The coronavirus outbreak has created a crisis for retailers globally, with non-essential stores in most countries shut down anywhere between two weeks to two months.
The crisis poses specific challenges to the six GCC states, which were relying on economic boosts in 2020 after witnessing a sharp decline in the region’s economic expansion last year.
Stringent measures have been adopted by all GCC states. UAE is undertaking mass testing and has completed one million tests. Saudi Arabia, Bahrain and UAE announced they would penalise those who spread fake news related to coronavirus, while Kuwait has ordered the deportation of expats who violated the 12-hour curfew imposed in the city.
The list also includes national sterilisation drives, strict social distancing rules, precautionary quarantine, and even movement permits aimed at mitigating the spread of the virus.
The clear message to stay at home unless absolutely necessary has spurred large numbers toward society toward digital, contactless shopping experiences. And in the digital space, it is the more local and more responsive retailers who win.
- Consumers will go cashless
COVID-19 may provide just the necessary push toward a cashless society and further digital connectivity. While digital payments have been growing with the advent of Benefit Pay in Bahrain, Mada in Saudi Arabia and Beam and Google Pay in UAE, the demand for contactless mobile payments is expected to further grow and consumers are more likely to choose retailers that provide such options.
- Import dependency will encourage a shift to local production
Coronavirus has increased the demand for non-perishables, as people opt for foods with longer shelf lives, such as rice and noodles, fearing that global manufacturing will slow down.
For fresh produce, the GCC relies heavily on imports, and in the first few weeks after the outbreak prices were shooting up for basic produce such as tomatoes and onions.
This in turn, resulted in calls for price regulation and increased import, however, the need to look inwards for agricultural cultivation also came into focus. Saudi Arabia has even launched an “Agricultural Guide” App to support local production and farmers by providing instant agricultural consultation services via the app. A focus on self-sufficiency and preference for local produce is expected.
- Demand for pharmaceuticals that can be stored for long periods
COVID-19 has led to a spike in demand for paracetamol, zinc supplements and various vitamin tablets such as Vitamin C, as consumers look to boost their immune systems.
To hold on to such first-time consumers, vitamins and dietary supplements manufacturers should promote the long-term benefits of taking them to safeguard against illness in the future.
- Brand message and communication
Even before the COVID-19 crisis, millennial consumers, who are the key consumer group in the GCC, wanted to know what their brands stood for, and this is true now more than ever.
Empathetic and locally inclined brand communication, with the goal of being consistent about measures being taken during the crisis, is of utmost importance as this cultivated brand image will help once the crisis is over.
Talabat is one such brand that has risen to the occasion –they currently provide contactless delivery wherein the delivery executive will leave the food package at a designated area outside the house and leave, while the payment is done online. This ensures zero contact with external elements while also seamlessly getting the food to customers.
- Single-brand, luxury brands at most risk
Across the GCC, just as is the case globally, luxury brands will suffer, as such consumers tend to like, see and review before making sizeable investments and are hence less likely to buy online.
On the other hand, bricks-and-clicks stores like Sephora, which have invested heavily in their online presence, will benefit from the reduced footfall in shopping malls. Other brands that have a strong e-commerce presence can also make up sales online.
For bricks-and-mortar establishments, it may take a lot more time to bounce back. However, once the risk subsides, customers can be drawn in through a major sale, like the Great Singapore Sale which was used to entice huge spending sprees after the SARS virus left Singapore’s retail sector in tatters.
Retailers need to be agile, aware and responsive, in order to survive the crisis. Any hope of recuperating in the future will is futile unless the current focus is on providing agile, localized responses to consumer needs, whether it be by increasing supplies or relying more on e-commerce.