Retail Industry

Retail is undergoing a revolution across the value chain. As a result, several key trends are emerging.

Adoption of Online Retail

For years, we have been hearing about the disruption online retail will bring to the in-store shopping. However, until 2019, online retail accounted for 2% of the overall Middle Eastern retail market. In mature markets, online retail accounts for up to 15% of the total retail. Online retail is driven by the younger segment of the population, which, in the Middle East, is over 25% of the total population.

Why is the adoption of online retail slow then? There are two key reasons:

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1. The wide experience gap between walking around a physical store versus browsing a mobile app’s online catalogue remains to be filled.

2. Supply chain issues and costs related to home delivery of online purchases remain to be sorted out.

Whether regional retailers were too busy or complacent with the traditional model, the coronavirus has enforced an urgency to adopt online retail now.


Advancements in retail technology contribute consumer experience enhancement, specially when shopping online. Voice recognition, Machine Learning (ML) and Artificial Intelligence are now good at predictivity and reduce the time and amount of information online shoppers need to input into the interface. Data analytics enables Personalization of the online shopping experience, and curates better choices based on consumer preferences. 

Although most Middle Eastern retailers haven’t yet used the power of analytics to facilitate personalization, it is just a matter of time now.

Lastly, technologies like Augmented Reality (AR), Virtual Reality (VR) and Mixed Reality (MR) enhance the overall shopping experience, whether a consumer is at home or in a mall.

From Multichannel to Omnichannel

Most retailers have adopted a multichannel retail strategy, which needs to be migrated to omnichannel, where consumers get the same shopping experience, regardless of how they choose to buy.

Omnichannel is critical to grab the consumer mindshare. For a traditional Bricks and Mortar Store, omnichannel means blending the best of online shopping and physical stores. This strategy is however not easy to implement either.

1. Bricks and Mortar Retailers know how to run stores with high turnover and manage large team

2. Online Retailers have little experience with physical stores, other than pick up points and/or depots

The Evolving Retail Value Chain

The traditional Retail value chain (Manufacturer → Retailer → Consumer) is fast evolving. This evolution is fueled by the convergence of Consumer Experience, Technology and Data Analytics. While store owners controlled the traditional value chain, the evolving value chain will center around consumer choices. Consequently, brands are pursuing Direct-to-Consumer (D2C) strategies including social media, online channels, and marketplaces (platforms).

To stay relevant, all players need to deconstruct the retail value chain and reconstruct it. They need to align with each other and reposition themselves in the new value chain. This will require them to undergo several changes in their business models and the ways in which they operate. There will be some winners and some losers.

It all Boils down to Consumer Behaviors

Albeit slow, the retail industry was on its way to a transformational change. Contrary to the hype that traditional stores will go out of business, the fact is that consumers will never abandon physical stores and malls. At the same time, online retail activity will see a sharp consumer adoption. In both cases, the retail industry transformation is being driven by consumer behaviors. The vast choices technology provides to modern consumers, the influence Gen-Z has, and the growing adoption of online marketplaces are trends that will govern.

Those who invest in learning consumer behaviors and expectations will rediscover themselves and thrive. Those who choose to ignore consumer behaviors will find it difficult to justify their existence.