The retail scene is ever-evolving, but the Middle East, for now, remains at the cusp of conventional store-based shopping and the rapidly growing online channels. These changes come from various causes, including technological changes, changes in customer behavior, and cultural dynamics.
Following the insightful report, below are in-store vs. online statistics and trends for the Middle East that debate customer preferences, market growth, and future outlooks.
E-commerce Development in the Middle East
For a couple of years now, the level of e-commerce activity has been remarkably high in the Middle East region. In fact, according to the report provided by the Dubai Chamber of Commerce, the e-commerce market in this region will equal a total of $28.5 billion in the year 2022 whereby a compound annual growth rate of 25 percent is applied to it.
Considering such a huge increase in the level of application of e-commerce, there are certain integrated factors that have been at play.
Increased Internet Growth
Over 90% of the people residing in both UAE and Saudi Arabia are using the internet hence a huge customer base for those who are shopping online. Equally high internet penetration exists in other countries, for instance, Qatar and Kuwait which are also supportive of online retailing.
Mobile Commerce
There has been a remarkable upsurge in the acquisition and usage of mobile phones and tablets. This in quite a lot of ways has increased the amount of mobile shopping that has occurred by quite a great deal. Research done by Statista indicated that in 2021, more than 40% of e-commerce sales in the region were made through mobile commerce.
Consumer Preference
There is a satisfaction and convenience that online shopping offers the clients. Once the COVID-19 pandemic broke out in the year 2020, the clients began changing their preferences to shopping virtually.
As per a Nielsen report, 58% of consumers in the Middle East said they shopped online more than before.
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Social Commerce
Social media platforms, like Instagram and Facebook, are becoming more of a place for shopping. Brands use these platforms for effective advertising, partnering with influencers, and direct shopping features that reach the active younger demographic.
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Same-Day Delivery
The want for speedier delivery options keeps on increasing. Same-day delivery services started being in operation for many e-commerce platforms to improve customer satisfaction and further compete with traditional retail.
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Personalization
Thanks to artificial intelligence and machine learning, it is now possible for businesses to personalize the shopping experience for each and every individual customer.
The customers received suggestions on items that they like or bought before based on their previous shopping history, which made them more engaged, and thus increased sales.
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Sustainability
Growing concern for environmental issues made sustainable and eco-friendly products popular. E-commerce promotes sustainable brands and practices.
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The Longstanding Allure of In-Store Shopping
Physical Retail Preferences of Consumers
While e-shopping is catching up, especially with the COVID-19 pandemic, in-store shopping remains still a big part of retail in the Middle East. Many just love going into the physical stores to shop for several reasons, including the following:
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Immediate Gratification
Perhaps one of the largest motivations for in-store shopping is being able to take products home immediately. Immediate gratification means that shoppers are not required to wait around for deliveries.
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Experiential Shopping
Physical stores are a sensory experience that could not be matched by online shopping. Many consumers just enjoy the ambiance, visual merchandising, and the mere fact of being able to try before buying.
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Personal Interaction:
In-store shopping has direct interaction with salespeople, adding to the overall experience of shopping. Personal advice and the ability to question are important to the consumer in making decisions.
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Cultural Factors
For most cultures in the Middle East, shopping is a kind of social activity. Malls are usually visited by families and friends together, which makes the shopping experience more of a social rather than a transactional process.
Trends Shaping In-Store Retail
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Omni-channel Retailing
Many retailers embrace the omnichannel system, giving consumers the convenience of a smooth transition without glitches from online to in-store. An example is that customers can purchase online and pick up at the store or return online purchases at brick-and-mortar locations.
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Experiential Retail
There is the adoption of strategies by retailers to offer special experiences when customers are in-store. There has been an increasing number of interactive displays, events, and workshops as the leading means of customer engagement.
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Omnichannel Retailing
Technology integration into physical stores is really changing the way people shop. From mobile payment options to AR fitting rooms, every retailer is using technology these days to increase customer interaction with their brand.
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Health and Safety
The COVID-19 pandemic brought health and safety to front and center. Many retailers are taking extra measures to reassure customers by having contactless payment, sanitization, and social distancing protocols in place.
