Opinion: How the retail landscape of Saudi Arabia is evolving

Words by Imteyaz Khan, General Manager of KSA operations at REDTAG.

The retail sector has been on the precipice of significant transformation, over the last few years. But 2020’s dramatic shift in consumer and workforce trends meant that retailers had to quickly embrace a change in course, to maintain their competitive advantage and remain relevant.  However, even amidst these disruptions, most executives would agree that the events that unfolded last year served to accelerate trends that were already gaining momentum.

For organizations, the year that passed was a once-in-a-lifetime opportunity to transform businesses, and rewrite the rules for their industry.  When it comes to KSA’s retail sector, 2021 holds an abundance of promise. Retailers are digitally differentiating and thinking outside the box, and cost-realignment is being coupled with fresh viewpoints, to address profitability. Here’s how brands are redefining the retail landscape of the future, in Saudi Arabia.

Dialing Up the Digital Omnichannel Experience

Online shopping isn’t new to KSA, with current estimates showing a user penetration of almost 80% in 2021. This uptick in demand for web-based shopping is creating opportunities to go beyond pure-play e-commerce. With many shoppers wanting to mix and match their interactions with brands, based on convenience, retailers can now tap into growing possibilities that allow for new levels of customization, and cross-channel revenues.

• ‘Zero friction’ Digital Experience – Retailers are setting aside bigger budgets to design online stores optimized for internet-based shopping. Priorities include a smooth shopping experience on mobile devices, high-functioning landing pages, and better last-mile logistics for faster deliveries.
• Connecting web-based and in-store – The evolution of the physical store’s role as a core component of the omnichannel journey has also affected store layouts. Many retailers are now using their stores to educate consumers on product offerings, reinforce their brand’s positioning, and support e-commerce sales. Take, for instance, REDTAG’s ‘Anytime Anywhere Exchange’ that is offering customers a ‘no question asked’ exchange policy, which allows for all digital purchases to be seamlessly exchanged in-store, providing the ultimate in omnichannel convenience, and ease of shopping.

Reimagining the Existing While Realigning Cost

While cost reductions are always a go-to option, they do not always encourage transformation. But 2021 is all about ‘New Rules’, and these new rules of profitability are promoting new ideas and strategies, in retail.

• Product lines go ‘seasonless’ – 2020 has essentially simplified fashion, and this is providing an excellent opportunity to transition to items that contribute to the longevity of a collection. Retailers are increasingly leaning towards ‘seasonless’ product ranges, to boost efficiencies and increase profits. This trend has resonated strongly with customers, who are now seeking pieces that they can keep in their wardrobe, longer than a season.
• Physical Stores move to more immersive experiences – Retailers are moving beyond the traditional view that physical locations are primarily for in-store customer engagement. Promising new formats that create a more immersive experience are beginning to take hold, especially in flagship stores.

Transforming Retail Experiences with Data

Data, the key to favourable future outcomes, is acting as a compass for business leaders. It helps create a practical understanding of buyer preferences, and lets brands benchmark their strategies against competitors.

As one of the fastest-growing physical retail segments over the last ten years, value brands in Saudi Arabia are capitalizing on data, to deliver a solid and engaging experience to customers. The region’s foremost fashion and homeware value brand, REDTAG, has launched its unique Customer Engagement initiative, to offer relevant, valuable, and differentiated services that target their consumer base. Designed after gaining a deeper understanding of their clients’ preferences and shopping habits, it has been a key deliverable for the brand, and has set a benchmark in customer experience management.

Expanding Youth Retail Proposition

Almost 40% of KSA’s population falls within 15 to 34 years of age. These Gen-Z and Gen-X shoppers are providing digital-first retailers unique opportunities to expand their customer base.  By creating product lines that cater especially to the evolving taste of this generation, major retail brands are now attempting to develop a strong foundation, for a life-long relationship with this digital-native audience.

While attracting younger customers might seem like another addition to investment in running costs, it is not necessarily so. The key is to understand behavioural differences, empower brand ambassadors, and establish physical outlets at strategic locations. For this smart and edgy generation, aspirational visuals, authentic influencer voices, and a snap-worthy experience, go a long way.

Developing Local Talent and Women, in the Workforce

As Saudi retailers drive business performance through the current recovery and beyond, developing the next generation of leaders, and increasing workforce diversity, is a major business imperative.

• Developing local talent – The ‘Great Reset’ is a huge opportunity to develop the next generation of Saudi talent. Localized talent brings unique community ties, cultural knowledge, and ethnic understandings, which offer invaluable insights for brands to tailor offerings, and significantly increase the rate of adoption.
• Increasing women’s participation in the workforce – In its Vision 2030, Saudi Arabia committed to increasing female participation in the workforce, from just under 20% to over 40%. Legislative changes have done much to further this goal, and the retail segment has seen female participation in its workforce increase to 48%. As the retail landscape once again gains steady momentum, women leaders and team members will help businesses thrive in unprecedented ways. At REDTAG, 51% of our workforce in KSA is comprised of women, marking a significant milestone for a brand that prioritizes inclusivity and diversity.

2021 and beyond

In KSA, 2020 gave a jumpstart to the digital and omnichannel playbook, for retailers. In 2021, the retail landscape is gearing up to deliver the most impactful and valued capabilities across all touchpoints. All this will facilitate better engagement with customers, build a stronger and more talented workforce, and secure a brand’s value proposition, for years to come.