Retail Disruption – Key Challenges Facing Retailers in the Middle East

Retail Disruption – Key Challenges Facing Retailers in the Middle East

Retailers around the world and the Middle East have been told for years that without having digital in their future, they had no future. While Covid-19 has devastated individuals, families, communities and industries, it has also driven home the importance of online and digital to retailers.

Online isn’t the future of retailing; it’s the today of retailing. At a global level, companies like Adidas are making strategic shifts to focus on digital platforms.

More than 70% of the Adidas global store base remains closed during the coronavirus pandemic.

The company said financial flexibility is key to its agenda, and it would reallocate resources to “eCommerce, IT, and additional set-up.

Adidas has understood that while consumers remain home, digital has become more important than ever before.

State of MarTech Report

Retailers in the Middle East who previously were not online, have been making herculean efforts to now try and get online, whatever it takes.

Dubai Mall recently announced the creation of a ‘virtual store’ exclusively for its retailers to market their products online and to connect with customers.

This was formed as part of a new partnership between Emaar Malls, the shopping malls and retail business majority-owned by Emaar Properties, and Noon.com.

Apparel marketplaces like Noon, Namshi and Nisnass would typically take 2-3 weeks to onboard a brand (following weeks of introductions and negotiations).

Now terms are being agreed rapidly, but the spike in interest means there are backlogs of 6-8 weeks to get brands online and offer their wares to customers.

Well-meaning executives in large retail portfolio organisations remain puzzled when it is laid out how complex the steps to get online can be, especially with legacy systems and processes to navigate around.

Before they even start, the first problem is that many retailers in this region do not have the right to sell the global brand they represent online.

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Retailers, predominantly follow a franchise model in the region only for physical stores, whereas the parent brand holds onto online rights during the contractual negotiations.

Even if the local retailer owns the brand, marketplaces have made it look easy to get online and offer a bright, engaging customer experience.

However, there’s a lack of appreciation as to how much time, planning, design, success and failures and sunk costs have gone into getting these highly recognised brands to the position they are today.

Mohamed Alabbar, Chairman of Emaar and founder of Noon has said: “Especially in digital and e-commerce, if you don’t have the muscles – the technology, financial power, the best people you can get – you die, and you die quickly”

Consumers in the UAE have embraced the offerings that are available to them. But if they are honest, the user experience compared to more mature offerings in the US, Europe and Asia can, in many instances, be lacking.

Why aren’t we seeing these smooth customer experience already across the board? Why are some retailers here still lagging behind in the online sphere? Many blame their legacy back-end systems that still operate in siloes.

Retailers often say that their current systems are not well- integrated enough to execute the intricate dance required by a ‘simple’ transaction such as buy online or pickup in-store.

Also Read Retail’s supply chain is broken and needs to evolve

It is, in fact, more than that. Retailers need to look at their technology suppliers who may be an obstacle that is standing in their way.

Some of the biggest retail tech businesses out there have significant gaps in the solution sets, as well as multiple, overlapping products.

Their path forwards is not defined, so their customers try to pick and mix the pieces and parts and layer on function in an attempt to mimic fully omnichannel solutions.

In the end, the customer gets mediocre to middling experiences at different touchpoints.

The truth is that legacy software, even when knitted together to facilitate certain omnichannel functions simply isn’t nimble enough for today’s omnichannel world.

Instead, retailers need solutions that provide faster time to value, easy migration and native integration.

That is found only in retail cloud solutions built to work seamlessly across channels. Given the urgency and the risk of getting it wrong, retailers must choose a path to omnichannel that will minimise both time and cost investment.

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