By Sanjit Gill, GM, Middle East at Collinson
The rise of digital-native retail brands offering highly competitively priced products with rapid home delivery services continues to increase pressure on the wider retail sector. Amazon, for example, with its low overheads and streamlined distribution service, has expanded into markets globally at the expense of many traditional bricks-and-mortar retailers. This has led to many labeling it the ‘retail killer’. The reality, however, is somewhat more nuanced.
While not rocket science, it’s only since global e-commerce gained serious momentum in the past five to ten years that it became cost-effective for retailers to service consumers in this way.
Owned by Amazon, Souq.com is the largest e-commerce platform in the Arab world. Its success is more a reflection of the changing retail industry, rather than the story of a successful anomaly brand. Its White Friday sale, is the region’s biggest online shopping event, where customers across the GCC and Egypt can choose from more than two million deals and offers, enjoying discounts of up to 70 percent. Deals are customised for the UAE, Saudi Arabia and Egypt, providing customers with their preferred products and brands at great prices. In recent years, it has set the industry benchmark for pricing, convenience and the integration of customer reviews, setting best practice standards for the retail sector.
Although Souq.com, as Amazon’s arm into the Middle East region, continues to stay on top of the competition, year-on-year, prominent player noon.com begins to rise to a regional champion when it comes to digital e-commerce. A year ago, it launched its operations in Saudi Arabia and the UAE to delight shoppers with the best e-commerce has to offer. As a customer-focused, Arabic-first e-commerce platform, the past year has seen noon grow to become a household name for online shopping in the region.
What should be learned from all of these e-commerce players’ success is that, to compete in today’s retail environment, a brand’s marketing and customer communication must be exemplary to persuade customers to shop with them and not with market leaders by default. Research we commissioned with Censuswide found that over three quarters (78 percent) of UAE consumers would be unhappy if retail brands they were loyal to had poor communication around the latest promotions and discounts.
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Only by offering the same – or an even better level of customer centricity as the frontrunners – can struggling or less well-established retailers win the affections of customers. Otherwise, why wouldn’t they shop with a competitor offering a better service? Ultimately, brands must have an understanding of how to treat their customers properly and this starts with data.
The introduction of GDPR throughout Europe, and some high-profile global cases of customer data misuse have understandably made companies all over the world far more cautious of using customer information responsibly. Customers are very much aware of this too. Not only do they expect their data to be handled in a secure and trustworthy way, but also want to understand the benefit and value to them in return for sharing their data in the first place. Still, 55 percent of UAE consumers said that they receive promotions and offers that are not relevant to them.
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Brands have a duty of service to offer better, more personalised communication experiences with the customer data they accrue, otherwise, they risk people opting out of consent and losing their initial attention, and perhaps in the long term, their loyalty.
Consumers shop through a mixture of in-store and online, providing data at every touchpoint in their browsing and purchasing journey. This data is there for retailers to respond to, providing it is collated into a single customer view. If used effectively, this single view can tell you who your customers are and what they want. If brands choose to ignore this data, however, they stand to lose out.
Our research found that 81 percent of UAE consumers feel frustrated when promotions aren’t aligned in-store and online. Not using available data effectively can leave customers feeling uncherished and as though their custom isn’t a priority.
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This is further validation of the Amazon blueprint of leveraging smart data at every available opportunity to give the best possible customer experience. Retailers that prioritise short-term sales that offer quick revenue boosts over a long-term customer-centric strategy will lose loyal customers who disengage with inconsistent marketing and communication from what was once a favoured brand.
The evolving world of loyalty means brands must continuously adapt and look for ways to meet their customers’ needs. One particular aspect worth considering is a paid-for subscription programme, which can support the loyalty and ancillary revenue objectives of an organisation. It has proven to be a successful tactic in both the retail and travel sectors and in fact, some of the earliest programmes within the travel space were based on customers paying a membership fee.
Amazon’s Prime service demonstrates how it can work successfully for retail brands, having built benefits and rewards onto the initial delivery offering. With the idea of instant gratification at the core, Amazon is able to engage a range of consumers, helping to build a broader customer base. In a similar vein, the subscription economy, which allows consumers to pay for items or services on a monthly basis, is becoming increasingly popular. Brands have the opportunity to leverage this to give customers a more personalised experience, which they can keep building on as they learn more about the individual.
The example set by Amazon has taught brands around the world the value of assessing what customers want, then establishing how to offer it better than the competition. In this highly personalised retail landscape, those brands that hope to rely on the strength of their product or word-of-mouth reviews will eventually fall by the wayside, as competitors actively entice new and existing customers.
Only with careful analysis of what makes your customers tick and what their needs and preferences are, will challenger brands to the likes of Amazon survive in the evolving world of retail. It is true that Amazon is the retail killer – but only for those retailers that are seeking short-term value and sales over deeper, more meaningful brand-customer relationships.