Connected, empowered, and spoilt for choices: the modern consumer is driving widespread disruption across the retail industry. Not long ago, consumer’s access to products and services was controlled by stores in the Middle East. This is how, by and large, the retail value chain in the Middle East looked like:
Did Consumer Market Players Fail to see the Emerging Picture?
Several trends were emerging:
- Mobile was fast becoming the device of choice
- Online buying platforms such as Amazon were coming up in the region
- With more than 1/4th of Middle East’s population between the ages 14 and 29, influence of Gen-Z was growing fast
Uncertain about how to correlate these trends, most brands and retailers were busy reaping fruits of investing in chains of stores and mass marketing. Come 2020, retail industry was enjoying the best possible start to a business year when suddenly, the coronavirus struck.
With technology empowering consumers to have more control on how they wish to select, compare, try, and purchase, traditional retail value chain (Manufacturer-> Retailer-> Consumer) will have to evolve.
Consumers at the Heart of Retail Value Chain
At the heart of this evolution will be the consumer and it will be driven by digital transformation, technology adoption, and how deeply consumer market players learn experience expectations of different consumer segments. The evolution will drive, moves and counter moves, across the value chain, posing existential threat for some. On the other hand, those players who are agile and are willing to innovate new business models, delivery mechanism, and integration of in-store and online, will thrive.
Future Retail Value Chain
Lines across the retail value chain are blurring. Brands are not only adopting Direct to Consumer (D2C) models but are also enabling other online channels, aggregation platforms, and marketplaces.
As seen here, technology has enabled new competitors for traditional retailers. International and local online players are also vying for a piece of consumer attention. Consequently, brands can no longer continue to ignore their presence and have to induct them into their partner ecosystem. Similarly, affected by the overall slump in shipping business, courier companies also sense an opportunity to get into retail fulfilment, bypassing the conventional retailer. The D2C opportunity, combined with marketplaces and intermediaries is exerting increasing pressure on the traditional retailer. The snowball that’s being created against the traditional in-store business model requires retails to adapt and adapt fast. Where can they start?
Retails Stores are not Going Anywhere
Despite rapid adoption of online retail, consumers will never abandon physical stores and malls. However, retailers in the Middle East will have to enhance the physical shopping experience. Key initiatives that consumer market players would need to start working on include:
- use of advanced contactless technologies
- seamless integration between in-store and online shopping experience
- opening of neighborhood stores for consumers who find it inconvenient to go to crowded malls
- investments into learning consumer behaviors
The Real Thing
It is not only retailers and brands, but all players in the retail value chain are realizing that in order to carve out a niche for themselves, they need access to real consumers. Therefore investments need to be done in soliciting direct consumer views on various aspects of the experience they expect, be it at the beginning of their experience Journey or the last mile of fulfilment, or aftercare service. The ability to gather insights on how, where, why, and what consumers spend will not only help to arrive at a successful omnichannel strategy, but would also be the key differentiator between flourishes or getting vanished in the new retail value chain.
