To offset the impacts of the COVID-19 crisis, retailers in the Middle East and Africa must act in three key ways: sustain, adapt, and build.
The COVID-19 pandemic is first and foremost a human tragedy, but it has also had a significant impact on the global economy. In the Middle East and Africa (MEA), extensive lockdowns have led to changing consumer attitudes and a shift to online channels for activities such as shopping, meeting, and learning. People are also spending less, which reflects more cautious attitudes and direct hits to income.
During lockdown, consumers across the Gulf Cooperation Council, South Africa, and Turkey focused their online spending on groceries, personal-care products, and household supplies. Sales in discretionary categories, such as apparel, footwear, and travel, fell sharply. Similarly, the restaurant industry suffered.
The priority for businesses in the next normal must be to manage the immediate impacts of the crisis on consumer demand. Depending on their position, that may mean ramping up digital solutions, leveraging third-party platforms, and using social media to continue conversations with their customers. Over the medium term, companies must make strategic decisions on e-commerce, taking into account their current capabilities, the trajectory of customer demand, and factors such as supply-chain capacity and flexibility.
Three key ways forward:
Sustain. Players with an online presence seeing a rapid increase in demand (for example, those associated with grocery and essential products) should sustain their activities through steps such as optimising baskets and rationalising product ranges to enable consistent delivery.
Adapt. Players with an online presence seeing a rapid decline in demand (for example, those associated with discretionary-spending categories, including apparel, footwear, and luxury products) should adapt by becoming more flexible, optimising digital offerings, and ramping up marketing.
Build. Players lacking an online presence must make no-regret moves, such as embracing social-media marketing. They should also find ways to sell online, through either third-party platforms or their own bespoke offerings.
In all scenarios, speed is of the essence. If companies in the MEA region can act decisively on digital initiatives, they will offset the impacts of the crisis, recapture lost sales, and be ready to grow in the next normal.
Online shopping: A permanent trend?
The MEA region has been relatively slow to adopt e-commerce, but the COVID-19 pandemic has brought a step change in behaviors. Consumers across the Gulf Cooperation Council, South Africa, and Turkey have done a lot more shopping online during the pandemic than before, amid higher demand for groceries, personal care, and household supplies. In fact, consumers in Saudi Arabia and the United Arab Emirates have seen among the highest rates of “new or increased” users in online deliveries (restaurant products and groceries) and communications (videoconferencing and remote learning).
As the e-commerce landscape evolves, brands must be prepared to tailor their strategies to new patterns of customer demand, working out how to develop their propositions to achieve maximum impact and build sales fast. For brands yet to engage with digital solutions, the crisis should act as a clarion call. The time to act is now.
Full report: https://www.mckinsey.com/industries/retail/our-insights/how-middle-east-and-africa-retailers-can-accelerate-e-commerce-imperatives-for-now-and-the-next-normal