Saudi retail in tech race to lock in consumer loyalty

• Gulf retailers ‘behind the curve’
• Cloud tech vital for personalisation
• Customers need ‘reason to be loyal’

Saudi and Gulf retailers are running to catch up when it comes to deploying sophisticated tools being used in other markets to develop consumer loyalty, creating an opening for innovative companies, according to analysts. 

“The Middle East is a bit behind the curve,” said Premal Patel, managing director of Catalina UK, a retail consultancy. 

“Technology plus personalisation plus loyalty is the nirvana of retail marketing – but it’s not quite there. Everyone’s talking about it but I don’t believe it’s at the scale of Europe and the US,” Patel said.

He said that some Gulf retailers are rolling out loyalty programmes but are at an early stage. 

“Everyone’s putting plans together but it’s all down to who’s willing to invest,” he said.

A report published in July by consultants Oliver Wyman said there was a window for European discount retailers such as Aldi and Lidl to expand into the Saudi market. The discounters use tools which build on knowledge that Saudi shoppers favour local produce and are geared towards online shopping. 

Ecommerce has transformed Saudi retail, growing at a rate of 15 percent a year. Venture capital funding in ecommerce startups totalled $428 million in 2023, the government says.

And the Saudi market, the largest in the Gulf, is particularly attractive to retailers. Spinneys, an upmarket UAE supermarket operator, opened its first store in Saudi Arabia this year and is planning a further 12 shops in the country by 2028. 

Patel said established retailers already present in the Gulf, such as Marks & Spencer, have transferred loyalty schemes into their local operation with some success. 

He also pointed to a retail trend in Europe, whereby shops sell in-store physical and digital spaces to brands for advertising. 

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Shein, the world’s largest fashion retailer, has taken what it calls “micro-personalisation” to the next level. 

Marcelo Claure, Shein vice chairman, told a forum in Riyadh last week that his group makes between 10,000 and 20,000 products each day based on what customers want.

“What we do is only manufacture what customers want. We have the ability to design and ship in one week,” Claure said.

Cenomi Centers, Saudi Arabia’s biggest mall operator, is rolling out a shopping app that will allow for immediate delivery from stores inside its malls to anywhere within the mall. In Dubai, many retailers are using “pop-up shops” in the middle of malls as a way to test products and generate buzz. 

“The shift towards online shopping has created new avenues for businesses to reach consumers, making it an essential component of any growth strategy,” said Andrey Dvoychenkov, general manager of NielsenIQ APP, a consumer intelligence company. 

Patel said retailers need to use AI technologies to target consumers more effectively with offers that will interest them. 

“Customers are not loyal unless you give them a reason to be loyal, they will shop anywhere that’s convenient for them. You have to be in front of their mind with rewards and relevant messaging,” he said.