The rise and rise of experiential retail in the GCC

Across the world, the retail sector is in a bewildering state of flux. Incumbent business models are, in many sub-sectors and territories, struggling to adapt to rapid and irreversible changes in consumption patterns, most obviously the expansion of digital possibilities for consumers.

Consumption choices are increasing and retailers face a constant struggle to remain relevant. Conversely, for retailers able to configure their propositions and business processes appropriately, the opportunities have arguably never been greater.

Given this backdrop, how are malls in the GCC reinventing themselves to keep visitors happy in an era when many of them have become used to a highly personalised and convenient experience?

Middle East consumers love to shop. Going to mall is an integral part of the region’s culture and character, says a survey report by PwC, titled They say they want a revolution: Total Retail – Middle East 2016.

“There is a powerful and very distinctive shopping culture in the Middle East, especially in the UAE and Saudi Arabia. Dubai, for example, has a long-term strategy to become the world-leading hospitality and leisure destination, and as part of that has positioned itself as one of the shopping capitals of the world.”

It is no surprise, then, that the region’s own populations see shopping malls as both social spaces and entertainment destinations, fulfilling a wider function than they would typically play in a Western economy. And this, in turn, makes the region’s physical stores far more resilient in the face of the online challenge, it adds.

The PwC report is based on its annual survey of global shopping habits, interviewing 23,000 online shoppers across five continents in 25 countries including more than 1,000 consumers in the Middle East. The report looked at what drives different shopping decisions, what makes different channels attractive and how new trends like social media are changing the face of the sector.

Retailtainment

Deputy CEO of ABC Group, Frank-Matthias Kuntermann, says: “In the Middle East and the GCC region especially, where mall density is high, malls need to differentiate themselves. Qatar, for instance, is going ahead with 11 new malls while the local population is just around 300,000. This makes it imperative for malls to focus on three core factors – location, the brand and the positioning – to attract and retain footfalls.”

“In the UAE for instance, almost every mall has its own unique characteristics – some are luxurious, some are family-focused, while some are entertainment-oriented, etc,” he explains.

Asked whether this is it because the competition is increasing and malls are coming under pressure, Kuntermann notes: “I would say yes. Competition is definitely heating up among malls and therefore they need to differentiate themselves. The malls that will suffer the most will be the ones with the blurry image – those that don’t have any USP or identity. If a mall’s image is not clear, people will less likely to visit that.”

The industry, he adds, is also moving towards the ‘retailtainment’ a concept, which is essentially adding entertainment and experiences to the retail mix, presenting a more well-rounded shopping experience to customers.

“ABC was a trendsetter in the field by adopting this approach in its flagships since the opening of ABC Achrafieh in 2003. Our new mall ABC Verdun will be the continuation of this strategy bringing the retailtainment concept to a whole new level. ABC Verdun is our largest project currently underway with a total investment of $300 million. The 50,000 square-metre shopping, dining and entertainment destination is in the heart of Beirut and is set to open in July 2017 and will host more than 200 stores and a 10,000 sqm department store. ABC Verdun is conceived as an interconnected urban park with both indoor and outdoor spaces,” Kuntermann maintains.

By the same token, the CEO of Majid Al Futtaim – Properties, Robert Welanetz, sees malls advertising as a new marketing strategy to connect with customers. “There is a symbiotic relationship between the mall owners, the retailers and the customers. So we have to take a multi-dimensional marketing approach to how you connect to the end user or the customer. That partly rests on the shoulders of the retailers and we choose retailers that understand the value of marketing.”

Flexibility and personalisation

An interesting trend that has emerged with this year’s new set of results is personalisation, PwC reveals. Digital technology is making this possible for a wide range of consumer goods, but it’s also a big opportunity for the physical store. By remembering their customers and tailoring their service to their specific needs, local stores can seize a vital competitive advantage over their online peers. Shoppers in the Middle East value real time personalised offers in-store even more than those elsewhere (34 per cent, compared to 25 per cent globally), it adds.

Regional managing director of Accenture in the MENA region, Omar Boulos, adds: “I believe malls are not just a conglomeration of retail shops anymore. They are an all-encompassing experience in this region, blurring the lines among retail, hospitality, and entertainment. The GCC region has been on the forefront of redefining the mall concept and ensuring that malls are an all-inclusive environment. By redefining itself to become a 360-degree lifestyle experience, the mall is insuring its future success.”

To wrap it up, major shifts in GCC demographics and the shopping behaviour of consumers have fundamentally transformed the definition of traditional shopping and retail over the past few years. Perhaps it is apt to say this is the era of the decline of the traditional mall and the evolution of experiential shopping.

An expanded version of this article appeared in the May 2017 issue of Gulf Marketing Review.

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