Rewarding customer loyalty is pivotal during Covid-19 pandemic
Maintaining the confidence of consumers and rewarding their loyalty during the Covid-19 pandemic has been more pivotal than ever for retailers across the UAE, especially as they tackle a new set of challenges, experts said.
Anastasia El Hage, founder and CEO of HUBB Global Group, observed that while consumers are drawn towards more high-end products in the UAE, with the current crisis, people have begun purchasing more local products to not only promote smaller businesses, but to also support the local economy.
“The survival of the UAE’s businesses depends on loyal customers who will keep coming back no matter what,” she said. “Consumers are always looking for more than just a purchase, they are looking for an experience. Apart from the regular sales, retailers can focus on sharing tips, building stories, and engaging personally with each individual shopper. We are now in a virtual age where retail brands can come up with innovative ideas and host them virtually, which also reduces overhead costs – those savings can be passed on directly to consumers.”
According to a recent PwC survey, Middle East consumers remain cautiously optimistic, even though 62 per cent say that they have experienced a decrease in household income.
Karl Nader, managing director of AlixPartners Middle East, highlighted some of the challenges that retailers have had to face as a result of the pandemic.
“In addition to residents tightening their purse strings, retailers are also facing huge cash concerns and carrying a lot of unsold inventory,” he said. “The easy solution is to launch deep discounts on leftover products, however this will erode margins. Pricing will remain a sensitive issue for shoppers over the coming months.”
With any missteps, the potential for permanent brand damage is high, he added. “In mass retail, whether in essential categories such as grocery, or non-essentials, it is a winner takes-all competition, and retailers that are part of larger groups are well positioned. For example, in the grocery industry, Carrefour and Lulu are leading the race vs Spinneys, Co-ops, and the rest of the players.”
However, online is still an opportunity for smaller and more specialized players, he revealed. If they are able to build and execute a differentiated value proposition, e-commerce gives them the opportunity to compete effectively within their niche market.
“Moreover, smaller retailers might be disadvantaged in terms of infrastructure and capital, however, they now have access to efficient platforms such as Shopify, and a number of the delivery apps,” he said.
PwC’s research showed that the pandemic has strengthened the online grocery shopping habits of consumers in the Middle East, with 51 per cent of the respondents saying that they were shopping for groceries online or by phone, either to pick up in-store, or, more commonly, to be delivered to their homes. Of those, 92 per cent said that they are likely to continue purchasing online after the pandemic is over. The results of the survey also showed that 61 per cent indicated that their spending on groceries has increased, while 41 per cent are spending more on entertainment and media. In addition, 50 per cent said that they decreased their spending on clothing and footwear, while 42 per cent cut back on restaurant food delivery and pick up.
Abboud Ghanem, regional vice president for the Middle East and Africa at Alteryx, explained that a smart approach to data now will protect retailers, particularly at times of crisis, and guide the way to a successful future.
“We live in an experience-based economy where the ‘hyperconnected’ consumer continues to redefine value,” he said. “The traditional measures of cost, choice, and convenience are still relevant, but now engagement and experience are equally as important.”
Technology, he added, has had a major impact on how customers interact, build relationships and expect loyalty to be rewarded. “Platforms such as Twitter have provided customers with public forums to openly share their feedback with businesses and brands uncensored. These interactions hold valuable data that can, when analysed, tell you something about how to improve the customer experience to maintain confidence and ensuring loyalty. In fact, when customers give you feedback, it means they care. This cannot, and should not, be overlooked.”