While middle east online sales are estimated to account for only 2 percent of overall retail sales according to a report by global research firm Gartner, “bricks and mortar are really under threat”, says Sanjit Gill, General Manager of Collinson Middle East.
The phrase brick and mortar is commonly used to refer to the physical presence of a shop, store, or organisation, and is derived from traditional building materials. Today, it is mostly used to distinguish physical stores from online businesses, which accounted for $2.8 trillion sales in 2018.
But the clichéd question remains: Is a complete transition from physical to online going to happen? Will fancy hi-tech materials and tools replace good old brick walls?
Online retailers have a number of advantages over traditional retailers, including competitive pricing, the ability to cater to the needs of customers that increasingly prefer convenience, demand rapid home delivery services, deeper insights on consumer demand thanks to click-through social media adverts and emerging technologies that intricately monitor consumer behaviour.
“Everything is great when you are making sales, but what happens when the customer wants experience?” Gill asks.
Finding the balance
In this region, most malls are cleverly designed in a way that they aren’t merely shopping destinations, but experiential destinations. And competition is rife there too. According to Gill, it all boils down to knowing your customer and being able to cater to their individual and diverse needs, keeping a balance between experience and convenience, products and services, technology and the human touch.
Most companies fail to maintain this balance and end up struggling in their digital transformation journey, according to Gill.
“[Firstly] 70 – 80 percent of IT budgets are going on supporting internal systems. The second challenge is shortage of talent. And thirdly, business environments around most companies are changing so fast that the internal IT demand is saddled with so much demand, it becomes very difficult to keep up with it,” says Sachin Agrawal, Vice President of Zoho Corporation.
Most organisations resort to buying third party software, which he says is a wrong approach and inefficient solution for the company’s IT problems. What could work, according to Agrawal, is low code systems. As the name suggests, it’s an approach that allows developers to draw an app as a flowchart instead of line-by-line. This makes developing powerful new applications quick and intuitive. “Using this, you can democratise digital transformation within the enterprise and also give business users more power so they can be citizen developers,” he adds.
Skill gap
Skills shortage, however, is a serious challenge in the region and another obstacle in the move away from physical retail locations. At a time when people are complaining about a weak job market with 9 percent of firms surveyed by Bloomberg having fewer headcount, lack of job security and a shortage of opportunities, organisations are desperately hunting for the right kind of talent.
Rami Shaar, Co-founder and CEO of Washmen, a laundry service app, recently stopped hiring from the region and has set up office in Beirut, among other countries. Shaar sources his developers from these overseas locations and he an interesting theory as to why other firms are following suit: “Globally, there’s a culture of developers not being after money. It is more of a passion or interest for them. If you find a developer who is out for a quick buck, he/she is not a good developer. [Expats] leave their home country to come to the UAE mainly to make money”, he says, implying that this is one of the reasons why the country doesn’t have access to a large pool of tech talent.
Amid all of these diverse insights, one thing that all panellists agree on is that the time for data gathering has gone. Now is the time for data processing in order to cater to the hyper-personalised needs of every single consumer, be it online or offline. All retailers need to aim to get to a place where supply leads demand. And for this to happen, scaling of operations is important, and to achieve that, technology is always going to be essential.
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