Gulf retailers have done well combining physical with digital – AI can help too

The Gulf’s retail landscape is amid a dynamic transformation fueled by the surge in e-commerce, a shifting digital landscape, and renewed demand for more sustainable operations. These forces present new challenges for the industry, but are also opportunities for innovative players.

Growing up in a family-owned retail business within a Khaleeji retail context, I've witnessed the sector's legendary agility in meeting evolving customer expectations. In the early years, mega-malls and online stores were non-existent. Instead, people relied on local shops, markets, and souks for their retail needs.

Today, the rapidly changing operational landscape calls for regional retailers to rethink their operations. Faced with a highly competitive, borderless, and digital-centric retail environment, they must adopt strategies to leverage their strengths and meet customer expectations.

Elevating CX

Having traveled extensively to all major shopping hotspots, I can confidently say the experience that Gulf retailers offer is a class apart. Besides the extensive choice of brands, personal attention, and customer service we offer, we always look to elevate the shopping experience for customers. The commitment to personalized experiences stems from first-hand observations of how they drive customer loyalty and increased revenue.

Over the past five years, we have witnessed the e-commerce boom, which has affected both consumers and retailers. This impact stems from its convenience and seamless integration with the region's robust brick-and-mortar retail, resulting in a unique ‘phygital model’. Unlike the West, where online shopping has become increasingly popular, physical stores are still an integral part of the regional cultural fabric.

Retailers should strive for a seamless omnichannel experience that seamlessly integrates the entire customer journey—whether in-store, click-and-collect, self-service kiosks or shopping on an app. Their experience should be supported by high-quality customer service through in-store staff, chatbots, or live agents.

Enhancing operations through AI

Today, no boardroom conversation – or dinner - is complete without discussing the latest in AI. Data indicates that in the GCC, AI adoption is the highest in the retail and consumer packaged goods sector, with 75 per cent of respondents stating that their companies have adopted the technology in at least one business function.

Thanks to the massive amounts of data at our disposal, AI can help retailers optimize operations and decision-making. By collecting and analyzing data from online and physical store interactions, retailers gain deeper insights into customer behavior, preferences, and needs.

The UAE has seen a large influx of tourists, with Dubai exceeding pre-pandemic numbers by welcoming 17.15 million visitors in 2023 – 19.4 per cent higher than in 2022. This presents a great opportunity to utilize AI to cater to a diverse set of people. AI can help many retailers and companies with simple things like how to address people in different languages, as well as solving the issue of understanding how customer tastes and preferences are influenced by social media.

This creates a solid emotional connection with customers, making them feel seen and heard.

Another use case where AI will contribute is within the supply chain industry, i.e., optimizing our logistics operations by leveraging data. For example, how can we serve customer location blocks? What are the nuances in high- and low-order density regions? What is the data telling us? What should be our efficiency rate and cost to serve these regions?

AI algorithms can then help us on many topics, such as streamlining delivery routes, factoring in traffic, and order priorities to reduce costs and improve efficiency.

However, the integration of AI poses ethical challenges, especially regarding data privacy and consent. As AI relies on extensive data collection, retailers must protect customers' personal information from cyber threats and comply with regulatory standards. Balancing the trade-off between offering enhanced shopping experiences and respecting customer privacy will be a focal point for discussions.

Regional retailers aiming for optimal performance should align their objectives with these technological advancements while considering the ethical implications of data collection.

Gulf retailers will thrive if they embrace these opportunities and adapt to an evolving marketplace.