7 strategies to help GCC retailers ace customer centricity

In a hyper-competitive and evolving economy, retailers must adopt a consumer-centric business model, which requires a laser-like focus on understanding, evaluating, and responding to ever-changing consumer expectations.

Companies that put customers at the core are more likely to thrive and become market leaders in the years ahead.

Here are seven strategies that consumer businesses need to address now, or risk being left behind.

Embrace GenAI

Generative artificial intelligence (AI) has the potential to reshape the consumer experience by helping companies better tailor products and offerings. By analysing large amounts of data in real-time with AI, retailers can reach consumers with offerings that match their shopping habits and interests.

The potential impact on customer experience is huge: Imagine a store where 40 to 60 per cent of human tasks can be automated, allowing resources to be reallocated to drive cost and productivity improvements while fueling innovation and growth. By streamlining repetitive tasks, employees can instead focus on higher-value activities such as customer interaction, sales opportunities, and personalised offers.

Customers in the GCC are excited about the prospects of generative AI with more than 50 per cent believing that it can help boost their online and in-store experience, according to the Oliver Wyman Customer Perception Map (CPM) survey.

However, generative AI also brings some risks, including confidentiality and security issues. There can also be a disconnect within companies about the pace of generative AI adoption, as illustrated by the recent survey that revealed that while 69 per cent of executives surveyed said they see broad benefits of adopting generative AI, 70 per cent of non-executives said their company was not ready to put the technology in place.

As generative AI reshapes customer experience, companies that act decisively will gain a vital head start on the competition. However, it is also essential to have a solid, well-communicated strategy on AI, and upskill the workforce accordingly.

Make it personal

According to the research, more than 60 per cent of customers are interested in tailored promotions and recommendations.

In the GCC, where many companies are part of large conglomerates, retailers need to integrate and personalise offers across multiple physical and digital assets.

Consumers increasingly expect businesses to go beyond generic interactions and truly understand their unique preferences and needs.

By harnessing generative AI, retailers can deliver more personalised experiences, which can boost brand loyalty and drive revenue growth. Research suggests that personalized experiences can deliver a 5-7 per cent revenue boost for retailers.

Master your digital strategy with 3Comms

An integrated digital strategy is key for any company to become customer-centric and drive growth. Companies must leverage technology and digital platforms to engage with consumers as more than 50 per cent of consumers said that they are interested in using technology to improve their experiences and offerings, according to the CPM survey.

This would require being more strategic about the ‘3Comms’ — e-commerce, social commerce, and content commerce. This is especially true in the GCC where e-commerce lags more developed markets by 15-30 per cent.

Social commerce will be the key that unlocks and accelerates extra growth in e-commerce in the region, especially with the rise of nano influencers and social connectors as an effective sales force.

Today, roughly 60 per cent of customers in the GCC make use of online retail channels for convenience and speed, and social commerce in the GCC is expected to see a growth of 28 per cent CAGR from 2024 to 2029, according to our analysis.

In addition, more than 50 per cent of purchases are influenced by social channels.

Against this backdrop, it is critical to drive effective and integrated digital strategies with social media campaigns, influencer partnerships, digital marketing and search engine optimisation.

Pioneer value plays

GCC consumers are tech-savvy and exposed to greater choices than ever. That said, it is more important for a business to deliver perceived value beyond the lowest prices, which can be in the form of superior customer service, frictionless experiences, and better-quality products.

Misconceptions about value in the GCC market prevail, which means there is a real opportunity for businesses. Take grocery retail, for example. While discount chains account for roughly 23% of the market in Europe, there are no large regional discount chains in the GCC comparable with those seen in Europe.

Yet eight out of 10 customers in the GCC say they would be interested in a discount retailer.

The first company to implement a value-centred format at scale will exert significant price pressure on the entire market and create a distinct value proposition in the market.

Put customers above suppliers

Put consumers first when it comes to dealing with suppliers as this can boost like-for-like sales by 5-10 per cent. That is the mantra facing consumer-centric businesses, especially when it comes to retail in the GCC.

Rising costs have encouraged some retailers to squeeze the back margin – leveraging discounts from their suppliers so they can make greater profit on products sold or pass on the discount to customers.

Suppliers also use back margin incentives to gain prime positions in stores – both physical and digital, which means consumers are encouraged to purchase items based on back margin rather than merit.

Businesses need to make the right decisions from the perspective of customers to develop a differentiated proposition and continue to attract new customers.

Expand your ecosystem

The increasingly blurred boundaries between industries and channels are pushing retailers to rethink their position to stay relevant.

Consumer preferences are evolving with more than 60 per cent of customers in the GCC interested in adjacent services from their current retailers, according to the CPM survey.

We can also see that 62 per cent of Gen Zers, born in the late 90s and early 2000s, are willing to use alternatives to their preferred brand. With brand loyalties changing, retailers must shift to a customer-centric mindset and explore how they can capture a share of the wallet beyond their core proposition.

Retailers can develop and tap their ecosystem of partners and suppliers to maximise their ability to develop new products, services and experiences.

Building an ecosystem is a journey that demands a clear vision, an open mindset for collaboration, and a balanced agenda aligned with the company’s risk tolerance and firepower.

Pursuing an expansion strategy into adjacent areas anchored in customer preferences such as innovations in new business models, or developing digital marketplaces, can enable companies to create enormous competitive advantage with minimal risk.

However, when doing this, retailers should start with the customer in mind and work backwards to ensure their investments have the best chance of success.

When developing products and services in conjunction with partners, business leaders must prioritise solving customer needs, presenting a win-win for both parties – and of course, for the customer.

Consolidation is inevitable

For a consumer-centric business, consolidation can deliver greater market share and a bigger customer base, while also minimising costs and maximizing synergies.

Consolidation is almost certainly coming to the GCC retail grocery market, where the top two players command a market share of just 25-30 per cent versus 53-65 per cent in more developed markets.

The days of smaller businesses being able to trade punches with the heavyweights are numbered and consolidation is inevitable, with opportunities for bigger, more successful retailers to acquire their smaller counterparts.

But making acquisitions can also bring challenges, especially around integrating technology platforms, brands, and work cultures. Retailers should carefully consider their integration plans and keep their customer needs in mind before leaping to mergers and acquisitions.

The writer is a principal – Retail and Consumer Practice at Oliver Wyman, India, the Middle East and Africa.