The omni business model:

a UAE perspective

Earlier this year, KPMG International and the Consumer Goods Forum (CGF) surveyed 400 senior consumer executives at the world’s largest consumer and retail brands. 7,100 consumers in 19 countries were also asked about their shopping behaviors and preferences to see how aligned executive strategies are with consumer sentiment. In this perspective, we share insights and leading strategies from some of the world’s most advanced omni businesses, with a UAE perspective on five key trends.

Globally, it is clear that the consumer industry has moved from facing disruption to being disrupted. Supply chains have been revolutionized. So have customer touch points – to the extent that achieving customer-centricity has become a determinant of survival, rather than a differentiator. But how accurately does this apply in the UAE, with high consumption levels and one of the world’s highest smartphone penetrations? In our global study – Seeking customer centricity: the omni business model – we look at how markets and competitive landscapes are changing, creating significant opportunities for agile, forward looking companies. Globally, leading edge retailers and manufacturers – and their supply chain partners – are transforming their companies into digital-first, customer-centric integrated omni businesses. In this brief overview, we look at how developments in the UAE reflect changes in the global consumer marketplace.

Businesses are transforming from omni-channel to omni - moving from seamless integration across sales channels to seamless integration of all functions, enabled by digital technology and centered on the customer. Omni is no longer about marketing – if it ever was. Consumer-facing organizations must transform both their experience design and their delivery architecture, operating with experience centricity from the inside-out and the outside-in.

I am sure you will find our perspective interesting and we would be pleased to discuss it with you.

Our survey suggests that, unless tomorrow’s consumer businesses are laser-focused on the consumer, using data and analytics and technology to target, serve and customize products and experiences for a highly segmented customer base, they will fail. Companies need a deeper, multi-dimensional understanding of their customers. Advanced data analytics and smart technologies can be used to track and anticipate customer behavior in near real time. Personalized products and experiences can be delivered when, where and how the customer wants them. But – and it is a big but – keeping up with fast-changing customer demand is not easy.

UAE data suggests that UAE consumers expect more –and that consumer companies globally are lagging behind customer expectations.

Becoming hyper customer-centricDigital channels are already replacing bricks and mortar outlets – both here in the UAE and globally. Digital transformation offers both opportunities and challenges – if done right, it should enable consumer companies to rethink their strategies, operations and business models, generating new levels of growth, efficiency, productivity and competitiveness. However, as we have seen across the economic landscape, digital is not easy – and it should not be seen as a cure all.Increasing use of social media and other new media and attracting, developing, and retaining talent are seen as top priorities globally and in the UAE. Expanding global operations was more than twice as important for UAE companies. Improving service and customer experience and moving to a more integrated omni-channel model barely registered for UAE companies, although cited by approximately one in four of global consumer companies.

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Are UAE customers more demanding?

0% 10% 20% 30% 40% 50%

Expanding global operations

Improving service and customer experience

Moving to a more integrated omnichannelmodel

Increasing use of social media and other newmedia

Driving digital transformation throughout ourbusiness

Making better use of data and analytics

Building and sustaining customer loyalty

Collaborating with customers and suppliers

Improving our mobile capabilities

Complying with global regulations

Different priorities for UAE consumer companies

There are no easy ways to develop a digital-first mindset but experience suggests that businesses should focus on three leading practices – defining digital; developing a multi-speed operating model; and making digital everyone’s responsibility.

Anurag BajpaiPartner | Head of RetailKPMG in the Lower Gulf

GlobalUAE

GlobalUAE

Trust is the best way to maintain customer loyalty in a digital world where consumers have access to huge amounts of information – not all of which may be accurate. In emerging markets, where consumer protection standards can be relatively weak, building trust is even more important.

