The Experience Evolution: Creating Next-Generation Retail Destinations
Daniel Parry, Managing Director & General Counsel, Gulf Related, as featured in Retail People magazine (August-September 2018).
With the rise of e-commerce over the past 15 years, the retail industry has witnessed a rapid transformation. Emerging technologies coupled with global economic trends have had an irreversible impact on consumer behavior and expectations – changes that have shaken up the old ways of doing business and created opportunities which didn’t exist before.
In light of this, malls that only provide a shopping experience are unlikely to survive, and conversely those that harness these ever-changing consumer demands and shopping behaviours will flourish.
Like never before, consumer power dictates the dynamics of a mall. 21st century malls should be social, public spaces and havens of entertainment that offer personalized shopping experiences and other value-added services. Instead of functional destinations, malls need to become an integral part of the community’s lifestyle, where people choose to spend their valuable free time.
To do this, we must rethink retail strategy from the ground up and attract consumers by virtue of a fantastic overall experience – beyond just shopping. This starts with the mall’s design, which must embrace the natural fabric of the area, and offer welcoming open public spaces for creative programming and activations; hard-to-find experiences that can not be replicated online.
In an increasingly online world, the store will continue to play a vital role in building customer loyalty. The need for sales staff to provide a friendly and knowledgeable service can not be underestimated. Having a customer walk into a store and leave as a brand ambassador should be the core objective of each sales assistant and embedded into each retailer’s business strategy. Equally, we must be smart and strategic about integrating technology into our bricks-and-mortar destinations. Omnichannel retail and the “Store 4.0” experience are the future of the industry. Rather than being intimidated, malls can use these powerful tools to amplify consumer engagement through data insights and develop innovative and fun in-store experiences that appeal to broad audiences. As a tech-savvy, dynamic and affluent nation where the mall plays a fundamental role within the fabric of society, the UAE is the perfect market to launch the “next generation” of retail experiences.
Changing Retail Landscape
The retail industry has been a jewel in the crown of the UAE’s economy for the past decade, increasing in value by over $2 billion per year to hit a spending high of $69 billion per year in 2016. We have maintained the highest average consumer spending in the region, at over $23,960 per capita – and this strengthens our position as one of the greatest shopping capitals globally. In fact, over the past two years, Dubai has risen to become the number one market in the world for global retailers, with 59 new brands entering the market in 2017.
Gulf Related has seen this trend reflected in the strong sales at The Galleria since its opening in 2013. We have seen Abu Dhabi’s consumers becoming more cosmopolitan and sophisticated in their decision-making and the local market has raised its expectations of the mall experience.
In Abu Dhabi and globally, with consumer needs changing, gone are the days of isolated business parks, shopping malls and residential suburbs. With our busy lives, we want our offices and homes to be set within lively, integrated communities, with smart, pedestrian-friendly infrastructure and all the necessities and comforts of everyday life on our doorstep. This is part of a broader lifestyle change in many dynamic cities around the world.
In light of global economic shifts, shoppers across the board have become more price-conscious and savvy about using online resources to find alternative products and the best deals. At the same time, consumers are increasingly conscious of retailers’ corporate values and actions, and remain brand-loyal when they feel personal, emotional or social connections to the story being told. These new engagements are driven by social media and online platforms, which are transforming consumer attitudes, desires and expectations in real-time.
Rise of Digital and Mobile
In the UAE, e-commerce has lagged noticeably behind international markets for several years, with our strong sales overwhelmingly predicated on in-store transactions.
In 2017, that all changed. Major digital players including Amazon, Noon.com and UberEats entered the market, and the delivery and banking infrastructure caught up with the online age. With mobile phone penetration above 220% in the UAE, we will see this market leapfrog desktop commerce and embrace retail on-the-go.
Increasingly, digital media is a dual storefront and interestingly in the US in the first quarter of 2018, although retail e-commerce sales totalled $114.4 billion, this was a decrease of 19.9% from the fourth quarter of 2017. This can be balanced by a strategic focus on in-store sales as in the US, e-commerce still only accounted for a mere 9.5% of total sales for the quarter. The growth in mobile e-commerce goes hand in hand with tech-savvy consumers’ new cross-platform approach to purchasing.
To capture the attention and spend of UAE consumers, retailers need to think beyond just ordering clothes online. Instead, retailers and mall developers need to be offering creative solutions for online and in-store experiences to complement, not cannibalize, each other to ensure the consumer's brand experience is optimized.
The shift to omni-channel retailing is one way that companies have already begun embracing digital developments. The technological revolution is changing every aspect of retail businesses from operations and supply chains to marketing.
