UAE Retail Landscape Shifts: 70% Of Retailers Integrate Digital Tools, Balancing Online And Offline Sales

A survey conducted by Zoho Commerce has shown that in the UAE, a significant 70% of retailers are blending digital tools with their traditional brick-and-mortar setups. This move towards a hybrid, or omnichannel, approach is a clear indicator of the evolving retail landscape in the region.

The dynamics between physical and digital storefronts are also evolving, with 57% of UAE retailers now operating both. This development is noteworthy, especially since nearly seven out of ten of these retailers report generating equal revenue from their online and offline channels.

This balance is a proof to the growing sophistication of omnichannel commerce, where businesses are increasingly striving for strategies that offer convenience, broader reach, and more personalised shopping experiences. The drive towards omnichannel retail is fueled by factors such as broader market access, changes in consumer behavior, and the demand for more customized shopping experiences.

Despite the surge in e-commerce, half of the retailers surveyed plan to increase their physical presence. This expansion strategy includes pop-up stores and in-store collaborations, highlighting the ongoing value of physical retail in providing experiential benefits and immediate satisfaction to customers.

Social media platforms have emerged as a predominant channel for product discovery, with 69% of surveyed retailers stating that their customers first encounter their products on these platforms. This surpasses traditional discovery avenues like search engines and marketplaces, illustrating the significant role of social media in retail marketing. Additionally, even businesses that solely operate offline are leveraging online feedback channels, indicating the blurring lines between digital and physical customer engagement.

In this rapidly changing retail environment, speed and convenience have become paramount for consumers. Over half of the retailers have noticed a growing demand for quicker delivery options, including same-day services. The main reasons customers choose online shopping are for convenience and cost savings, whereas in-store shopping appeals due to the tactile experience and the immediate gratification of taking items home.

To cater to these evolving consumer preferences, a majority of retailers are now incorporating in-store technology. This includes mobile payments and digital aids like screens or tablets for product exploration, with nearly 70% of retailers acknowledging that such technologies significantly enhance customer convenience and the speed of service.

However, transitioning to an omnichannel model presents its own set of challenges. About 51% of retailers find it difficult to manage both their online and offline operations effectively. Other hurdles include logistical complexities and rising operational expenses. For online retailers, high shipping fees are a major customer deterrent, whereas physical stores grapple with issues like limited staff and lengthy checkout queues.

Prashant Ganti, vice president of global product strategy, finance & operations at Zoho Corp., remarked, "The retail sector in the UAE is taking a more holistic and intelligent approach to commerce. Our study shows retailers are building unified experiences by combining other online and offline channels, reflecting a trend in how a modern consumer purchases. As the country's retail sector continues its digital evolution, businesses that invest in the right tools, including AI to enhance buyer experience will lead the next wave of growth."

The study, which took survey from over 300 businesses, shines a spotlight on the emerging trends, challenges, and opportunities within the UAE's retail sector.

Looking to the future, nearly 60% of retailers in the UAE are investing in artificial intelligence (AI) and machine learning to stay competitive. They believe these technologies will play a crucial role in achieving seamless integration across sales channels, offering more payment options, and delivering hyper-personalized shopping experiences. Close to half of the respondents are convinced that AI will revolutionize online retail in the coming years.