Has the Retail Scene Changed in the GCC?

COVID-19 has decisively altered the global retail scene. As the pandemic spread at lightning speed, malls and boutiques shut down – some of them permanently – and stay-at-home orders drove even the most reluctant e-commerce shopper to carry out most of their purchases over the Internet.

Like the rest of the globe’s population, GCC residents were affected by the pandemic, and they noticeably altered their shopping habits after the onset of COVID-19. For them, malls are an important social space in which they congregate with their friends. It’s where they meet for lunch and to shop during the day, and where they go with their entire families after sundown and on weekends for various forms of entertainment. In the GCC, malls effectively function as the 21^st-century version of the traditional Arabian souk.

When their retail spaces went on lockdown, GCC shoppers turned to the Internet – in the UAE and Saudi Arabia in 2020, visits to malls dropped by over 50% during the pandemic, as reported by Global Fleet. In fact, according to research conducted by Ernst & Young, 92% of shoppers in both countries significantly altered their shopping habits, shifting to the online world. Across the MENA region, online transactions saw a significant uptick: $41.56 billion in 2020 as opposed to $34.69 billion the previous year, according to Go-Gulf.

“Unfortunately, the COVID lockdown in Qatar and the GCC has affected many businesses that have been present for many generations,” says AlGhalia Nabeel Ali Bin Ali, head of strategy and operations at Galeries Lafayette and ABA Fashion in Qatar. “During the lockdown, we did notice a huge shift toward online retail,” says Rachad Tabiat, owner of AlOthman, the multi-brand high-end boutique in Kuwait and Bahrain.  “We are faced with an increasingly complicated retail environment, driven by strong demand for e-commerce, and more sophisticated and personalized consumer preferences.”

For Galeries Lafayette in Doha, the challenge was great, as the venerable department store didn’t yet have an e-commerce platform. “In order to be sustainable and run the business we had to act quickly,” say Ali Bin Ali. “Creating an online store needed some time, so the first thing we did was to create e-catalogues, and we communicated with our clients via WhatsApp and through our social media platforms. E-commerce certainly grew rapidly in the country, with most businesses adding an online platform in order to be successful.”

Many are convinced that the GCC’s online shift won’t be permanent. “I don’t believe this shift will kill malls in our region, the way it did with the Western markets,” says Tabiat. “In our region, malls are still considered a place for social get-togethers and ‘experiential’ uses that can’t be done online. People will still want to go to these malls for their restaurants, movie theaters, fitness facilities and the like.”

Ali Bin Ali agrees. “In regards to the future of retail in Qatar and the GCC, I think that malls will still be present, since people love to walk around and go see what’s new in the market,” she says. “People still appreciate ‘traditional shopping’ because it has its benefits, such as feeling the material, trying the piece on and browsing all their options in person rather than virtually.” Tabiat also observes that as confinement measures were lifted, shoppers gradually returned to their pre-lockdown habits. “Seeing the foot traffic in malls and shopping centers in Kuwait nowadays, I truly believe that they have already survived the COVID-19 lockdown.”