Future of Middle East retail shaped by malls

Over the years, the retail market in the UAE has proven resilient because household consumption has remained stable, the tax-free incentives continue to attract an affluent population and the modern shopping malls and events like the Dubai Shopping Festival make the region a profitable destination for international brands and tourists.

Which is naturally leading to an expansion of malls and three opened in Dubai during the recession, including the world’s biggest.

For the future, Nakheel has announced a new mall for the Palm, while a $6 billion project including a retail district will be built on JBR.

So it is clear that the future of retailing in the Middle East is going to be shaped by malls, which poses a problem as much as it does an opportunity.

The malls in the Middle East are social hubs and iconic landmarks for every tourist. In turn, malls throughout the region, especially in the UAE, have become as much a leisure destination as they have a collection of shops, cinemas, ski slopes and theme parks. In respect to the JBR development, it will even have the world’s largest Ferris wheel.

But while the architectural distractions that one encounters on a shopping trip are an impressive diversion that adds to the experience of the visit, in retailing there is one simple truth; the most important people are shoppers, the people who spend money. Which means the success of any retail outlet, complex or mall should not be defined by how entertaining it is — rather it should be judged upon how many of its visitors are spending cash in the shops.

For example, the shops along the upper level of JBR have closed by the dozen because the navigation was so complicated.

Likewise, the retail landscape at the DIFC has changed and luxury boutiques have been replaced with convenience stores such as pharmaceuticals and newsagents because the clientele just wanted to go to work and get back home and as quickly as possible, maybe picking up the laundry and groceries en-route.

It helps illustrate the dangers of ignoring shoppers at the design and leasing stage of a project; ignoring what motivates them and ignoring the reasons they choose to shop where they do and when they do.

So any brand wishing to enter the market in Middle East must not be lured by the impressive attractions a retail destination in the Middle East can offer.

While they act as a crucial catalyst for footfall, retailers need to balance overt architectural experiences with real shopping experiences in-store as well as out.

To do so, retailers need to glean truthful insights from shoppers so they can tailor communications, whether it is at POS or online to help improve a shopper’s life and add value.

In short, regional brands and retailers cannot ignore what motivates a shopper and rely solely on a mall’s attractions to increase footfall. They need to generate repeat purchases, brand equity, customer loyalty and over time grow into what Saatchi and Saatchi X calls a ‘lovemark’ brand.

— The writer is the managing director of Saatchi and Saatchi X, Mena.