Brick-and-mortar retailers must adapt quickly to the shift towards e-commerce amid the coronavirus pandemic as a month-long lockdown of malls prompted users to increasingly shop online, according to a new report from the Dubai Future Foundation.
The report on retail, the eighth in the foundation's "Life After Covid-19" series, addresses the challenges and opportunities the UAE and the Arab world will face in the aftermath of the global health crisis.
It highlights the effects lockdowns and stay-at-home directives have had on retailers around the world. For example, in the US, nearly 630,000 outlets have been forced to close, the Financial Times reported.
"The pandemic is forcing the closure of 'bricks-and-mortar' retailers around the world as consumers switch to online shopping and this represents an urgent call to action for landlords and governments to provide a lifeline for struggling offline retailers," the report from the Dubai Future Foundation's research arm said.
On the other hand, online retailers have thrived amid the temporary shutdown of store and malls during the coronavirus outbreak.
Amazon has hired 175,000 workers to meet demand, including over 1,500 in the Middle East. Majid Al Futtaim, which operates 24 shopping malls, experienced a 59 per cent year-on-year increase in online customers in March, the report said.
Saudi Arabian retail group BinDawood's online sales were up 200 per cent over the last few months.
"This shift towards online shopping driven by the pandemic is consequently accelerating retailers' plans for digital transformation," the report said. "Bricks-and-mortar retailers with plans to develop an online presence now need to address this immediately."
In the UAE, where shopping malls closed for a month between March 25 and April 25, some mall operators have helped stores migrate online. Emaar Malls set up a virtual Dubai Mall on noon.com and Majid Al Futtaim rolled out an online marketplace through carrefouruae.com.
The report also provides short-term recommendations during the Covid-19 outbreak and long-term recommendations post-Covid-19 to help the retail sector.
In the short term, it urges banks to restructure maturing loans in the retail sector as needed, shopping mall operators to waive rents for their tenants during lockdown, and companies to shuffle and reskill workers to manage the surge in e-commerce demand.
In the long term, to encourage consumers to return to the malls, the report suggests introducing tax-free shopping, certifying malls as "Covid-19 free" by relevant authorities, and implementing touchless shopping experiences such as self-checkouts.
"Despite the extensive challenges retailers are facing today, there are grounds for optimism about retail in the region in the long term as long as we act rapidly," the report said. "Regionally we have a culture of spending time at shopping malls for leisure and entertainment, and this is expected to return post Covid-19."
Previous topics in the Life After Covid-19 series include financial technologies, community, innovation and entrepreneurship, telecoms, commerce, education and workspaces. The Foundation was established in 2016 by Sheikh Mohammed bin Rashid, Vice President and Prime Minister of the UAE and Ruler of Dubai, to position Dubai as a leading city of the future.