The optimal supply chain structure in today’s omni business environment is fully integrated with the front-end of the business and is flexible and agile enough to react to constantly changing customer needs and market dynamics. Supply chains need to balance cost with keeping customers happy and providing a better consumer experience – a level of sophistication that very few companies have been able to provide. Companies are approaching this challenge by making better use of data and analytics, which is also being used to improve coordination with supply chain partners.

The top three priorities for UAE companies – while they generally reflect global priorities – suggest that UAE consumer companies understand there is something of a gap between current and leading practice - and that they need to catch up. More than half of UAE respondents said that improving distribution speed and efficiency was a top supply chain priority. At the other end of the scale, optimizing tax impacts got relatively few mentions – although this may change as the imposition of VAT gets closer.

Creating a supply chain fit for purpose

Our survey suggests that building an omni business model will be vital to win in tomorrow’s consumer industry. Experience suggests that there are a number of critical success factors and challenges:

Again, there are marked differences between UAE and global responses. Globally, consumer executives saw technology and culture as the two most important challenges – both of which ranked relatively lowly with UAE executives. Measurement and understanding of ROI and an agile supply chain were significantly more important to global executives than to their UAE peers.

Building a world-class omni business

0% 10% 20% 30% 40% 50% 60%

Improving distribution speed and efficiency

Aligning front and back-end operations

Ensuring quality and adherence to standards

Expand global business and sourcing

Improving inventory and resource tracking

Supply chain priorities

0% 20% 40% 60%

Monitor and eliminate bribery, fraud and other forms ofcorruption

Go to market through new brands

Eliminate product complexity/phase out certain products

Promote worker safety and integrity in our supply chain

Empower workers and suppliers through training

Protect customer data and ensure secure transactions

Collaborate with companies, government agencies andkey stakeholders

Reduce waste by changing processes, product design,and business models

Create corporate social responsibility programs

Ensure food and product safety

Use audits and third-party specialists to verifycompliance

Improve communications around ethics, integrity andsafety

Promote consumer health and wellness

Communicate clearly what our brand represents

What are companies doing – and what do consumers think they should be doing?

% of consumers said they think it is where companies need tofocus to build trust

% of UAE execs who said it would be a top 5 tactic to buildtrust

% of global execs who said it would be a top 5 tactic to buildtrust

Our survey suggests two things – that worker empowerment is seen as more important in the UAE than it is globally and – more importantly – that there is a significant gap between what companies say they are doing and what consumers think they should be doing to build consumer trust.

0% 10% 20% 30% 40%

Measurement and understanding ofomnichannel ROI

Agile, demand-driven supply chain

Full integration between front and back endsystems

Right pricing strategy across channels

Ability to drive digital innovation

Top five success factors

0% 10% 20% 30% 40%

Appropriate technology

Culture that embraces innovation andcollaboration

Full integration between front and back endsystems

Integrated distribution and logisticscapabilities

Right new business partners

Top five challenges

UAE Global

Becoming hyper customer-centric

UAE Global

Contact us:

kpmg.com/AE/en/industry/Consumer-and-Industrial-Markets/Pages/default.aspx

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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Recent consumer industry-focused thought leadership:

Anurag BajpaiPartnerHead of Retail+971 50 553 6117abajpai@kpmg.com

Anurag is recognized as a subject matter expert in the consumer market sector, having worked on a number of engagements for international franchises –both franchisees and franchisers – and principals. Anurag has advised C-suites and boards at a number of UAE-based family businesses and leading global multinationals.

Rahul JainSenior Manager+971 4 3569710rjain4@kpmg.com

Rahul is a Senior Manager in our Consumer and Industrial Markets department. He has significant retail, automotive, real estate, trading and manufacturing experience, having worked with a number of major UAE companies.

An audit partner based out of our Abu Dhabi office, Akil’s portfolio of clients includes large local and multinational consumer and industrial market clients in the luxury retail, automotive and food and beverage sectors. He advises C-suites and client boards of directors.

Akil VanthliwalaPartner+971 56 683 3245avanthliwala@kpmg.com