Flipping the Funnel - COVER STORY - Schweitzer Project
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COVER STORY
Flipping
the Funnel
Story: Shruthi Nair
28 | RETAILME | DECEMBER 2020
COVER STORY
R
“ etail is dead” – a preposterous narrative
that started earlier this year, fueled by
economic downturns and a little virus
refusing to quit its rampage has gotten the
whole industry to come together as a unit to
innovate and transform – and after a long time –
think about the distant future.
DECEMBER 2020 | RETAILME | 29
Source: shutterstock.com
COVER STORY
A
mong the many challenges the 2018 is set to increase to well over 2% With the ongoing internal
retail sector had been facing, of GDP by 2030. This year we saw that debate of ‘convenience versus
was short-sightedness that number go further up, with 49% of experience’ consumers have today,
made coping with the economic UAE consumers surveyed by Dubai retailers have had to modify their
repercussions of the pandemic more Economy and Visa revealing that they offerings. But do the consumers know
difficult for some than the others. As have been shopping online more what they want or are they cognitively
they say, we are all in the same storm because of the pandemic. adapting to what they’re fed online?
but not in the same boat. Then began the new preposterous Are today’s so-called forward-thinking
Unsurprisingly though, we saw narrative that “physical retail is dead”. retailers thinking far ahead, or are
a whole digital shift and adaptation So does that mean that the GCC’s retail they still sticking to textbook trends
sector, which is expected to grow to that have lost its relevance in today’s
happening much faster than was
$554.13 billion by 2030, is going to be world?
initially predicted. In all GCC
dependent on e-commerce operations It is essential to understand how
economies, e-commerce is expected
solely? The quick answer to that is, no. both the platforms for retail are
to witness a growth of over 50% from But equations between physical and going to transform individually and
2019 to 2030. According to Frost digital retail are going to change, and perhaps even interchange in purpose
and Sullivan, e-commerce, which so are the functions and functionalities and notion, all while neither of them
accounted for 0.4% of GCC GDP in of the actual and virtual spaces. perishes.
Store as stage; Customer as audience
Source: shutterstock.com
How would a customer define a retail the future, the chances are that the director of Interstore, said, “Stores
outlet or a shopping store? It will most term could be used quite literally. Not will move from being static places of
likely be along the lines of a place where just theatre, but imagine a concert, buying to living, working environments
people buy things. That definition a theme park, an exhibition, or even and ecosystems. Retailers need to think
worked well in the pre-digitisation age, a museum - that is how experiential of themselves as a host or a curator.
but not anymore. Stores can’t just be retail is going to evolve. If I think of a food retailer, customers
places for transactions as e-commerce Zurich-based Interstore is a retail already expect them to be a specialist
platforms have emerged with design agency that has developed and an expert”.
convenient and comfortable offerings to concepts to transform retail spaces “Newness is going to be critical.
entice the busy, lazy, and smartphone- all over the world, including Dubai, Retailers need to think of themselves
addicted customers of today. to promote the idea of the store as as entertainers as well. It is going to be
Retail Theatre, by definition, was not just a place to buy and sell goods, about how to create this moving story”,
about using music, art, light, and smell but a place for shoppers to have he added.
to allure customers to spend more memorable experiences. If retailers are essentially
time in the store and subsequently Speaking of the future of retail entertainers, then retail spaces will have
spend more in the store. However, in spaces, Nathan Watts, the creative to be media for brand experiences and
30 | RETAILME | DECEMBER 2020
COVER STORY
backbone of the store that is making
the experience more seamless for the
customer. But technology as an element
of entertainment or theatre is a different
aspect. We are seeing tech being part
of the envelope of the space - we see
moving content or digitised surfaces
to create a wow factor. Retailers are
also starting to deploy automation and
a robotic system to create a sense of
theatre”, he said.
Another term, people associate
with shopping is ‘retail therapy’. This
concept is going to be more prominent
as smartphones are increasingly
contributing to the “loneliness
epidemic”. With COVID and everything
from schools, offices, and even co-
curricular moving online, we’ve seen the
emergence of terms like ‘screen fatigue’
and ‘zoom fatigue’.
stories. It could be a visual magazine or “Customers will want to get in a “We can get hung up on how
a radio channel and a marketing portal. car and drive to an experience instead digital is going to be the driving force
Such spaces can create a powerful, and of places that are just warehouses - but people still seek real-life social
emotionally galvanising experience, to with products. The retail store of the interaction, so shopping as a social
create an essential level brand affinity, future may be smaller but will be more experience will re-emerge and evolve.
trust and allegiance. experiential”, Watts said. Some retailers have already wised up to
Yes – the spaces may be smaller, the He added, “As an entertainer, the fact that shoppers dwell for longer
footfall will be lesser, but the impact of retailers need to start thinking about and spend more money when they have
the store is going to be much higher. their competitors, which are now things to do with their friends”, he said.
