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Discover the future of commerce trends set to reshape online and offline retail in the GCC in 2024 and years to come.
Known the world over as a prime retail shopping destination, the GCC region has been slow to adapt to the digital revolution – but that’s now changing. The future of commerce in the GCC region is bright and increasingly online.
E-commerce sales saw a steady increase during the pandemic, with more consumers in the UAE and KSA shopping online more often since, as shown by a consumer survey held by auditing firm McKinsey.
Source: McKinsey
And while in-store shopping has remained popular in the region after the pandemic, Middle Eastern consumers have retained many of their online habits that they picked up during the COVID-19 pandemic, found auditing firm PwC in a 2022 survey.
By 2022, 91% of consumers shopped online across the Middle East and North Africa (MENA) region, with 70% of consumers preferring digital payments, payment provider Checkout.com found in a survey. These consumers rely on e-commerce businesses for products ranging from fashion to furniture, reports software developer Virto Commerce.
Source: Virto Commerce
While currently only a fraction of the region’s gross domestic product, the e-commerce industry is set to grow significantly at a compound annual growth rate (CAGR) of 9.26% between 2023-2028, reports market research firm IMARC Group.
With such projected growth, the e-commerce market presents substantial opportunities for forward-thinking entrepreneurs. Simultaneously, consumers’ continued demand for offline shopping experiences will keep traditional retail relevant for years to come.
So how does the future of commerce look? And which e-commerce trends can you leverage now to win big in tomorrow’s market? We cover these 6 future trends in commerce:
- E-commerce infrastructure booms
- Shopping happens hybrid
- Innovations in retail experiences
- Commerce goes omnichannel
- Digital payments dominate
Read on for a breakdown of the future of commerce.
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Future trend 1: E-commerce infrastructure booms
A key factor in the e-commerce adoption in the GCC consumer is a young population that is earning more and spending more time on the internet, notes the aforementioned McKinsey report. These consumers, mostly millennials and younger, seem to have a currently underserved appetite for online shopping.
When interviewed by Euronews, Rashad al Mulla, Senior Director of Marketing at e-commerce development project Dubai CommerCity, notes how “the whole industry is just trying to catch up to this demand."
Al Mulla reasons that: "The demand is coming from both ways; it's coming from the people demanding their goods and services be delivered via e-commerce and from suppliers who've identified that this is an opportunity that we need to tap into. And all the sub-services are now in high demand, like fintech, payment gateways, online portals, last-minute delivery and logistics."
“All the sub-services are now in high demand, like fintech, payment gateways, online portals, last-minute delivery and logistics.” – Rashad al Mulla, Senior Director of Marketing at Dubai CommerCity
And indeed, e-commerce fulfillment centers are a growing trend in the GCC, writes e-commerce supply chain specialist RSA Global. Likewise, other services in the e-commerce business will flourish in the next few years.
The future of e-commerce will thus bring business opportunities for entrepreneurs beyond e-commerce platforms.
Future trend 2: Shopping happens hybrid
With the rise of mobile commerce and online sales growing, observers might think that retail sales will decrease in the long run. Big online retailers like Amazon, moving into the GCC’s e-commerce could suggest that. But in truth, the future might neither be offline nor offline – the future of commerce looks to become hybrid.
For starters, GCC consumers aren’t all-in on online shopping.
Sebastian Buss, Chief Marketing Officer at Statista-operated database EcommerceDB, argues that: “Consumers in the Middle East, roughly 50%, like to touch things before buying them, which hinders e-commerce on the one hand, and promotes malls on the other. This is not the case in strong e-commerce markets such as the US and UK.”
“Consumers in the Middle East, roughly 50%, like to touch things before buying them, which hinders e-commerce on the one hand, and promotes malls on the other.” – Sebastian Buss, Chief Marketing Officer at EcommerceDB
It’s not just GCC citizens that continue to make in-store purchases – tourists do too. Dubai's strategic initiatives and government support have positioned it as a key driver of the retail industry's expansion, and its status as a global retail hub for shoppers is expected to solidify further, attracting tourists and investors from around the world, reports Dubai-based venture capital firm Seed Group.
With continued demand and investment, new physical retail spaces will continue to open in Gulf cities. While reporting in 2023 on the opening of a new mall, local newspaper Khaleej Times mentioned the construction of 6 more shopping centers in Dubai. And like Dubai, other cities in the GCC region are expanding their retail landscape.
But it’s not just more of the same traditional retail that is being built – retailers are focusing on differentiating themselves through innovative offerings and both online and offline customer experiences.
