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Consumer expectations of sustainable, socially conscious, and personalized shopping experiences continue to grow around the world.
Shifting buying habits, such as looking for sustainable and philanthropy-based brands have become more pronounced. Connected, or digitally savvy, consumers now form 86 percent of the population in the GCC region.
Online access to product information has significantly changed product awareness and buying behavior. Retailers are now taken to task and held accountable to consumer standards, much more than ever before.
In advance of The Retail Summit which will be held in Dubai in March, there are two areas that are proving to be key for success in today’s retail environment — generating brand value by investing in sustainability measures and revamping loyalty programs to capture a shifting consumer base.
Rising demand for sustainable products
Due to a growing global demand for brand reflection on cultural and societal values, retailers are striving to build ethical value chains and communicate that to consumers.
Simon-Kucher & Partners’ 2021 Global Sustainability Study reflected that around 80 percent of global consumers place importance on environmental sustainability and aspire toward more sustainable lives.
Within the UAE more specifically, one in four people have made a significant change in their purchasing habits to become more sustainable over the last five years. Even more promising, one in three are willing to switch to sustainable alternatives when they are available.
The question is — are they available?
Regionally, many brands have made moves to make their firms more sustainable, whether it is launching second-hand tailoring, adopting organic-based manufacturing, or donating to charities with every consumer purchase.
The e-commerce space has further paved the way for consumers to clearly understand their options. For instance, the luxury online fashion platform Farfetch houses a “pre-owned” category on its website. Going a step further, startups such as Shift Eco have emerged in the UAE, offers a curated marketplace of eco-friendly products.
However, these sustainability practices often come at a premium, and the question becomes whether consumers are willing and able to pay.
Studies indicate that millennials, those aged between 25 and 40 years old, and Gen Z, between 9 and 24, are more likely than Gen X, between 41 and 56, to pay this premium. While Gen Z consumers may have weaker purchasing power than older shoppers, it still presents a strong indicator to firms that this trend may grow over the next decade.
Companies generally work to offer products at a competitive price to customers. However, when the option of cutting prices is not viable, sustainable brands should use another tool to shore up their customer base — building attractive loyalty programs.
Building loyalty
Growing customer loyalty is increasingly driven by robust loyalty programs, particularly those that focus on a personalized customer journey. The two often go hand in hand.
Consumers, more than ever before, expect a personal touch when they buy, such as product recommendations, promotions, and direct communication. Tailoring communication and personalizing messages make customers feel valued and contributes to building a customer-brand relationship.
Recent findings show that 72 percent of connected consumers in the UAE subscribe to at least one loyalty program, and 40 percent subscribe to multiple programs.
In fact, loyalty programs are almost a given, and UAE shoppers are more likely to buy from an e-commerce platform that personalizes offers and discounts and continuously interacts with them.
As retailers continue to build their sustainable practices and assortment of eco-friendly products, loyalty programs will serve as a fundamental way to drive awareness and sales.
Consumers across the GCC are willing to try eco-friendly products, but progress is needed across the market to offer sufficient products at attainable prices. Companies must prioritize the evolution of their value model to meet changing demand across the region, while using loyalty programs to cater to customers.
• Farah Thalji is director at consultancy Simon-Kucher & Partners’ Dubai office.