Digitising operations and eliminating silos to ensure investments aren’t a bottomless pit.

Words by Sander Maertens, Head of Middle East at Adyen

UAE retailers have demonstrated incredible resilience and adaptability over the past few years. According to a report by the Dubai Chamber of Commerce and Industry, retail sales in the UAE will touch US$70.5 billion by 2025, registering annual growth of 6.6 per cent.

With the pandemic seemingly trending in the right direction for many regions around the world, retailers would be forgiven for resting on their laurels and easing off investment to recover from a challenging period. They’d also be forgiven for assuming that the role of physical stores will diminish, given the mass migration to online retail.

But our global research – surveying more than 40,000 consumers and 11,000 businesses across 26 countries – says that they’d be mistaken on both counts. First, when it comes to physical stores, the majority (59%) of consumers worldwide prefer to shop in person. This was higher in the UAE at 68%. Presumably, the popularity of shopping malls and physical retail stores in the country has played a huge role in influencing consumer preferences.

Second, our research found that those who invest in technology and new ideas to improve their businesses will outgrow and outperform the rest. More than half (55%) of consumers say they are more likely to shop with retailers that use technology to improve the shopping experience. In fact, 58% of UAE consumers only plan to shop in store if retailers make the experience more interesting, for example creating Virtual Reality experiences, in-store cafes, or special events. 46% of consumers say they would love it if in-store sales assistants used technology to assemble items from their online wish list in the changing room ready to try on.

The big question is, where to prioritise innovation and investment? Without the right strategy, digital transformation can feel like a bottomless pit for investment.

Digitising operations

66% of UAE retailers invested in digitising their organisations to improve operations over the course of the pandemic. That’s almost a 20% uptake compared to the global average, which puts UAE on the forefront of innovation, so much so that now 99% of merchants are planning to invest in technology over the next year. It is a wise choice as research shows that 4 out of 5 retailers who invested in digitising grew 20% or more.

But the opportunity is larger than that. Cebr’s modeling found that accelerating digital transformation in retail would add an additional 4.7 percentage points to the UAE retail sector’s total growth rate over the next five years.

Leveraging digital innovations, such as unified commerce to break down silos throughout a retail business creates a virtuous circle with two significant benefits. First, it will help the flow of data and insights across the entire organization, helping to identify ways to improve operations, provide more data for decision making, enhance productivity, and ultimately make the business more profitable.

Second, digital transformation helps create new customer experiences, ultimately improving loyalty and sales. And if done correctly, it will create further opportunities to enhance operations, either by identifying more efficient processes or by making valuable data insights more accessible across the business.

Eliminating operational silos for improved customer loyalty

Let’s take the example of a customer who purchases something through an online channel, but then wants to return or exchange it in the store. This is a customer journey that 61% of shoppers globally say would make them more loyal to the retailer that offered it. Unfortunately, only 23% of UAE merchants allow their customers to easily return items purchased online at their physical stores.

This discrepancy isn’t that surprising, because when a business operates in silos, this seemingly simple customer experience is actually something very difficult to offer. But for a business that has a single payments system across all its channels, connected to a central platform for online and in-store point of sale (POS), inventory management, and other operational parts of the business, it’s a straightforward offer.

But it’s also important to think of the business implications of this customer journey. Customers say they are more loyal to retailers that enable this cross-channel experience, so there is the possibility of getting customers to come back, by offering it. Plus, the customer coming into your store to make a return could be considered an opportunity to increase engagement or even up-sell. And from an operational perspective, it saves you time and money because you don’t need to manage the return with all the supply chain and logistical complexities involved.

When a retail business is truly connected and there are no silos across its sales channels and operations, there are countless other experiences that not only improve shopping for customers but also streamline operations and reduce costs.

And this is where the opportunity really lies for the sector’s growth.  That’s why now is the time to double down on digital transformation. Those that do this are set to grow, outperform their competitors, and thrive in the next era of retail.