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UAE consumers are driving a transformation in retail, industrial and logistics

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The UAE, and the region at large, is ready to capitalise on a new trend of e-commerce within the retail, industrial and logistics space, although challenges in technology, regulation and a change in consumer behaviour remain.

Malls will have to change their purpose to become more fun and entertaining, while online presence for brands and stores – and faster deliveries – are expected to come up in the near future.

“The region historically has had very low online penetration, compared to what you see in more mature western markets,” said Anurag Bajpai, Partner and Head of Consumer and Retail at KPMG, during Day Two of Cityscape Summit 2020. “The industry wasn’t ready, and a lot of people have learnt a lot about their business and their agility to innovate in the last six to eight months. Investments are being made in infrastructure, logistics and supply chain but there’s a lot of focus on the top of the mind of retail companies.”

As COVID-19 became a large catalyst to move e-commerce and online presence forward, challenges have lingered in the market. But experts believe they will be overcome, with most e-commerce platforms trading twice or three times more than last year. 

“There are opportunities to continue bringing into the market top-notch last mile delivery space,” said Gabriella De La Torre, Director of Consulting at CBRE. “There’s still very much an opportunity for continued investment and delivery of high-quality delivery space.”

INVESTING IN TECH

The investment will also be acquired in physical infrastructure, while gaps remain in technology, such as payment gateways. Regulation is also still an issue in the market today. 

“Governments have been improving regulation, like the DIFC and ADGM,” said Imran Sheikh, Chief Investment Officer at Peninsula Real Estate Management Limited. “The entrepreneurship ecosystem has grown and is taking on steam now, filling the gaps of fintech and logistic services in the region.”

Logistics is expected to contribute 8% to the GDP next year, with a growing demand for it, as well as warehousing and distribution types of facilities. But the supply is not there yet, creating disequilibrium in the market. 

Malls will need to adapt, to either offer customer value, include places that offer convenience to consumers, or offer an entertainment experience. 

“COVID-19 has permanently changed customer behaviour today,” said Mansour Hajjar, Head of Country Management for UAE and India at Chalhoub Group. “People’s homes have become a school, an office, an entertainment centre and a gym so developers need to think more about how to offer a home experience at malls and create more collaboration with retailers to curate and create those experiences.” 

The days of a store-only format driving growth are also gone, pushing brick-and-mortars to think differently. “Retail isn’t just about buying and selling, it’s about home delivery and Artificial Intelligence,” Bajpai concluded. “They can partner with online platforms. We see a lot of trends evolving around partnership – given the complexity, a company alone cannot do it on its own”.

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