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How is digital innovation reshaping the GCC’s physical retail spaces?

David Tripney, director at Atkins Middle East, explains how digital innovation is revolutionising the region’s physical retail landscape

SPECIAL REPORTS, Sectors

David Tripney, director at Atkins Middle East, explains how digital innovation is revolutionising the region’s physical retail landscape...

The growth of retail in the Middle East has been nothing short of remarkable. London, Paris, Milan, and New York still inevitably dominate the global shopping scene but, as pioneers in the retail space, emerging markets such as the Gulf are fast becoming the watchword for innovation.

Yet while the retail scene is a crucial catalyst for attracting footfall to the region, as the digital economy develops, brick-and-mortar locations must evolve if they are to remain relevant in the decades to come. Technology clearly has a central role to play in this respect. Now more than ever, it is important for physical malls to develop and keep pace with the changing demands of consumers.

Inspiring the future

Take the success story of Majid Al Futtaim’s Mall of the Emirates as an example. One can easily spend a day inside this retail development; you can eat, drink, go the cinema, and even go skiing, all before you’ve even thought about shopping. Essentially, the physical construction of the mall is designed in such a way that it becomes very much a leisure destination, and this experience is far from unique.

The Beach in Dubai’s Jumeirah Beach Residence (JBR) area, for instance, combines shopping, an outdoor cinema, and the sea. This project displays how commerce and entertainment can be seamlessly integrated.

With the UAE’s population expected to grow to 10 million people by 2030, aided by more expats and tourism related to Expo 2020 Dubai, the physical construction of retail propositions as integrated social, entertainment, and leisure destinations, is likely to boom. Atkins has been active in the Middle East for more than 50 years, and we are seeing this trend become more prevalent – both in the retail space and in other sectors.

As buildings become multifunctional and multifaceted, a blurring of the lines can be seen in some of the region’s most important projects, such as the UAE’s Burj Al Arab and Dubai Opera, and Bahrain’s World Trade Centre and Durrat Al Bahrain developments. Constructing an integrated retail and leisure centre destination is critical in fusing social and urban spaces. Moreover, it is the customer experience that is driving this approach.

Tailored experiences

Beauty retailers, such as Sephora, are now experimenting with virtual reality (VR) mirrors, which enable shoppers to test different eyeshadows and lipsticks without applying them to their skin. We are seeing similar examples of technological innovation in regional malls and shopping spaces, as retailers explore novel methods of gathering insight into customer behaviour. We are also witnessing the ways in which Big Data can help retailers to better understand and market to their consumers by suggesting products that may be relevant, even before a customer has walked through the door.

Such innovations will serve to make physical retail outlets more efficient. The space required for checkout areas will be reduced, because customers will be able to complete transactions virtually from inside dressing rooms or via their mobile phones, eliminating the need to queue. With this in mind, there is likely to be less onus on having extensive physical retail areas in the future because the fundamental hallmarks of traditional stores – such as cashiers and till spaces – will no longer be needed.

Cultural nuances

It is worth noting that the Middle East has a culture that favours the personal experience and, while technology is unlikely to replace this, it can absolutely enhance it. For example, Atkins expects that, in years to come, instead of going into a car showroom to view a range of models, customers will be able to interact with virtual car models instead of physical ones. The necessity for an extensive physical stock of vehicles may become redundant, thus streamlining and reducing the required retail space, making it more profitable.

Car parks may also become redundant, as the real estate footprint for car parks is currently extensive and costly. In the future, therefore, we will see more sophisticated transport offerings, with an increased choice of public transport and autonomous vehicles that reduce the need for large areas of land dedicated exclusively to the housing of private cars.

Such trends will contribute to the drive for sustainability within areas such as Dubai, which are working towards the smart city vision. The buzz around driverless vehicles has the potential to result in alternative transport options, which could reduce the population’s dependence on private vehicles that need to be stored in physical structures attached to malls. And, of course, less space for cars means more space for retail opportunities and revenue generation.

A mall for all seasons

While technology presents numerous opportunities to the region’s retail sector, this evolution will not be without its challenges. Unlike their more developed counterparts, shopping destinations in the Middle East have one major obstacle to overcome: the climate. With temperatures regularly passing 45°C during the summer months, how can retailers respond to the natural environment?

The region’s high ambient temperatures pose both an opportunity and a problem for retailers. On the one hand, customer footfall tends to increase during the summer, as tourists and residents seek sanctuary in the cool environments of the malls. On the other hand, engineers and designers must ensure that all adjoining infrastructure is equipped to cope with the unforgiving climate.

At a fundamental level, customer experience and comfort remain key considerations. Most amenities need to be enclosed, with covered walkways and transport infrastructure located close by. Shopping areas that include outdoor elements, such as Dubai’s City Walk and Boxpark developments, require considerable and careful thought and planning to ensure they remain attractive, year-round destinations.

Future-proofing retail

The future of retail in the Middle East will require more than a one-size-fits-all approach. The digital world is fundamentally changing the way we shop. No longer are malls simply a collection of physical stores, or somewhere to go for a few hours at the weekend; they are becoming fully integrated communities that fuse social and urban environments.

If the Middle East’s retail sector is to compete on the world stage, it is vital that it embraces and integrates digital innovation within both the physical and online realms.

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