The retail and e-commerce market in the MENA region has grown exponentially over the last five years, with a recent report by the Dubai Chambers projecting retail sales in the UAE alone to reach $70.5bn by 2025.
Yet, as the market becomes increasingly saturated, retailers face various challenges from the rise of digital noise and digital advertising, to a shift in consumer behaviour, and the need for digital transformation.
To thrive in 2022, companies require a digital and consumer-first approach to tackle these challenges, within an increasingly competitive sector. But, why now? ‘The customer is always right’ is one of business’s oldest clichés. So, why does now feel different? And why are retailers under pressure to rethink business models to have a customer-first mentality, and keep up with changing consumer demand?
The rise of online shopping
Regionally and globally, online shopping has exploded. Online sales in MENA are expected to exceed $50bn by the end of 2022. Even if a purchase was not necessarily done online, the role of online research post-purchase has also become deeply integrated into consumers’ journeys. Organisations have no choice but to embrace digital transformation to match changing consumer expectations and behaviours to provide a seamless shopping experience.
Mobile-first
Consumers have also developed a mobile-first approach to shopping, preferring brands with seamless mobile apps. For example, 55 percent of shoppers in Egypt, UAE and Saudi Arabia use their smartphones when shopping online.
Companies have no alternative but to digitalise their businesses and integrate online efforts, as consumer behaviour pivots sharply to the ease and speed of shopping online.
Customer retention and loyalty programmes
Customer acquisition is one thing, but customer retention is an equal challenge. Modern consumer spending involves fewer repeat orders. Retailers must retain customers via a seamless shopping experience and offering tangible benefits, so they come back for more. This has led to the rise in loyalty programmes which offer rewards to consumers, help retailers increase customer loyalty, and match changing spending habits post-pandemic.
Advertising and cashback rewards
Advertising is also a major challenge facing retailers. As the market becomes more saturated, ensuring digital advertising resonates with customers, rather than irritates, has become a high priority. Enter cashback reward platforms which operate secure advertising channels where brands can direct some of their advertising spend at customers directly, instead of paying a third party.
As a result, and in a win-win situation, customers can monetise their own data and extract more value from their relationship with brands.
Digital noise
As the retail space becomes more competitive, consumers have become more distracted due to ‘digital noise’ – the cluttering of communication channels between shoppers and retailers. This has rendered some communication as less meaningful and engaging. The challenge for retailers is making their communications more personalised.
Alternative payment methods
MENA, a region traditionally dominated by cash transactions, is embracing alternative payment methods.
A recent Mastercard survey reported 63 percent of Egyptian consumers have tried new payment methods in the last year. Thus, retailers must invest in digital infrastructure to enable alternative payment methods, as consumers shift their digital payment behaviour. An added bonus is that alternative payment methods further aid a seamless shopping experience.
Whilst the future is exciting for the retail and e-commerce markets, the adaptations required of businesses are steep and swift. Delays could prove fatal for legacy, offline business models. Relevance requires digitalisation, an acceptance of alternative payment methods, and customer retention via loyalty programmes and cashback rewards – as the market becomes ever so competitive.
The challenge is undoubted, but the solutions are clear.
Ezz Fayek, CEO of WaffarX.
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