Dress to impress

It’s just as well that retailers in the Middle East have never been frightened of tough competition. The market is so intense these days that they must be flexible enough to reposition themselves to meet the demands of customers on an almost individual basis.

Tags: Hewlett-Packard CompanyJumbo ElectronicsMerlin DigitalPlutoRetailUnited Arab EmiratesXerox Corporation
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Dress to impress Rohit Bachani, Merlin Digital.
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By  Piers Ford Published  April 12, 2010 Channel Middle East Logo

Differentiation is more important than ever in retail. But with constant pressure on margins, expensive overheads and an unstoppable tide of new products, retailers must make important decisions about the type of business they want to be, and how they can make themselves most attractive to their target customer.

Rami El Hussein, managing director of games distributor Pluto, says that caution in the sector has led to a lack of creativity on this front. But the ongoing price war will eventually force the issue.

“The simplest way for retailers to differentiate is by becoming more customer-focused — educating the sales people to be real product experts who not only read the price label when asked, but actually add value and help consumers part with their hard-earned cash,” he said.

“Specialising in certain categories and maybe price points — high end laptops, for example — will ensure that clients who are after those categories will go to that retailer, where they spend a reasonable premium for a good service and advice. Up-selling with unique accessories is also a money-maker once the retailer decides to actually abandon the common ones and find the niche small items. All this is easier said than done, but in my opinion it’s the way forward. Adding new sections for high margin items like games will also help them.”

El Hussein says retailers who are half-hearted will see their revenues draining away to those who are committed to their target market. “The customer is smarter than ever and is choosing where to spend his money wisely,” he added.

High street players say the shopping experience is crucial to winning a customer’s business, from the moment they walk through the door to the level of after-sales care.

“Since its inception, CompuMe has been building its brand awareness on services and peace of mind,” said Mahmoud Majed, brand manager at the retailer’s parent company Itsalat International.

“In the beginning, this was not an advantage as everybody was looking for [good] prices. But today, the customer is more demanding and expects to receive proper service. We are investing in our staff to upgrade their product knowledge and communication.

“The consumer is evolving all the time and the products are getting more technical. You need a continuous adaptation to the market conditions,” he insisted.

At the same time, Majed says, everybody is still after the best price for the best products and brands. There is an inevitable squeeze on margins, compounded by the daily operating costs faced by any retailer.

JP Nambiar, head of retail at IT superstore Jumbo Electronics, agrees that well-trained staff with excellent product knowledge are essential for any serious retailer.

“Our shopping experience also extends to after-sales,” he said. “We off our customers user training seminars, inviting them to learn more about the uses and applications of the products to maximise their experience. We also have nine service centres across the Emirates which ensure that our customers receive a fast and efficient after-sales service.

“Jumbo Unwired, our concept store at Dubai Mall, is another great example of how we are differentiating ourselves from other retailers in the market. The store deals exclusively in wireless technology including laptops, mobile phones and printers, and caters to the consumer who is after the latest in cutting edge technology.”

Nambiar and Majed also agree that the cost of renting premises is the most significant overhead for the retailer. Majed suggests landlords should act more like ‘partners’ in the current economic climate, and offer more favourable terms and conditions.

“During the downturn, footfall in malls fell with the decrease in tourism in the region and, as a prudent retailer, we were one of the first to enter into discussions with our property owners about reducing rents as a way to control this cost,” said Nambiar.

But these behind the scenes concerns are of no interest to the consumer, who needs to be stimulated by the promise of seeing something new with each visit. Change within stores must be constant argues Majed. The customer has to feel the retailer is ‘alive’. New initiatives — not just in store layout but also in terms of promotions — help retailers to leapfrog each other in the quest for customer loyalty and squeezing the last drop from single-digit product margins.

That means tying in with major regional technology and retail events — GITEX and the Dubai Shopping Festival, for example — as well as running regular campaigns combining bundled packages, exclusive products and significant price mark-downs.

“The IT sector is constantly changing, with new technology — in terms of speed, efficiency, storage and features — coming out all the time,” said Nambiar.

“As a retailer, our challenge is to keep up with the rapid changes in the market. Price erosion ranges up to 30%, and although this makes IT products more affordable, this is inevitably a challenge. However, with this price erosion, we see a growth in sales volumes as the products become more affordable, and this growth is something we believe can be sustained long term.”

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