Lessons From China: Five Predictions For The UAE's Retail Landscape
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I have just returned to the UAE after a five-year retailing re-education in China. It’s good to be back, because there’s just nowhere else like Dubai when it comes to in-store activation. Whether at the shelf, along the aisle, or in the mall, this place leads the world with in-store creativity and communication- just visit Carrefour in the Mall of the Emirates or Ibn Battuta Mall in Dubai, and you’ll see what I mean. In China though, I got a glimpse of the future -our future- that stretches beyond simple communication and traditional creativity.
So, here are five things that I predict will be coming our way, and changing the way commerce is conducted here in the UAE within months, if not weeks:
1. ADDED VALUE ON E-COMMERCE
In most parts of the world, e-commerce is a sales channel where shoppers go to save time, but in China, it’s different. It’s a place to go to kill time- to be entertained! Millions are logging on to e-commerce platforms and marketplaces looking for entertainment experiences. Live broadcasts, influencer events, gaming, competitions, you can find them all on Tmall.com or JD.com. For the most part, that’s not yet the case here, despite the internet playing a major role during the discovery process for both online and in-store buyers, with 48% of UAE consumers getting their shopping ideas and inspirations online- there is still much to do. The opportunities, however, are clear for all to see.
2. TRUE OMNI-COMMERCE RETAIL
A key driver for the development of e-commerce in China has been the lack of physical retail infrastructure. The increasingly affluent Chinese shopper needs access to the latest products and brands, and they don’t want to simply just purchase, rather they want an experience. This has forced retailers and brands to create shopper-centric experiences via content and platform innovation. Digital experiences, CRM, chatbots, etc.- all of them within what is essentially a shopping platform. Just as online retail has adapted to the market, offline retail has had to up its game too with the same data collection, personalized, tailored experiences being offered in-store and at-shelf. Stores are portals to more experiences. Consumers shop via mobile devices, with the QR code (often sniffed at in our region) being the most common bridge to exciting new purchase driving content.
But perhaps the most exciting omni-commerce development in the past year has been Alibaba’s Hema Fresh. An innovative O2O (online to offline) concept which is a platform, physical store, restaurant, fulfilment center, and go-to e-commerce merchant for fresh groceries. Delivery times are usually under 30 minutes within a three-mile radius, and in big urban cities where Hema Fresh is located, this has even had an effect on real estate prices! Imagine if that was to happen here.
3. JOINED UP PAYMENT
Paying for what you buy has also seen a seismic shift in China. Mobile payment has exploded in the last three years, and if cash is not dead, it’s certainly dying, especially in the big cities! Paying for groceries, taxis, your morning coffee, renting a bike, even giving money to friends, are now activities almost exclusively conducted via the payment duopoly of WeChat Pay or Alipay digital wallets.
When payments are conducted digitally, it provides a more frictionless experience for the shopper. Scan-and-go in stores and facial recognition payment options are all currently in play, as well as coupon redemption via mobile, allowing for a much more seamless transactional experience. The UAE has some of the highest internet, smartphone and social media penetrations in the world, so it’s no surprise to see that at a governmental level, here in the UAE, we’re seeing massive advances in the range of payment options coming to market. Innovations like the Dubai Now app are putting flexibility and convenience front and center of the user experience.
The truth is we are a highly diverse consumer community here, with all nationalities wanting to shop pretty much as they do at home. So, I’d say when it comes to innovative payment options in-store, we still have some catching up to do. In the UAE, we are yet to see homegrown tech giants dominating the way they are in China. But rest assured, just as the increase in Chinese visitors will shape tourism here, it’ll shape commerce too. You may have noticed WeChat Pay payment options are now being offered not just by tourist hotspots, but by major supermarkets too- so expect more ways to pay for goods in-store to be offered to all of us soon. This is only the beginning.
4. SOCIAL COMMERCE
Continuing with the digital-first theme, we must consider the potential power of social media to drive purchases. Frankly, the ubiquitous social media platforms in China like WeChat, QQ, and Weibo have completely changed the way brands bring their products to market. All of these platforms are now used to drive purchases, either directly through their own sales functions, or more commonly through direct link and partnerships with larger e-commerce players.
The model is essentially very simple– push out content to start a conversation, create social buzz, pull interest and engagement by providing an experience, and then provide an easy link to an incentivized purchase on ecommerce. The majority of brands and retailers in our region have been surprisingly slow in harnessing the power of joining up social media with commerce. Although the past few years has seen some trailblazing initiatives such as Arla Foods’ Arabic cookery platform Saha w Hana, and influencers likHuda Kattan establishing a significant presence on YouTube with 2.4 million subscribers and 100 million video views, and as a result, building a prominent beauty brand, Huda Beauty, that has been fueling demand online. I think we can expect to see more Facebook and Instagram initiatives that lead to purchases in the coming months.
5. DATA AND PERSONALIZATION DRIVING PURCHASE
Of course, underpinning most of the commerce revolution in China is the ability to collect and utilize data to create highly targeted and sometimes personalized experiences. The ability for brands and retailers to engage in one-on-one personalized conversations with shoppers in real-time is already happening, and further driving future shopper expectations. It is of course much easier to do this online, but with the explosion of omnicommerce grocery, in-store targeting and re-targeting is becoming a reality too. Predictive purchase preferences, social media offers, and even facial recognition are enabling retailers to meet shopper demands in an increasingly expectant economy.
We are yet to see much real-time personalization happening in stores in the Middle East, but with the increase of digital tactics at the shelf, as well as the ability of retailers to turn engagement into data, it should make for some interesting opportunities in the future.
In summary, it will be very interesting to see how the region’s historical aptitude for combining trade and creativity will lend itself to these new channels and mechanics. How we pivot and adapt to the needs of an increasingly demanding and digitally savvy shopper will be key to retail success in the future.