As consumers’ expectations grow for a sustainable, socially conscious, and personalized lifestyle, so does their demand for it. More and more consumers are looking for sustainable and philanthropy-based brands.
Connected consumers now form 86% of the population of the region, resulting in a significant change in product awareness and purchasing patterns. In response, retailers continue to be targeted and held accountable to consumer expectations in a more significant way than ever before.
Following The Retail Summit held in Dubai, Simon-Kucher and Partners have highlighted two areas that are proving to be key for success in today’s retail ecosystem: generating brand value by investing in sustainability measures and revamping loyalty programs to capture the shifting consumer base.
Demands for Sustainability Are on the Rise
Retailers have been striving to construct completely ethical value chains with a focus on communication. This is in light of the growing awareness of cultural and societal values.
The Simon-Kucher & Partners’ 2021 Global Sustainability Study revealed that 80% of consumers aspire to lead more eco-friendly lives. One in four UAE consumers has changed their purchasing behavior to be more sustainable in the last five years, specifically. Even more encouraging is that one in three are willing to use sustainable alternatives when they become available.
The region has seen many brands embody this, whether it’s through second-hand tailoring or the adoption of organic manufacturing. Consumers now have a clear understanding of their options thanks to e-commerce. Farfetch, the luxury online fashion platform, offers pre-owned goods in its store and clearly defines the category within. Additionally, startups such as Shift Eco, which functions as a curated marketplace, have emerged in the UAE that pre-identify an entire range of eco-friendly products.
It is often true that sustainability practices carry a premium, which raises the question of whether consumers would be willing and able to pay for such practices. This premium is more likely to be paid by Millenials and Gen Z than by Generation X, according to Simon-Kucher and Partners’ study. GenZ hasn’t yet grown in purchasing power, but this presents a clear indicator for retailers and manufacturers in the coming decade.
In order to achieve their customer acquisition targets, companies should strive to offer products at a competitive price. The most practical option for sustainable brands, however, when cutting prices is not feasible, is to build attractive loyalty programs to strengthen their customer relationships.
Enriching the Customer Experience Will Solidify Their Loyalty
Customer loyalty is increasingly boosted by loyalty programs, particularly those focused on personalizing the customer journey. They are often linked. Today’s consumers expect personalization across all touchpoints with companies, including product recommendations, promotions, and direct communication. The practice of tailoring communication as much as possible and personalizing messages makes customers feel valued and contributes to a good relationship between the brand and the customer.
72% of connected consumers in the UAE subscribe to at least one loyalty program and 40% to multiple programs. In fact, we’ve found that loyalty programs are almost a given, and the UAE is more likely to buy from an e-commerce platform that personalizes offers and discounts and makes the effort to continuously engage with their customers.
GCC consumers are willing to go on the eco-friendly route, but there is still progress needed for the market to offer ample product options at attainable prices. Loyalty programs will play a crucial role as retailers build up their sustainable practices and assortment of eco-friendly products. They will drive both awareness and conversion as they cater to customers embarking on their own personalized journeys.
Simon-Kucher & Partners, Strategy & Marketing Consultants:
Simon-Kucher & Partners is a global consulting firm with more than 1,700 professionals in 42 offices worldwide focusing on TopLine Power. Founded in 1985, the company has 37 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.