Complex Made Simple

With digital shopping thriving, are malls disappearing, and virtual ones appearing?

As physical retail outlets desert the now empty walkways of big shopping centers, some malls are going after hybrid models, a mix of digital and physical, while others are turning fully digital

The Toy Store has abruptly ceased its operations, closing stores across some of the biggest shopping malls in the UAE Nakheel Malls, the retail arm of master developer Nakheel, has launched its data transformation initiative Riyadh Municipality has issued the first commercial license for the biggest online shopping mall in Saudi Arabia

There are clear signs that shopping malls, the once getaway havens for kids and adults alike, are suffering, not only globally but also locally.

As physical retail outlets desert the now empty walkways of big shopping centers, some malls are going after hybrid models, a mix of digital and physical, while others are turning fully digital.

Troubling signs 

Apple’s store at Mall of the Emirates recently announced it would remain shut until further notice, according to customer care representatives contacted by Gulf News.

“To support the health of our valued customers, Apple retail store is currently closed until further notice,” said a pre-recorded message on the iPhone-maker’s customer care number.

The store is only accepting customers who have already paid and have come to collect their orders. 

“They have one door open to assist customers who have paid and will be collecting their items,” said a mall representative. “They need to sanitize the full store.”

It is not known if Apple is taking advantage of low sales volume to shut its store for at least 3 days.

Meanwhile, the Dubai-headquartered Gulf Greetings General Trading LLC, owner of the toy retail brand The Toy Store, has abruptly ceased its operations, closing stores across some of the biggest shopping malls in the UAE, leaving a number of suppliers left out of pocket.

The business is the exclusive representative of Hallmark Cards for the GCC region and is the owner of The Toy Store, a chain of eight branded toy shops that boasted major units across sites such as Mall of the Emirates and Dubai Mall.

The company operated a total retail space of 125,000 sqft feet across the Middle East and had distribution centers in every GCC country, with almost 400 employees across the region.

Suppliers received an email from Gulf Greetings Management informing them of the closure of the business, citing “unavoidable and unprecedented circumstances.” 

Read: UAE residents eager to return to shopping malls and beaches but not in a hurry to attend music concerts

Hybrid-like models 

Nakheel Malls, the retail arm of master developer Nakheel, has launched its data transformation initiative as part of a customer-centric strategy to benefit retailers and customers across Nakheel Malls’ assets.

Using machine learning algorithms and AI-enabled data products, the fully governed, advanced platform provides key insights to more than 3,000 tenants by studying retail habits, purchases, and experiences of over 90 million customers.

Omar Khoory, Chief Hospitality and Assets Officer, Nakheel Malls, said: “We partner with Artefact in this digital transformation to embark on a realistic, empathic journey that will enable us to further understand our customers’ needs and provide our retail partners with in-depth analytics to support their business growth.”

Dr. Oday Salim, Data Manager, Nakheel Malls, said: “New use cases are being tested and integrated into retail operations leading to both machine learning and AI in a five-year plan.”

As part of this digital growth strategy, Nakheel Malls recently introduced dragonmart.ae, an e-commerce platform that provides shoppers the ability to sort and discover over 35,000 products found at Dragon Mart across 11 high-level categories within the comfort of their homes.

In a matter of a few months, the Dubai Mall will be home to an immersive digital art gallery spread over 2700 sqms. Set to feature some of the world’s most iconic works of art by the likes of Dali, Monet, and Van Gogh, the new gallery is named “Infinity Des Lumieres.”

The vast space will showcase infamous works of art via 130 projectors, 58 speakers, and 3000 high definition moving images. The unique gallery looks to introduce a tech-driven cultural and arts platform.

The gallery offers up an immersive, multi-sensory, journey of sound, light, movement, and color for a delightful shock to all of the senses.

Fully virtual mall

Riyadh Municipality has issued the first commercial license for the biggest online shopping mall in Saudi Arabia.

A dark-store warehouse license has been issued to keep pace with the growing demand for food and consumer products on the internet, according to an official statement.

The step comes in realization of the smart city goal and in support of electronic commerce and logistical services.

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UAE, Saudi, online shopping trends

According to a study by Ernst and Young, 92% of consumers in the UAE and Saudi Arabia have switched to online shopping, which has forced the majority of retailers to quickly adopt digital transformation strategies to keep up with the market and continue to do business.  

Sectors that have thrived during the pandemic, such as e-commerce, delivery services, edtech, and healthtech, have all adopted digital payments, thus stimulating the digital financing sector.

The entire retail sector, from micro-enterprises to larger establishments, faced multiple challenges and it is expected that the businesses that have adapted to the new reality will have valuable opportunities to achieve business continuity and growth in the phase following the pandemic.

UAE and Saudi consumer spending

UAE consumer spending for 2019 was $164 bn, a 1.34% increase from 2018’s $162 bn. 

Dampened by COVID-19, consumer spending in the UAE is expected to reach $150 bn by the end of 2020, according to Trading Economics global macro models and expectations.

Fitch Solutions expects household spending in the UAE to return to growth in 2021 at 4.1% year on year (yoy), after the COVID-19 pandemic led to an estimated contraction in consumer spending in 2020 of 5.7%. 

Improving economic growth in 2021, recovering oil prices, a revival of international tourism, and government stimulus measures will support disposable incomes in the UAE. 

As such, the average annual disposable income in the UAE is expected to grow by 12.4% yoy, up from a contraction of 19.6% in 2020.

Consumer spending in Saudi Arabia averaged $60 bn from 2008 until 2020, reaching an all-time high of nearly $80bn in Q3 2020, according to the Saudi Arabian Monetary Agency.

It is forecasted that household spending in Saudi Arabia will return to growth in 2021 at 2.7% yoy, after the pandemic led to an estimated contraction in consumer spending in 2020 of 3.3%. 

Improving economic conditions means the average annual disposable income in Saudi will grow by 6.4% yoy, up from a decrease of 12.8% in 2020.