Historically, there has been a gap in the UAE’s industry for a clever first actor who can jump on upcoming innovations to maximize what Deloitte calls the “Store 4.0” experience. Now, we are seeing encouraging signs that the tide is changing.
“Store 4.0” has technology built into every facet of a shopper’s visit – not as a gimmick, but to create a fun, convenient and friction-free customer experience which also boosts sales. This means everything from augmented-reality changing rooms which scan your measurements and recommend the best clothing fit to push-button purchase functionality via digital wallets like Apple Pay.
Building technology into the omni-channel retail experience enables retailers to collect significant quantities of refined consumer analytics data, which, interpreted well, can allow retailers to not only meet but consistently exceed customers demands.
Just like retailers, mall operators can use this data to activate multiple channels of customer engagement – such as geo-fencing physical locations to identify repeat customers and the areas of the mall where they spend most time, allowing for highly targeted mobile advertising.
However, successful omnichannel retail also requires brands to invest in the in-store experience, ensuring that customers become ambassadors through personal engagement that inspires a connection with the brand story. High-quality customer service is the most effective way to improve the retail experience and cultivate consumer loyalty.
With convenient online shopping options on the rise, technological change is requiring malls to focus on creating spaces that are not just functional, but also beautiful, pleasant destinations to spend time. Successful shopping centres are those that have evolved to become mix-use, full-service destinations. Big brands alone are no longer enough to bring shoppers in, and the role of the mall operator to create a unique physical experience is becoming an increasing priority.
A successful mall should be the hub of the local community, somewhere that people can come together. Public space is a critical element of promoting this feeling. Modern malls need to offer creative retail experiences – such as concept stores, pop-ups and luxury shopper services – as well as entertainment and lifestyle elements like concert venues, gyms and parks. Recent research into Abu Dhabi’s consumer habits carried out by Gulf Related, illustrated that 89% of respondents ranked entertainment options as an important factor in their choice of mall. At The Galleria, curated and bespoke services ensure that visitors’ experiences are seamless and memorable.
In the coming years, the proportion of free public space in malls, compared to tenant floorspace, is set to increase significantly. This space will become the town square of the future, and offers exciting opportunities to develop programming – from art exhibitions to farmers’ markets – that complement the retail mix. At Al Maryah Central for example, we are creating three themed parks targeting different age groups.
This is a shift in strategy for many malls, but the Gulf has been leading the way on the re-thinking of ‘the mall’ for many years and is well-placed to continue this trajectory.
Malls in the UAE
Consumers in the UAE have a unique relationship and close affinity with malls as they play, and will continue to play, a central role in the social fabric of everyday life.
In many other regions of the world, malls primarily serve a functional purpose as a place to go to browse and shop so the convenience of e-commerce and online retail has easily drawn consumers away.
However in this part of the world, malls serve a different purpose – they are social destinations and community centers, with over 70% visiting a mall at least once a week. Malls in the UAE are an essential part of how the community lives, works and entertains. As well as being shopping destinations, they represent a hub for social interactions of various kinds and inspire emotional and personal connections.
In recent research commissioned by Gulf Related, 94% of respondents stated that visiting malls constitutes an important part of their leisure life. Consumers in the Middle East want to visit malls not purely for shopping, but also for entertainment, dining, exercising, and escaping the heat as well as other family and social activities – with 9 out of 10 always or usually dining out during a trip to the mall.
As a result, UAE malls see exceptionally high visit frequency and length of stay. Al Maryah Central was built with this in mind, offering a variety of entertainment options for visitors to stay all day – such as a 21 screen VOX cinema, family entertainment and parks.
Al Maryah Central’s Offering
Abu Dhabi is already beginning to provide mixed-use lifestyle destinations to meet consumers’ changing needs, and Al Maryah Central is an exemplary blueprint.
Al Maryah Central has focused on placemaking – creating public spaces that promote health, happiness and wellbeing through integrated design principles – developing a place for people to come together. We are at the forefront of next-generation mall development, with a beautiful and airy design built around natural materials. We will be the hub that connects Abu Dhabi’s new business district on Al Maryah Island and with half a million residents within a 10-minute drive, we’re expecting more than 20 million visitors per year.
The buoyancy of the Abu Dhabi market is reflected in The Galleria’s impressive numbers year after year, and Al Maryah Central will build on this existing offering to reach new audiences. The total retail spend by trade area in 2018 is estimated at AED 22.7 billion, and that is forecasted to grow at around 4.4% per year to reach around AED 27.0 billion by 2022.
These strong results set the stage for the completion of the development’s next phase, set to open in August 2019 as a game changer for the market.
Building on The Galleria’s strong focus on luxury, Al Maryah Island will become the ultimate destination for retail, dining and entertainment, delivering an outstanding experience to the Abu Dhabi community and beyond.