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Gulf retail braces for change

News, 17 April 2017
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DUBAI: Amazon's acquisition of Souq promises to transform not just the online shopping experience in the Gulf, but also the offline as malls and bricks-and-mortar stores rethink their approach.

Last month the US giant bought access to a fast-growing e-commerce market – consulting firm AT Kearney has forecast the Middle East market will grow from $5bn in 2015 to $20bn in 2020 – when it paid a reported $650m for Souq.com which operates on a similar model, hosting around 75,000 merchants selling more than 8m products across 31 categories.

One reason for this growth surge, according to The Motley Fool, is a lack of variety in brick-and-mortar stores.

The Nation recently carried out a snap survey of 3,649 users of the TaskSpotting app, which rewards consumers who complete marketing-related missions around the UAE, and found that a majority regularly shopped online (59%) and that three quarters (74%) felt price was the best reason for doing so.

While clearly not a representative sample of shoppers, a majority (63%) also thought that online shops had a better range of products than local stores, but delivery was an area where opinions were more evenly divided, with 43% saying that goods bought online generally didn't arrived on time.

But delivery and customer satisfaction are areas in which Amazon excels. And Ronaldo Mouchawar, CEO and co-founder of Souq, expected this would be central to the future growth of Souq, which will continue to operate under its own name.

"By becoming part of the Amazon family, we'll be able to vastly expand our delivery capabilities and customer selection much faster, as well as continue Amazon's great track record of empowering sellers," he said.

With local, Saudi-financed Noon.com also gearing up to launch in the same space, the future appears interesting for both consumers and traditional retailers.

The Nation noted that malls already function as public spaces and entertainment venues but suggested that more would have to be done, such as hosting other businesses, like sports venues.

"We would also like to see an increase in community connections at malls," it said, with space for pop-up stores, while any new malls might have to be smaller and more locally focused.

Malls could even consider embracing the opposition, offering pop-up space to online-only retailers to come in for limited periods.

Data sourced from The Nation, The Motley Fool; additional content by WARC staff

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