Jacqueline Elboghdadi has been a corporate leader for the past two decades, focusing her expertise in brand management primarily at Procter & Gamble across the Middle East region. In 2021, she transitioned to lead the Customer and Marketing transformation for Alshaya Group. Her extensive experience has provided her with unique insights into the retail model and the current consumer landscape, highlighting the major shifts required to drive retail excellence in today’s dynamic environment.

In the following article, she provides a comprehensive overview of the changing retail landscape, highlighting the key drivers of growth and the impact of new consumer habits. It offers valuable insights for business leaders and marketers looking to navigate this evolving industry.

The retail landscape is undergoing a significant transformation, with the Middle East experiencing a particularly profound impact. This shift, which began over a decade ago, has been accelerated by the COVID-19 pandemic in 2019. The rise of e-commerce, marketplaces, and the convenience of doorstep delivery have revolutionized consumer behavior, allowing people to shop from the comfort of their homes.

The Changing Dynamics of Retail

What does this mean for retailers? How does this shift impact traditional retail growth strategies and marketing tactics? The change is monumental. To understand its implications, let’s explore the key drivers of retail business growth, particularly in the Middle East and Africa, where 90% of brand models are franchised.

1. Global Brand Appeal: Retailers and franchisers bring global brands to the region, leveraging their international fame and appeal.

2. Physical Availability: The primary business driver has been physical presence in prime locations, such as the best malls, ensuring high footfall.

3. Operational Excellence: The second most crucial function is operations, which drive conversion through:

• Well-trained store staff

• Excellent customer experience

• Product knowledge

• Inviting store atmosphere

For over 25 years, malls in the Middle East have been family entertainment destinations, guaranteeing footfall. However, with new entertainment options emerging, weekend destinations are shifting.

The Role of Marketing in Retail

Traditionally, retail marketing in the region has been seen as a cost rather than a growth driver. Unlike fast-moving consumer goods (FMCG) companies, which rely heavily on marketing to drive purchase intent and conversion, retail brands have focused on:

• Announcing new collections, sales, and promotions

• Optimizing media to reach a broad audience

• Utilizing first-party data for targeted advertising

Personalization and localization were often overlooked, relying instead on globally produced collateral.

The Impact of COVID-19

The pandemic brought significant challenges:

1. Decline in footfall

2. Mall closures

3. Overall consumption decline

Even after restrictions were lifted, business performance did not fully return to pre-pandemic levels. Why? New consumer habits had formed.

Emerging Trends

Several trends have emerged:

• Decline in mall window shopping

• Increased entertainment options in key markets like Saudi Arabia

• Greater competition from local brands

• Consumers conducting research before purchasing

• Online shopping penetration exceeding 50% across the GCC

The Path Forward

Is being in the best mall location and offering great customer service enough? Not anymore. To succeed in this new landscape, retailers must adapt to changing consumer behaviors and preferences. Embracing digital transformation, enhancing online presence, and leveraging data for personalized marketing will be crucial. Retailers must innovate and evolve to stay relevant and competitive in this dynamic environment.

A 5-Step Approach to Winning in the New Retail Landscape

        1. The Brilliant Basics of Physical Availability

• Be present where consumers are, whether in the best malls, new emerged destinations, on websites, or through apps.

• Proactively identify where consumers are most receptive, which might not always be malls.

• Ensure the right product at the right price, offering value to win over consumers.

       2. Cracking Mental Availability

• Focus on brand awareness beyond collections and promotions. Make the brand stand out for its core values and appeal.

• Use influencers, word of mouth, and education to create a strong mental connection with consumers.

• Be part of consumer conversations and address unmet needs.

Basically, be part of consumer conversations, and be there where they are most receptive to purchase

          3. Activating a Real Omni-Channel Experience

• Develop strategies to segment consumers based on behaviors and purchase funnel stages to drive larger basket sizes and more frequent purchases.

• Ensure a seamless journey between online and in-store experiences.

• Invest in first-party data to track brand funnels and drive actionable insights.

“A Consumer who’s already a customer doesn’t need awareness but rather needs another occasion of purchase to get a higher frequency out of him; whilst the non-customer needs to be convinced to do the first-time trial”

         4. Data and Personalization Ladder

• Use both external and internal first-party data to segment potential and current customers.

• Tailor communication to each segment to drive purchase intent and conversion.

• Avoid jumping to hyper-personalization without first establishing basic segmentation and consumer journey strategies.

        5. Measurement and Researching

• Focus on measurable business results rather than media process measures.

• Ensure awareness efforts translate into higher purchase intent and unprompted brand awareness.

• Use dynamic marketing mix models and advertising testing to track and optimize marketing spend.

“The brilliant thing is that technology and analytics now allows much cheaper, more agile, and more actionable Marketing Mix Models that can be leveraged to forecast and plan optimizations across all paid marketing spending”

In conclusion, the retail landscape is evolving rapidly, and the Middle East is at the forefront of this transformation. Retailers must rethink their strategies and embrace change to thrive in this new era. By focusing on physical and mental availability, omni-channel experiences, data-driven personalization, and measurable results, retailers can navigate the challenges and seize the opportunities of the modern retail environment.