Consumer Preference Comparison
Shopping Preference Statistics
A number of studies have been done to gauge consumer preferences in the Middle East for filling in the changing trends between online and in-store shopping. These include:
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Frequency of Shopping
In a survey conducted by Visa, it was found that 70% of Middle Eastern consumers preferred in-store shopping for groceries, while only 25% showed a preference for groceries bought online. At the same time, however, the preference for online shopping increases significantly when it relates to electronics and fashion.
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By Age
The younger the consumer, the likelier they are to shop online compared with older sets of generations. Indeed, according to PwC's research, 62% of millennials in the region reported shopping online at least once a month, compared with only 34% of online shoppers who were baby boomers.
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Spend Behavior
Bain & Company's report highlighted that Middle Eastern consumers are willing to spend more on luxury goods online than in-store. This can be traced back to perceptions of better deals and greater product variety online.
Bridging the Gap
As the retail world keeps on evolving, it has become clear that in-store and online shopping each have their own strengths. Many retailers concentrate their efforts on connecting in-store and online shopping, presenting a perfect shopping experience to various consumer needs and preferences.
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Integrated Marketing Strategies
The retailers now engage in integrated marketing campaigns, which include online-offline elements. Promotions/discounts normally get announced with the help of social media and email campaigns that drive traffic to stores and encourage online purchases.
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Loyalty Programs
Many retailers have begun to introduce loyalty programs that would incentivize customers to shop across both channels. This not only enhances customer retention but also presents more buying options to the shoppers.
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Feedback Mechanisms
Retailers increasingly seek feedback from consumers about their shopping experience. This helps them identify areas where they can make further improvements and position their offerings to be more attractive to the customers.
Future Outlook: Trends to Watch
Going forward, a number of trends may be foreseen that will shape in-store and online shopping in the Middle East for years to come, including:
1. E-commerce Growth:
E-commerce in the Middle East will continue to grow as more consumers take to online shopping. Companies investing in user-friendly platforms, effective logistics, and customer service will prosper in an environment like this.
2. Advancement of Technology:
Innovations such as augmented reality, virtual reality, and AI-powered personalization contribute to an improved online and in-store shopping experience. For the future, retailers who adopt such innovations will create environments for consumers that are more engaging and interactive.
3. Sustainability Focus:
While increasing eco-awareness among consumers in the future, sustainability will be the main factor to be considered by the retailers. Companies that adopt eco-friendly practices and offer sustainable products will resonate more with environmentally conscious consumers.
4. Hybrid Shopping Models:
In the future, hybrid models of shopping will emerge that will introduce the advantage of online and in-store experiences together. Virtual try-ons might be featured, along with augmented reality in stores and digital displays that interact to enhance the feel of shopping.
5. Focus on Customer Experience:
Eventually, all focus will fall on the creation of great customer experiences online and in-store. Such a retailer would prioritize engaging with customers, keeping them satisfied, and making the whole experience more personal so that no competitor can outperform them.
The delivery of quality customer experiences is going to further be emphasized. Retailers who will have personalization, convenience, and engagement at their very core will be differentiated in the market as competition grows, based on all variables. That would involve data analytics to interpret the customers' preferences, and thus offer customized offerings.
6. Subscription Models:
Subscription-based shopping models are also here to stay, particularly in vertical categories such as beauty and groceries. It is expected that retailers will be unremitting in exploring innovative subscription offers as these provide them with an opportunity for recurring revenues while catering to consumers' desires for convenience and personalization.
7. Integration of Social Commerce:
Social media will play an increasingly important role in being a sales channel. This therefore means retailers must design a way to go about social commerce, including influencer partnerships and direct shopping features as consumers seek inspiration on platforms ranging from Instagram to TikTok.
Conclusion
This debate between in-store shopping and online shopping is very relevant in the Middle East. Online shopping would still grow significantly, owing to a wide reach for convenience and an ever-increasing consumer base, but the in-store shopping appeal would also continue to remain strong. The task for retailers will be how to manage such a changing environment by staying attuned to consumer preferences, leveraging technology, and creating omnichannel shopping experiences relevant to diverse needs.
Looking ahead, there is little doubt that retailers across the Middle East will be even further assimilating the best of brick and mortar in-store shopping experiences with that of online. It is by embracing innovation and a 'customer-first' approach, keeping pace with changing consumer behaviors, that retailers can confidently continue to thrive in this dynamic market and meet customers' needs within an ever-evolving retail environment.