A recent survey commissioned and exhibitions, museums, theatre etc. We Hence retailers have the opportunity
published by Epson revealed that 92% of need to think about how we can engage of providing their space as an escape, a
respondents in the UAE indicated they more with the customers through our place where they can keep their phones
would change their shopping behaviour stores. Think of them as art galleries down and take in actual experiences and
if more shopping destinations had an - creative, engaging places that are perhaps, that is the value proposition
experiential element, rising to 94% of sensorial, which makes that store part of against the e-commerce giants that
Generation Z and 93% of millennials. a customer’s leisure time”, he said. are threatening the very existence of
The study also revealed that such But how is digital going to be traditional spaces.
experiences in retail stores would attract integrated into all of this, if at all? “It is in the interest of every physical
increased spending. 24% of consumers “The element of technology is retailer to get people off their screen
in the UAE claimed they would shop in interesting as we see it in two ways. to get the physical experience of that
a store they had never visited before if it We see the smart store evolving with space. So bringing all the technology is
offered an experiential element. hidden technology, which is the probably not the answer”, he said.
“Retailers will need to think harder
about how to attract new audiences
and build frequency. By building
relevant offers and services around
their key businesses, whether through
diversification or strategic partnerships,
retailers will need to establish their own
new retail paradigms to engage and
remain relevant, ultimately providing
more reasons to visit and where people
can spend more time”, he said.
Even the way customer acquisition
was seen and done would likely change.
Earlier retailers had to pay huge
amounts to bring customers into their
store. The store of the future will have
customers paying to experience what it
has to offer – again, like a concert or an
Source: shutterstock.com
exhibition or a theme park.
DECEMBER 2020 | RETAILME | 31
COVER STORY
Digital, digital everywhere
Source: shutterstock.com
But that’s not how the digital natives But can you live without e-commerce seven sub-categories: D2C, e-retail,
who’ve had a head-start on the whole capabilities? Not anymore. You can’t pure player, live shopping, affiliate
e-commerce transformation process even attract traffic to your shop social commerce, group buying, and
feel. Managing partner and CIO of without a digital presence”, he said. subscription-based e-commerce.
Middle East Venture Partners, a VC Due to the rapid growth of online While we see players
firm that invests in the early stages retail, the Middle East region will also experimenting and delving into the
of innovative companies across witness a fast infrastructure capacity first three forms of e-commerce,
different verticals including retail, building, such as the $870 million some local retailers are still relying on
Walid Mansour thinks that no retailer Dubai Commercity, expected to be global brands to lead the way when it
can survive without e-commerce launched in January 2021 to support comes to the more experimentative
capabilities. e-commerce retailers. and creative forms of e-commerce
“I don’t think when people say However, retailers here have been like social commerce. Subscription-
retail is dead, it means that we are limiting their scope when it comes to based e-commerce stands on the
going to wake up one day to a virtual e-commerce. Today e-commerce is concept of getting recurring revenue
world where there are no addresses. a vast universe in itself with at least from customers, on products and
32 | RETAILME | DECEMBER 2020
COVER STORY
services, at a chargeable fee. The beyond, making it vital for retailers offering goods against a delivery fee.
amount of personalisation that can be to increase personalisation and build It’s a data mindset of looking at your
guaranteed by such a model and the relationships with this essential customers and selling to them using
number of loyal customers that this population segment. data points that you can’t have in a
can generate is what makes this trend “Common mistake in the past is traditional retail environment”, he said.
one to watch out for. that incumbents have been applying What is also noticed since Covid
“Social commerce is a completely traditional retail mindsets into is that, there is increased trust in
new way of shopping, which wasn’t e-commerce. The acquisition cycle, the safety, speed, and convenience
even in the mainstream of strategies offerings, after-sales services are all of contactless payments. According
in retail companies. I’ve come across fundamentally different. You can’t have to the UAE e-commerce Landscape
many retailers who say they want to the same mindset and expect different 2020 survey, 61% are now using
transform but aren’t doing it. They results. It is also the ability to transform cards or digital wallets more to make
think about it as an additional channel retail and not just think about having payments online instead of opting for
to their main revenue line. Very few digital experiences in retail. They cash on delivery. The post-COVID-19
have been able to transform, either by need to put e-commerce in a different outlook is that 43% will continue using
acquiring companies or by reinventing position that is not corrupted by contactless payments; 48% will opt for
digital brands from scratch”, said traditional thinking”, he added. digital payments online over COD for
Mansour. The most significant benefit future e-commerce purchases.
