Dubai: There is a huge percentage of consumers who wait for events like Gitex Shopper to buy products as consumers know that they will get better deals and bundle offers.
But, Gitex may face an impact, maybe after five years, when online retailing or e-commerce gains traction because many online retailers in the UAE are holding events like ‘White Friday’, similar to ‘Black Friday’ in the US, to offer customers very good deals, said Ahmad Bakr, research analyst at Euromonitor International Middle East.
“We will see a lot of these deals online from now on and other online retailers will follow suit. When this happens and competition grows, then Gitex Shopper will face an impact. Until online competition saturates, Gitex Shopper will be the key for consumers and retailers,” he said.
Plug Ins and Ecity pulled out of this year’s event but Plug Ins started its own promotion from September 30 to October 8 at its offline and online stores.
LuLu Hypermarket also started its own event known as ‘Digex 2016 Middle East’ from October 1 to October 8 at its offline and online stores across the UAE.
Online retailing, which is growing from a low base, will touch $540 million this year (around five per cent of the total market value) compared to $440 million last year.
By 2021, Bakr said that internet retailing will be around 10 per cent of the total sales value, around $1.1 billion. It will double in the next five years.
“Then we will see negative impacts on events like Gitex Shopper. The major impact of the Gitex Shopper is the consumer confidence. If Gitex was not there, many customers wouldn’t have thought about upgrading their products,” he said.
Gitex has a big physiological impact on consumers and tourists, he said, and added that many buyers will not take the hassle of waiting for the products bought online to be delivered after a couple of days and instead prefer to take the products with them.
“Personally, I buy all my clothes, accessories, and other products online as I had lived in the US but my wife doesn’t buy everything online. She goes to the stores to check and buy. For her, Gitex is the perfect place to be. She will never think of buying online when such an offline event is offering deals and availability,” he said.
He said that e-commerce is growing very fast as big retailers are pushing towards omnichannel strategy [unifying online and physical retail stores to lure shoppers] by offering big discounts. This is pushing consumers to buy products online rather than going to the store.
The competitive edge of online shopping is the ease of buying products and ease of delivering the products.
“Over the coming years, we will see a much higher competition when it comes to enhancing the shopping experience. There will be music playing on the website and able to compare the products and prices for the buyer. The channels will try to offer the same exact shopping experience online also,” he said.
Omnichannel strategy is working in the UAE; however, he said that there are other things the retailers need to play in terms of competition to grab the attention of the buyers.
“It is not only going to be about the price. The competitive edge for the offline retailer is the touch-and-feel factor of the product. If offline retailers can enhance the shopping experience for online buyers, which is not happening now, then there is a threat to pure online retailers,” he said.
Nadeem Khanzadah, head of omnichannel retail at Jumbo Group, said that there are different segments and priorities for customers. Price is a factor for some while convenience is a factor for some others, and it is all about trust for yet others.
“There will always be segments to which you are catering to. The likes of pure online players are catering to a certain set of customers and we are catering to a set of customers who want convenience and trust. There is a big enough market for everybody to do well,” he said.
The future is going to be a combination of pure online and omnichannel, he said.
“I am not denying that online will not grow a bit but it is difficult to predict what will happen after five years. The growth in online will be higher than offline stores but retailers who have become omnichannel will continue to survive,” he said.
In the US, he said that more than 80 per cent of the shopping is done offline while in the UAE, 96 per cent of the shopping is done offline and only four per cent is online.
According to Ripen e-commerce website, the vast majority of US retail sales, 92 per cent, still happen offline.
Even though online is growing fast, Khanzadah said the share of online shopping in the UAE is going to be 10 per cent after a few years.
“Gitex will face pressure but retailers and organisers have to do new things to attract customers,” he said.
The prices for pure online retailers are always going to be cheaper than offline retailers as they have no overheads but only price conscious buyers will buy online, Bakr said.
“They [offline retailers] should offer value-added benefits to online buyers,” he said.