Gulf retailers must offer ultra-experiences and omni-channels to survive, say experts

In the week of yellow, white or black Friday, when online e-commerce firms hold their annual sales bonanza, brick and mortar remains strong.

The region’s appetite for luxury malls shows no sign of abating, despite a global retail downturn, according to experts.

But the concept of ‘retailtainment’ will be key to retaining consumer interest, said Timothy Earnest, group director at Dubai-headquartered Al-Futtaim Malls.

“What the shopper tells us is that they love going to malls. Whether it’s for shopping, dining out, moments of family entertainment or simply for a social experience – they are looking for something that serves all these purposes,” Earnest told Arabian Business.

“We call this combination of factors, ‘retailtainment’ and it’s something we look to implement into all of our malls,” the group director said.

Earnest said the firm’s upcoming 64,800 square metre Festival Plaza mall in Dubai would have all the hallmarks of a ‘retailtainment’ centre.

Slated to open in December 2019, the Jebel Ali-based mall will feature flagship stores Ace and Ikea, as well as 120 shops, a 500-seat food court, and a ‘stay and play’ option.

“As retail evolves, it has become more and more about the variety of experiences that people can enjoy, and share with others. Entertainment, attractions and enjoyable activations are all key components to this trend,” he said.

Mall owners who stay focused on adapting and transforming their properties will retain high demand from shoppers, insisted Earnest.

“This is the case globally, but even more so in Dubai, where we are fortunate to be more advanced in this space than many parts of the world,” he said.

Retail expands regionally

Retail sales across four Gulf countries are projected to increase by more than $24 billion over the next five years, with the UAE expected to lead this trend with an estimated growth rate of 16 percent, according to Euromonitor International.

Euromonitor’s research reveals that Kuwait, Oman, Saudi Arabia and the UAE are all set to capitalise on the rise of consumerism thanks to favourable demographics, a rise in population and a strong growth trajectory in tourism and per capita income.

Store-based retailing will continue to dominate, accounting for $52.7 billion of the overall market in the UAE, however, non-store retailing, which includes online shopping, direct selling, mobile internet, social media and home shopping, will grow by 78 percent from 2018 to 2023.

A spokesperson for Emaar Malls, the developer behind the world’s largest shopping centre Dubai Mall, predicts rapid evolution of the region’s e-commerce ecosystem, as well as the transformation of malls into dynamic lifestyle destinations.

“We believe that malls must evolve to continuously enhance the shopping experience for visitors. They must serve as living entities that celebrate the delight of retail and leisure. With the right offering, superb services for customers and innovative lifestyle experiences, malls will continue to be relevant to customers,” the Emaar Malls spokesperson said.

“We see a complementary relationship between online and traditional retail – and that is why we emphasis on driving the strategy of omnichannel retail. We have recorded consistent growth in both sectors.”

Quality will win

According to Phil McArthur, founder and chairman at retail consultancy McArthur + Company, high-quality, well-planned and well-merchandised malls will thrive in the GCC, however, there could be casualties in “tier two” projects.

“There are currently hundreds of new mall projects, from mega malls to neighbourhood convenience centres being planned or under development in all countries of the GCC.

“Several cities such as Dubai, Abu Dhabi and Doha are quickly reaching saturation as far as mega malls, however, there are more to come,” McArthur said.

The retail expert said that regional malls would need to continue to embrace digital platforms, as well as provide excellent in-person guest experiences.

“We believe all major malls and retailers need to provide omnichannel options for their customers.  Mall retailers must improve their guest experience and productivity in all locations to ensure profitability.”

Mall operators must adjust their leasing and marketing strategies to manage the impact of ecommerce, McArthur said.