UAE retailers deal with no promotion diktat

As the Dubai Government continues to do all they can to halt the spread of COVID-19, the recent package of six precautionary measures for commercial establishments issued by Dubai Economy includes some fundamental challenges for off-line retailers as they plan to get back to something approaching “normal business”.

Along with the anticipated advice on wearing protective masks, gloves and implementing social distancing measures at every entrance, changing rooms and checkout, retailers also face significant operational musts that will need some careful consideration.

At the forefront among these measures is the mandate to “Stop Conducting Promotions’.

On one hand, it’s a completely sensible measure to prevent retail heating up too quickly and risking the danger of infections spreading between previously locked down shoppers flocking back to their favorite stores and indulging in much needed retail therapy.

However, from a retailers’ perspective, banning promotions remove a tried and trusted weapon to win back shoppers and build some much-needed purchase momentum.

Price perception

When the retail industry talks promotion, we normally think of discounts or sales, often accompanied with a big red sign that are usually the easiest to spot. In recent years, the language of promotion has become the language of the store, especially in grocery, where retailers fight a never-ending battle to win the perception of low price and good value.

In fact, in some categories such as hair products and personalcare, promotions heavily influence choice and can represent up to 50 per cent of sales.

Selling sans promotions

So, retailers responding to this new directive will ask themselves - Just what is a promotion?

A product competitively sourced as part of an efficient supply chain and offered at the lowest price (and highlighted as such on shelf)? The need to sell inventory at a reduced rate to make room for new stock - are these promotions?

A need inspired “bundle or bulk buy” offer to help with special Ramadan purchases - is that a promotion? In that respect the new guidelines are rather vague.

Understanding, anticipating and responding to customer needs is what good retailers are hard wired to do and these days shoppers expect it. Shopper marketing is big business here, brands think of ways to provide value to their customers and retailers are constantly looking for ways to communicate that value to shoppers.

To be told there are no bargains to be found in-store at Ramadan or Eid is going to be a tough message to deliver and receive, however understandable.

For exclusively off-line retailers this will be tough, especially as they see their on-line competitors not restricted in the same way.

In retailing terms, this has been the first “ecommerce-first Ramadan’. If you look at any of the online shopping platforms right now you will see price and bundle “special offer” promotions being offered as normal.

In the past few weeks, we’ve seen a seismic shift in buying behavior as online shopping has become the new normal. Carrefour have seen an increase of 300 per cent in online Customers. Aggregator platforms like Insta-Shop and El-Grocer have seen shopper demand rise by 500 per cent and have risen to the challenge operationally.

No going back?

Those who have used online shopping channels for the first time, may not see a reason to go back to store any time soon, especially if they don’t see the bargains or promotions let alone the activations, sampling and experiences that have become such a big part of their shopping value equation here.

So, while the measures now in place are entirely sensible and needed, off-line retailers will need to think harder, act smarter and in more creative ways, not just by understanding shopper needs but to communicate value in ways that are compliant with regulation if they are to level up an increasingly competitive playing field.

- Richard Nicoll is Chief Commerce Officer and Managing Director at Liquid.