The most notable trend has been the rapid transition to e-commerce and the creation of ‘phygital’ retail experiences that bridge social media, technology and experience. This trend was already advancing before the pandemic, but has now been cast in a new, essential light to ensure the continued success of the sector. Savills, the global leading real estate advisors, highlighted in their latest Re:imagining Retail report (a cross-sector collaboration of insights from Savills and its peers from across the landlord, developer, planning and design space) that the declining demand for certain retail space is by no means a new phenomenon, but we are now at a critical stage where retail needs to be resized and repurposed, not replaced.

Regional experts from Savills Middle East are sharing their views:

Swapnil Pillai, Associate Director – Research at Savills said: “Nuances exist, and the Middle East has its own unique context and consumers to consider. Here, we are seeing a different dynamic based on a number of factors, including the fact that the retail landscape is dominated by bricks and mortar retail spaces of all sizes, from community to mega malls which, for many, represent the fabric of their day-to-day lifestyle. As such, they are already well established as balanced, mixed-use destinations. Here, the challenge to retailers is how to ensure the long-term viability of these locations as vibrant, relevant destinations by keeping up with micro trends and fresh new ideas.”
Harry Goodson Wickes, Head of Northern Gulf said: “In the Middle East, entertainment has been re-invigorating malls since the outbreak of the pandemic. This period has been challenging due to lockdown restrictions, but innovation has been evident in malls with a demand for more entertainment options, including temporary events, in countries such as the UAE, Egypt, the Kingdom of Saudi Arabia and Bahrain. In this regard, the regional gaming sector, which is the world’s fastest growing market, is playing a key role. This is essentially due to the fact that these countries have a youthful, tech-savvy population inclined to indoor entertainment for a substantial time of the year when it’s too hot to be outside.”

According to Yasmin Mahdy, Head of Retail Agency at Savills Egypt, “In Egypt we are seeing more demand from the homegrown concept, evidenced in the increasing number of well-known local brands that are also quickly expanding in Egypt. Leisure is also a fundamental component for the creation of new experiences and instrumental in driving traffic to retail destinations.”
In the Middle East, malls are rooted in the culture of the local population for whom these places form the centre of people’s lives. Commenting on this trend, Hashim Kadhem, Director - Head of Professional Services at Savills Bahrain said:

“We predict strong trading for these seemingly traditional venues as long as retailers continue to focus on enhancing the customer experience by reinventing themselves and reconciling their tenant mix to offer the best of Food and Beverage (F&B), shopping and entertainment, and incorporating a good online presence at the same time. We are already seeing F&B and entertainment concepts being key anchors at shopping malls rather than the traditional department store. If malls are able to continue to reinvent themselves in this way, they will remain ingrained in the culture as the default leisure pursuit, especially in the hot summer months, given the lack of outdoor alternatives which are available in Europe.”

Commenting on Saudi Arabia, Mutasem AlSheikh Ali, Associate Director - Retail Agency at Savills KSA said: “In the Kingdom, during lockdown, many consumers tried e-commerce for the first time and sectors that were previously under-developed like the grocery and homeware sectors saw online figures increase by more than 300%. Some of the e-commerce booms subsided after the end of the lockdown, but the market stabilised at a much higher level than before. Here, the retail market picked up much faster than other sectors with fashion/apparel retailers expanding.”

He added: “Retailers who want to be successful going forward should innovate around new consumer needs: consumers’ lifestyles are evolving and becoming more diverse and these are enforced by recent Government regulations opening up society. There is enormous scope for new propositions not yet available in Saudi Arabia.”

Swapnil Pillai concluded: “Retailers who want to prepare for the future could look to those countries such as the UK who are further ahead of the curve when it comes to re-imagining retail. What we are seeing there is that retail still has its place, but perhaps not solely as retail space. We need to think of these as consumer hubs that are no longer just about shopping, and more about mixed-use, sustainable communities.”

For further information, you can read Savills latest Re:Imagining Retail Report -  HERE