Global consultancy Argon & Co has helped clients around the world leap ahead with successful e-commerce and omnichannel strategies in the luxury retail industry. To learn more about the firm’s work in the Middle East, we spoke with Managing Partner Stefan Westdijk and Consultant Bouchra Ghrayyeb.
Transformation is critical to the future of retailers who want to survive in this wave of change. From digital transformation to sourcing strategies, supply chains to store operations, there are many key factors that retailers need to get right.
An increasingly important area for retailers is the omnichannel strategy, which refers to a seamless, integrated customer experience across multiple channels, such as online stores, brick-and-mortar stores, and mobile apps, allowing customers to interact with a brand consistently and smoothly, regardless of the platform or device they use.
“Our main focus area in the luxury sector is e-commerce and omnichannel strategies. We work closely with luxury brands to navigate the complexities of digital transformation, especially in enhancing e-commerce logistics, supply chain management and omnichannel operations,” said Westdijk.
“Our goal is to enable luxury brands to deliver a seamless and personalized customer experience across all platforms, which is increasingly important in today’s market.”
Online Driver
E-commerce is now widely seen as the sole driver of retail sales, while other parts of the industry have struggled: brick-and-mortar sales have stagnated over the past two years and have barely managed to maintain healthy growth through the difficult times caused by the pandemic.
So to achieve their goals, retailers need to have a complete digitalization strategy in place. Retailers, especially in the luxury sector, need to aim for compelling online experiences that drive sales, but the shift to e-commerce is no panacea and an omnichannel strategy must be holistic.
Luxury retail has proven to be a very strong subcategory in the Middle East, especially in regions such as China. By some estimates, the Middle East luxury market could double in size by 2030, much of which will be driven by online sales.
“We worked with a well-known luxury brand looking to redefine their logistics requirements for e-commerce and rethink their distribution model,” Westdijk said.
“The project consolidated current and future logistics volumes, formalized logistics requirements such as inventory and quality control, and compared costs and services with market practices. Our recommendations improved storage and volume forecasting, ultimately increasing the efficiency of the overall logistics operation.”
One of the many luxury malls in the United Arab Emirates
The adoption of innovative technologies is clearly a key part of an omnichannel strategy and overall digitalization process, and will be a big trend for luxury brands going forward. AI and machine learning, for example, will play a key role in creating highly personalized online shopping experiences.
“AI can analyse customer data to provide customised offers and services, which is crucial for differentiation in the luxury market,” Ghraieb said.
“Omnichannel integration through IoT (Internet of Things) technology seamlessly integrates online and offline channels, enabling luxury brands to deliver a consistent, personalized experience across all customer touchpoints, whether online or in-store.”
Similar innovative technologies, like advanced analytics tools, can be a game changer by helping companies optimize their supply chains by tracking inventory and shipments in real time, so teams know what products are available when they need them, improving customer satisfaction.
“The retail industry is experiencing unprecedented change around the world. The past decade has seen the rapid growth of pure-play e-commerce companies, which have very different cost structures than traditional companies,” Westdike said.
“As consumer expectations and pressures rise, digital initiatives are needed to transform customer experience, gain deeper consumer insights and evolve supply chain management, sales forecasting, pricing management, promotions and store operations.”
