An action plan including 25 recommendations has been drawn up by a high-level retail industry think tank in the UAE to help businesses survive the coronavirus pandemic.
A new report by the UAE Retail and Malls Think Tank highlights challenges facing the UAE retail sector and recommends actions for a more sustainable sector.
These include a call to increase collaboration between retailers and mall owners, accelerate the digitalisation of the retail sector and legislate to help safeguard businesses and workers from future disruptions.
The think tank is a focus group comprising leading industry players from across the UAE retail and malls sector brought together by Mashreq Bank and MEED. Its purpose is to assess the challenges in the UAE retail industry highlighted by Covid-19 and to recommend actions to overcome them.
Analysis from the report shows that, prior to the Covid-19 pandemic, retailers were already facing difficulties from the increasing popularity of online shopping and growing oversupply of mall capacity.
Lockdown measures to stop the spread of the virus exacerbated the impact of existing burdens, shutting down revenue streams while operating costs continued.
In response, the think tank was established to determine actions that the industry can take going forward to emerge stronger from the present crisis. The recommendations address five key questions on collaboration, growth opportunities, innovation, customer and staff welfare and future shocks.
Joel D Van Dusen, head of corporate and investment banking group at Mashreq Bank, said: “In the UAE’s economic diversification strategy, the retail sector has been one of the drivers supporting the Emirates’ vision to reduce its dependence on oil.
While the Covid-19 pandemic has exposed weaknesses in and brought new pains to the sector, there continues to be massive value and potential waiting to be seized by those who rise to the challenge.
Joel D Van Dusen, head of corporate and investment banking group at Mashreq Bank
“Only by creating a permanent shift in the way business is done, will the retail sector be able to future-proof its position for the long-term.”
Four themes from the Resilience in Retail and Malls report:
* There needs to be increased collaboration between retailers and landlords. By moving away from the current transactional approach – which is largely governed by profits and losses – to a partnership model, the two parties can benefit from a more holistic and mutually supportive relationship founded on strong communication.
Areas for cooperation could include joint ventures, consumer journey improvements, marketing and data sharing.
* The need for a common voice to represent the interests of the UAE retail industry to government. The retail sector should consider developing an effective model that presents a unified perspective to the UAE government.
* It is imperative that the industry digitalises all aspects of the value chain, incorporating innovation across supply chain management, customer sales and last-mile delivery. The government and industry need to work together on initiatives that use technology from the start to the end of the value chain. Due to retail infrastructure in the UAE lagging behind China, US and Europe, the UAE Government should introduce more standards for minimum technology requirements.
* More formal legislation is introduced to help safeguard the business as well as employees against future disruptions. For example, a new law should require retailers to put aside a portion of their revenue as cash reserves. Additionally, insurance policies should be re-written to cover lost revenues against epidemics and pandemics. While expensive, in light of many recent major outbreaks such as SARS, MERS and now Covid-19, this could soon become a necessity.
The UAE Retail Think Tank was launched earlier in 2020 and brings together key industry representatives, including retailers, entertainment providers, shopping malls, consultancy and advisory firms, and financial services companies.
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