the Apple magic. It showed you can cram all the tech you want into a store but if the basics are missing and the customer service is non-existent you really shouldn’t bother.

SAMSUNG We imagined so much more.

Of the stores we visited, Nike was the standout for us. There’s no question this is a cool store that delivers retail 101 in abundance and showcases the Nike brand beautifully.

The store enticed us in with huge brightly coloured screens showcasing the brand, and the clever merchandising continued to pull us through every one of the 30,000 square foot to explore each sport in turn, from running to tennis to golf. There was an amazing mix of standard Nike products mixed with Middle East specific products, such as the hijab designed for running, which made the assortment even more impressive and helped to strengthen the brand message.

Throughout the store the designers made the most of the building’s architecture and created a perfect balance between the industrial building and the bright products with dramatic fixture displays. Without a doubt the highlight of the store was the circular trainer display framed by 30ft panoramic

windows showcasing the Dubai skyline.

There was a smattering of tech throughout the store, an interactive map, a personalisation bar and a running gait analysis machine that showed the customer running through the Dubai skyline. However, the subtle use of tech throughout the customer journey wasn’t particularly ground breaking and the beauty of the store and products were allowed to be the star attraction.

Unlike the NYC store, which we found loud, distracting and a total sensory overload, this shop was fun and relaxing and made us actually want to shop. There was no tech for tech’s sake and the merchandising was on point from every angle.

his was a real highlight of our visit and showed that when a retailer focuses on creating a beautiful store and good customer experience, instead of focusing on the newest and latest tech, it can create a powerful and memorable experience for all the right reasons.

NIKE Simple can be beautiful.

Brand

Digital

Experience

Brand

Digital

Experience

“ Showcasing the brand

beautifully.

”

“ An attempt at a digital

store.

”

If you ever doubted there are enough sweets in the world to fill a 11,500 square foot store you need to visit Candylicious, the sweet shop that delivers a unique experience.

When approaching the store we were met with the staff dancing and singing at the entrance to incredibly loud music. This really set the tone for the Candylicious experience. The store is a total attack on the senses and what I imagine is every child’s idea of heaven and every parent’s nightmare.

The store is set out in distinct zones covering everything from gourmet ice cream, a jelly bean pick ‘n’ mix, a popcorn shop, a gourmet chocolate

counter to a machine that prints sweets in the shape of your loved ones. It also has an impressive Willy Wonka style tree in the middle of the shop displaying oversized lollipops. What more does a sweet shop need?

As a novelty store it was extremely well executed and visually very impressive. It was very easy to become distracted by products you didn’t dream existed and as a result I would predict the average transaction value is higher than the basic sweet shop. To earn top marks it would be interesting to see how Candylicious encourage repeat visits and drives loyalty with their customers to ensure they aren’t a shop people visit for a treat or for the novelty factor.

CANDYLICIOUS Willy Wonka on acid.

Brand

Digital

Experience

Whilst our reviews of shopping in the GCC aren’t all glowing, it’s useful to remember that the region has been experiencing double digit growth for a long time and that during this time stores largely met the needs of their typical customer.

It is only in the last few years that the economic landscape has begun to change and consumers have started to demand a more engaging experience from retailers.

Based on our experience, and our previous BJSS Store Tours in New York and London, we have identified the top three things we think retailers in this region should be doing right now.

REDEFINE THE ROLE OF THE STOREMany retailers will have large and expensive store estates that are unlikely to be required in this new world. These store estates will be too costly to operate as growth slows or moves to another channel. They will also fail to deliver the value they once did as they won’t play such a pivotal role in building brand presence or acquiring new customers, or indeed serving existing customers.

Retailers need to ask themselves some tough questions about the role of their stores and crucially how they fit into the overall customer experience - and they need answers quickly. The store’s role will need to be clear to both the retailer and the customer otherwise it will lead to a confusing customer experience, expensive overheads and a fast track to disaster.

Decisions need to centre on the customer and be based on robust user research and data. This will enable retailers to decide if their stores should, for example, be there to deliver a convenient experience, or to provide an exciting and engaging experience to acquire new customers and build loyalty with existing customers.

DESIGN THE END-TO-END EXPERIENCEAs part of redefining the role of the store and the new emphasis on ecommerce, retailers will need to understand their new end-to-end customer journeys. The days of visiting a store to browse, get advice and purchase are a distant memory. Retailers in the GCC will need to manage customers browsing, comparing, purchasing and returning across multiple channels at any time of the day.

Delivering these functionalities separately isn’t enough, retailers need to establish how they deliver a consistent brand experience across all channels and how this impacts their existing store experience and operations. For example, now customers will expect to see if something is in stock before they visit, easily compare it with other products on their phone, talk to sales associates and checkout using their phones in store.

But more than this, customers will expect their service and experience to be personalised to them, in every single channel.

Retailers need to seize the opportunity to be an early adopter and deliver an exceptional experience that is right for their brand and their customer. Those that get this right will be able to capture new customers and drive real customer loyalty.

DEVELOP VERSATILE LOGISTICS

Delivering this new customer experience will require a far nimbler supply chain and logistics operations.

Firstly, better forecasting and predictive analytics will be required to ensure the right stock levels are in place across channels to meet customer demand. Algorithms will need to be in place to pre-empt demand and move stock accordingly to ensure it is being promoted and sold through the best, and most profitable channel.

Logistics systems will need to be able to serve all channels to allow purchases to be made in one, delivered through another and even returned through a third. This process will need to be seamless for the customer and quick for the retailer to avoid products becoming stuck in a returns cycle for prolonged periods of time.

Without these supporting logistic capabilities, retailers will not be able to deliver the expected customer experience. This will inevitably detract from any ‘cool’ digital experiences implemented in store or any pretty user interfaces online and will fail to drive the required customer behaviour.

CONCLUSION These elements are all challenging to deliver, especially in a competitive marketplace that moves incredibly quickly. We really believe that retailers in the GCC must take action to gain first mover advantage and build a strong reputation for customer experience and to win customers’ loyalty.

They only need to look to retailers in the west to learn their fate if they choose to take no action.

“ On point customer

experience.

”

Hannah is a Senior Retail Consultant who specialises in delivering market leading customer experience strategies, with a focus on enabling retailers to develop their

omnichannel customer offer. She is renowned for delivering customer-centric client solutions that are both market differentiators and drive real business value.

Hannah has honed her skill-set through her international experience with a range of tier one and tier two retailers across general merchandise, fashion and grocery.

hannah.tharp@bjss.com

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