Future trend 3: Commerce goes omnichannel
In creating a hybrid retail experience, retailers in the Gulf Cooperation Council (GCC) region are not just creating online and offline retail channels – they’re combining the two, proptech company Estater concludes.
GCC retails are adopting what is called an omnichannel approach, which entails integrating their online and offline channels to provide customers with a seamless shopping experience.
This includes strategies like click-and-collect, which allows customers to buy products online and pick them up in-store. It also involves integrating social media into the retail experience.
“The region is witnessing the rise of social commerce”, Director Consumer and Commerce at Deloitte Middle East Dr. Ahmed Hezzah notes.
“Social media channels have become influential marketing and sales channels, with consumers discovering products, engaging with brands, and making purchases directly through these platforms. E-commerce retailers are leveraging social media influencers, interactive content, and seamless integration with online stores to drive engagement and conversion.”
“Social media channels have become influential marketing and sales channels, with consumers discovering products, engaging with brands, and making purchases directly through these platforms.” – Dr. Ahmed Hezzah, Director Consumer and Commerce at Deloitte Middle East
Omnichannel strategies are crucial for entrepreneurs to thrive in 2024’s retail market. In an increasingly digital future, being present across channels will become even more important.
Future trend 4: Innovations in retail experiences
The GCC region is fast becoming a global center for growth and innovation in the digitalization of both offline and online commerce.
To improve operational efficiency and profitability, retailers are investing in new technologies such as artificial intelligence, machine learning automation, and customer data analytics.
In innovating the retail experience offline, numerous brands in the GCC region are implementing cashierless, frictionless stores and adopting artificial intelligence-enabled solutions, wrote business software developer Shopworks.
While the GCC is already a global leader in the implementation of machine learning in business processes, it’s the region’s retail industry that shows the highest AI adoption rate in a McKinsey survey on the use of artificial intelligence.
Source: McKinsey
Some retailers, for example, use AI-powered chatbots to provide customer service, whereas others use big data analytics to create personalized experiences through product recommendation.
And GCC retailers are looking at other technologies to enhance and personalize the customer experience.
Augmented reality (AR) and virtual reality (VR) are being leveraged to enhance customer engagement in the GCC retail sector, found consulting firm MarkNtel Advisors.
In their report, 7 out of 10 customers named shopping as their primary motivation for utilizing AR, indicating a strong interest in interacting with products online before making a purchase, which has enhanced the appeal of augmented reality try-on.
A key trend generating consumer demand in 2024 and beyond, innovations in retail experiences and the adoption of new technologies will only increase in years to come. Entrepreneurs who are ahead of the adoption curve stand to gain significant market share.
Future trend 5: Digital payments dominate
Despite a historical dependence on cash, consumers in the GCC demand digital payment methods for their online and offline purchases.
The aforementioned Checkout.com report highlights the increasing preference among MENA consumers for digital wallets and other digital payment methods. Their data also shows increasing adoption of fintech apps, growing interest in digital currencies, and the changing consumer behavior towards digital transactions.
Fortunately, the rise of disruptive players in the payment landscape, including fintechs like Kem, is poised to reshape the payments market with innovative and low-fee payments solutions. These solutions include QR-code-based P2P payment apps and Buy Now Pay Later (BNPL) financing.
Source: Checkout.com
With digital payments already in demand, the future of commerce will see products bought in real time through instant payments, with digital wallets, and possibly with digital currencies.
Entrepreneurs and business owners in the GCC should stay on top of the latest payment trends to serve tomorrow’s consumer.
Conclusion: Preparing for the future of commerce
As our future of commerce report shows, the GCC’s retail industry is undergoing a digital transformation that affects both online and offline retail.
E-commerce is on the rise, along with infrastructure and services to support the industry for it and and sales continue growing steadily, though consumers still value some in-person shopping. Retailers are innovating through omnichannel commerce, emerging technologies like AI and VR, and frictionless digital payments.
These five overarching trends are shaping 2024;s and promise to gain significant traction in the coming years. Leveraging these trends and technologies early on can allow forward-thinking entrepreneurs to serve digitally-savvy customers today while riding the wave of e-commerce expansion in the years ahead.
The future of commerce is here. Unlock your company’s full potential today with Kem – the digital payment platform purpose-built for bold Middle Eastern founders and consumers ready to ride the fintech wave of the future. Download the Kem app on Google Play and Apple for secure P2P payments and start receiving secure P2P payments from customers now.
