Fashion retailers across the Middle East are constantly vying for product and service differentiation to enhance their competitiveness in the crowded market. However, as opposed to vendor-driven retailing, customer centricity is increasingly becoming the cornerstone of their renewed strategies. That pivot, Shehbaz Shaikh says, boils down to the uptake of connected intelligence. The Chief Retail Officer of the value fashion and homeware brand REDTAG said that evolving demographics, dynamic shopping behaviours, shifting societal norms, and an overall upbeat economic outlook in the region have led retailers to leverage connected intelligence to shape retail strategies.
In the latest forecast by the World Bank, the economies of the six GCC nations are expected to grow by 3.2% in 2023 — considerably higher than the corresponding global figure of 2.1%. The continued surplus oil revenue, along with strategic governmental spending, is adding to the optimism. Concurrently, sociocultural reforms, particularly women-centric progressive policies, are unlocking consumer spending in fashion. Evidently, the increasing workforce participation of women is influencing fashion trends and non-traditional channels such as e-commerce.
“Connected intelligence constitutes a nuanced understanding of various factors influencing the present-day retail industry. For instance, millennials and Gen-Z — a sizable majority in the region — are gravitating toward omnichannel brands offering personalized experiences in both physical and online stores. Traditional retailers are thus incentivized to build and scale e-commerce capabilities with robust supply chains and convenience-oriented value propositions. REDTAG’s e-commerce launch was inspired by those driving factors. We are expecting the e-commerce segment to double its revenue contributions this year,” explained Shehbaz.
Validating the growth of e-commerce in the region is a finding by Admitad: Fashion e-commerce sales rose by 19% in the first quarter of 2023. That growth rate has bucked the global trend, in what can be regarded as the impact of structural tailwinds such as increased retail spending and 98% internet penetration in GCC. According to another study, about 55% of the Middle East’s population is well acquainted with the workings of omnichannel retail — which translates to roughly 265 million people. Needless to add, that represents a vast untapped market. Forward-thinking retailers such as REDTAG are harnessing connected intelligence to tap into it.
Building future-ready omnichannel models
“Buying into the promise of Big Data in developing customer-centric omnichannel models, we began harnessing it a while ago. After expanding into an omnichannel model, we incorporated a customer data platform (CDP) to unify data from across channels and get a comprehensive view of a customer’s journey and shopping behaviour. A customer experience management (CEM) platform was onboarded to analyze the unified data and provide insights for personalized campaigns. Such technological fortifications have enabled us to deliver consistent and contextualized experiences to our shoppers,” Shehbaz revealed.
Such predictive models have seemingly enabled retailers to keep abreast of emerging trends — a critical business imperative in fashion retail. Touching upon one such latest trend, REDTAG said that back-to-school shopping is accounting for a sizeable portion of the store footfall and online traffic — something the value-focused brand expects to continue well into September. However, back-to-school shopping behaviours have evolved considerably in the last couple of years against the inflation backdrop, with parents making more informed and less impulsive purchases and being noticeably price-sensitive.
“On the other hand, modest collections are finding admirers among the growing fashion-conscious generation. Modest fashion boils down to details that reconcile global trends with Middle Eastern sensibilities,” Shehbaz continued, “when people shop online, they make decisions based largely on the apparel’s aesthetics. However, they operate on a preconceived notion of brand quality as experienced in past purchases. So, the need to deliver uniform experiences across channels, stay consistent, and retain existing customers is definitely not lost on retailers.”
Cautious optimism would be an appropriate term to define regional retailers’ approach in the current economic cycle marked by inflationary pressures. For its part, REDTAG has launched the ‘New Lower Prices’ initiative to ensure that higher costs are not distributed to the customers. Such brand gestures continue to drive sales in the Middle East fashion industry, which is projected to grow at a healthy CAGR of 7% between 2023 and 2027.
“Behind every initiative and technology adoption, there are long-term objectives such as customer-centricity. They may not be quantifiable in the short term. However, over the long haul, customer-centric retailing will pay generous dividends, rationalizing every penny spent from the get-go. Retailers in the Middle East are increasingly subscribing to that philosophy. It’s only a matter of time before they start reaping the rewards,” Shehbaz Shaikh asserted.