Gen Z is expected to account for of this e-commerce boom is data, “If you don’t have online
nearly 1/4th of GCC’s population. though. You can call it the new oil or payments, you don’t have
Hence, vendors need to understand the new soil, but one thing is sure. It e-commerce. It doesn’t just enable
the purchasing habits of Gen Z, as is going to be the most valuable asset a payment infrastructure, but it also
well as Gen Alpha as both these for any retailer. “There’s a depth of gives you a lot of data, and that could
groups, will become a dominant data that comes out of e-commerce. enable a variety of services around it”,
population cohort by 2025 and E-commerce is not about a channel for said Mansour.
Source: shutterstock.com
DECEMBER 2020 | RETAILME | 33
COVER STORY
Phygital – Because “boring” retail is dead
Source: shutterstock.com
“Category after category technology Many retailers have been It is an amalgamation of the two. In
in digital has been able to prove that progressively echoing the idea that essence, online and offline are going
you don’t need physical retail to get stores aren’t required to sell a lot of to interchange the roles it used to
whatever you are shopping — starting products anymore as transactions play earlier where physical store were
from books, electronics and even are more efficient online. It’s already places to shop, and mobile phones
fashion. For personalisation, if you established that physical stores will were sources of entertainment.
are good in your digital channelling still be relevant but just with a different But it even goes beyond that – the
with your discounts, promotions, purpose, but also that many physical big fat marriage between the two.
you loyalty, payment schemes, stores that don’t find purpose will have Physical spaces are going to make use
recommendation search engines are to shut shop. of online capabilities and e-commerce
all way better online than offline. I “Boring retail is dead”, is what Atul presence for a seamless shopping
don’t think retail will die, but I don’t Bhatia, the head of strategy and growth experience and e-commerce will be
suspect that the shops will not be at Splash, part of Landmark Group used to push customers to stores.
smarter and adapt the key premises thinks. “We (at Splash) are piloting the
of e-commerce”, said Mansour For consumers, the future of ‘endless aisle’ model. If you walk
making a strong case for the future of retail is not going to be a tug of war through our store and you don’t find
e-commerce. between convenience and experience. your preferred size or model, our
34 | RETAILME | DECEMBER 2020
COVER STORY
“When you look at the competition
like Zara, they are taking positions
in prime spots in the mall and
recalibrating. They are shutting down
smaller stores and opening more
prime spaces. The media is hyping
about the retail apocalypse, and that’s
not true as a lot of them are opening
stores as well and that is to recalibrate
the whole portfolio to align with
consumer preferences”, Bhatia echoes.
The battle isn’t between online and
brick and mortar but rather about who
will build the convergence between
digital and physical retail faster. It
presents enormous opportunities for
innovation in future retail experiences
especially with technologies like
Artificial intelligence (AI), robotics,
gamification, augmented and virtual
reality (AR/VR) and the internet of
things (IoT).
For the lack of a better analogy
during the Christmas month, Covid-19
has been sort of crucifixion year for
the retail sector, which is now slowly
beginning its mighty resurrection.
Time will tell how retailers can survive
and pioneer this transformation and
Source: shutterstock.com
transition and which retailers will be
able to do it successfully. ■
store staff can assist you in ordering
online rather than losing the sales.
So physical spaces are used to order
online. Secondly, when you are
ordering on e-commerce, we will
explore if we can bring the products
to our customers faster. If we have
hundreds of stores in the region, we
can use them as fulfilment centres
and bring the product to you more
quickly”, said Bhatia explaining how
Splash envisions this marriage.
Clickbait media is to blame
for misconstruing what has been
happening in the retail space. When
people see headlines like ‘In the US,
630,000 outlets are forced to close’ or
‘Chalhoub group is closing over 60 of
its stores’, it is made to look like some
sort of retail armageddons. However,
what doesn’t get talked about much
(well, because bad news sells) is
that a lot of these store closures are
happening to move investments into
their other offerings, including digital.
The best example is that Chalhoub
Group has witnessed a higher sales
growth with at least over 1% growth
year-on-year despite all these closures,
and that is because they moved their Source: shutterstock.com
investment into e-commerce.
DECEMBER 2020 | RETAILME | 35
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