Retailers can endure COVID-19 by e-commerce integration: DFF report

By Rahul Vaimal, Associate Editor
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The Dubai Future Foundation, DFF, has published its newest report titled “Life After COVID-19: Retail” which highlights online retailers and e-commerce platforms experiencing exciting growth as customers shun shopping malls in acknowledgment to COVID-19.

The report, released within the Foundation’s “Life after COVID-19” series and covers eight reports to date, and tackles the complex challenges and possibilities that the UAE and the Arab world will suffer in the outcome of the global health crisis.

The report recognized the necessity for closing down malls in the UAE from 25th March to 25th April, amid the global health hurdles. Due to the digital foundation that Dubai and the UAE provide, plenty of online retailers delivered their goods throughout the country to a digitally-enabled population, most of which, use the internet, according to the jointly circulated statement by Visa Middle East and The Department of Economic Development, DED.

The report highlighted instances where online sales are on the rise. Dubai-based Majid Al Futtaim, MAF, which operates 24 shopping malls, such as Mall of the Emirates, has witnessed an increase in online sales, with a 59 percent year-on-year jump in online customers in March 2020. Saudi Arabian retailer Bin Dawood Holding has witnessed a 200 percent improvement in its online business since the growth of the COVID-19 crisis.

The report exhibits that moving markets online needs substantial investment from brick-and-mortar retailers suffering a cash crunch. However, retailers can be saved from such expenses should existing and new e-commerce platforms grant entrance to their platforms for their products. Dubai-based real estate company Emaar, for example, has set-up a simulated Dubai Mall on for consumers to buy virtually at many of the mall’s well-known stores.

The report examines the enforced closure of brick-and-mortar retailers globally, as a consequence of COVID-19, with customers turning to online shopping. Moreover, it discusses the results that the pandemic has had in the United States, US. To date, nearly 630,000 outlets have been made to close and it is unclear how many of them will resume. According to the United Kingdom-based The Financial Times, clothing retailers – Debenhams and Oasis – have listed for administration in recent weeks, and many in the industry are anticipated to encounter more financial trouble after lockdown than during it.

On the other hand, some e-commerce retailers are on a hiring spree. According to a recent article by Thomson Reuters, Amazon, the American multinational conglomerate technology company, has chosen 175,000 employees to cope with the demand. Instacart, North American grocery delivery and pick-up service, declared hiring 300,000 full-service shoppers in March, and a month later it announced proposals to hire an extra 250,000 to meet growing consumer demand for online grocery delivery and pick-up in the US and Canada.

The transformation to online shopping has generated huge opportunities for e-commerce retailers and the logistics and delivery services that serve them. However, a notable number of retailers continue to be offline. This generates an opportunity for governments to guarantee that smaller retailers with a restricted online presence are not left behind and presented with an e-commerce platform.

In the short-term, the report indicates, banks should restructure maturing loans in the retail sector, presenting a lifeline to an industry experiencing low revenues. Deferred rents to retail tenants could be given during the lockdown, provided by shopping mall landlords. Employees can be reshuffled and reskilled, supporting growing sectors to handle the rush in demand, and preparing employees for new roles.

In the long-term, it is expected that customers will return to the malls, though not at the equivalent levels as before. The report recommends offering tax-free shopping at malls to inspire shoppers to return. Shopping malls could also profit from being verified as “COVID-19-Free” by related authorities and can further be maintained by testing every visitor before entering. Lastly, the improved popularity of touchless shopping experiences can be catered to with self-checkouts, and the avoidance of touchscreens.