Retailing to an “ever evolving” consumer

At the heart of retail lies the consumer, Deloitte pointed out while opening a session at MRF 2024. That consumer is evolving, they are tech savvy, more informed and have more demands. They are also impacted by external factors such as economic and geopolitical developments.

The GCC consumer landscape is evolving rapidly, with the UAE and Saudi Arabia showing trends that reflect “a shift from uniformity to a dynamic and diverse market.”

Consumers and their appetite to spend are impacted by inflationary trends, but when compared with their global counterparts, consumers in the Middle East are “cautious but more confident,” observed Joerg Meiser, Partner – ME Consumer & Retail Strategy Lead, Deloitte. “This directly translated to their retail purchases indicated by a year-to-year growth of 10 percentage points.”

Consumers are seen to be spending more on certain categories including food & groceries, fashion and personal care, but also on hospitality and travel. Among trends expected to dominate consumers’ purchase decisions are personalisation, premium offerings and cross border commerce.

Turning focus to factors that will drive success for retail businesses, Sundeep Khanna, Partner – Consumer & Retail, Deloitte pointed out the importance of moving from being transactional to being experiential; ability to leverage new capabilities such as artificial intelligence (AI), augmented reality (AR), virtual reality (VR) and Metaverse to personalise and engage; and being seamless across channels, including social commerce.

“The global marketplace has never been so small and easy to access. And the fundamentals of having the right assortment and ease of payment remain pivotal for success,” he added.

Deep dive: Role of AI in business

Amid pressures to grow, increase margins and absorb rising costs, new ways of working are emerging.

So, what can AI do for business? Can it reduce costs and increase revenue?

“If we look at supply chain, cost saving initiatives could be around improved demand planning and optimised logistics and distribution. Interestingly, retailers are reporting cost savings of up to 40% by leveraging AI to optimise inventory control and reduction of logistics costs by 15%.”

By enhancing customer satisfaction through approved delivery and availability, reducing lead times and having the right product in the right place at the right time, businesses can increase annual revenues by up 5-10% increase through inventory management and logistics.

Many companies have recorded over 10% sales increase through AI-driven chat bots in retail by ensuring a highly personalised approach towards customer service. Further, there are several use cases for AI in marketing through automated content creation, social media management and e-mail marketing to customers. There are opportunities for operational labour cost savings and anywhere up to 10-15% of EBIT value from leveraging analytics and Generative AI.