Home > Blog > Retail & Fashion Industry in UAE – Growth, Challenges & Solutions

By the beginning of 2023, the fashion retail industry in the United Arab Emirates (UAE) is projected to grow to $4.86B. Over the next three years, it will continue to grow at an annual growth rate of 9.92%, resulting in projected volumes of $6.46B by 2025. By 2025, UAE’s fashion industry will have 6.1M users, and the average revenue per user (ARPU) is expected to be $936.80.
fashion in united arab emirates

Fashion is a competitive industry in the UAE. The country is home to all the major fashion retailers worldwide, from Zara, Next, and Nike to H&M, Gucci, and Chanel. UAE’s multicultural and diverse economy also means that the fashion industry is diverse. It comprises a mix of segments – from luxury and premium to affordable wear.

However, one common thread connecting all fashion segments is that many shoppers are keen to shop online. At the same time, several emerging fashion and retail challenges in the UAE are unique to the country.

Growth of E-commerce Fashion & Retail Industry in the UAE

Since the pandemic, the digitization of UAE’s fashion industry has accelerated; today, 7-9% of all fashion sales are online. Several fashion retailers – from big box retail stores to luxury retailers – also grew their e-commerce operations during the pandemic.

It was the nudge they needed to start exploring the full potential of retail innovation via e-commerce. Fashion retailers began building their online presence and bolstering their digital marketing strategies to attract users online.

Yet, merely making these two shifts was not enough to build a successful, sustainable e-commerce business model. The mall culture is still a vital part of a shopper’s mindset and lifestyle in this part of the world. To succeed, e-commerce platforms must overcome several operational challenges to meet consumer expectations.

Fashion and Retail Challenges in the United Arab Emirates (UAE)

uae fashion & retail brands challenges faced by businesses in 2023

The UAE has built a stellar reputation as a global shopping destination. The flagship stores of brands offer a superior consumer experience. However, 90% of the brands are yet to build an online presence. Brands must understand that consumers face certain limitations when it comes to shopping offline.

For instance, they may need to wait in long queues for trial rooms or when checking out. They may need help locating their size or a product in line with their requirements. They may also not have the time to physically come to the store. These challenges may discourage one from making purchases altogether. However, all these issues can be easily eliminated when a brand starts marketing its products online.

Here’s a look at some common fashion and retail challenges in the UAE and why brands should make the transition to online sales.

1. Poor retail consumer experience:

Today, consumers expect a seamless shopping experience that matches the finesse of service delivered at a brand’s flagship store. Issues such as the unavailability of products of all categories and sizes, the inability to compare the prices of similar products, and store-limited choices can decrease customer trust.

2. Inability to scale Inventory Management:

As sales grow, retailers likely face major issues in managing their inventories efficiently. Manual inventory management can lead to errors, duplication, and inaccurate data collection. It can also put undue pressure on warehouse resources, which may be overstocked or understocked. Storage in warehouses is costly, and the inability to optimize the experience affects profitability.

3. Inability to process returns efficiently:

Consumers face a difficult process when it comes to returns in retail shops. A returns process that causes consumer stress may restrict them from repeat purchases. The return policies vary on e-commerce platforms as most of the process is done without the need for any human intervention. Leverging efficient technology-based solutions help with seamless returns and refunds.

It is imperative for brands to make the transition to online sales to scale and maintain quality. They will need the support of tech-enabled inventory and order management solutions. These are the tools required by retail teams to reduce manual efforts and optimize their digital operations at scale.

Technology-Based Solutions to Overcome Fashion & Retail Challenges

Today, online and offline retailers can leverage comprehensive tech-enabled solutions that automate and streamline several repetitive tasks. These solutions offer smart insights that help businesses make better decisions. They provide analytics that gives information on consumer behavior, interests, and trends.

Here is a snapshot of solutions that brands can leverage to tackle common fashion and retail challenges in the United Arab Emirates:

1. Returns management:

Today, online retail customers primarily look for seamless returns. Returns happen at scale, creating chaos for retailers if not equipped with the right technology solutions. Returns management solutions are dedicated to solving these specific issues by automating the entire process. Online retailers will also have visibility of the whole return cycle via a dedicated & insightful dashboard. Another valuable feature is the returns data that can tell retailers a lot – for instance, what products and categories are not working. The returns rate is a key metric that brands can track and analyze for improving customer experience in the long run.

2. Quick Order Fulfilment:

Today, orders come from multiple channels –Offline stores, Direct to Consumer (D2C) websites, etc. You will also be using various shipping partners to fulfill orders. Fulfillment without delays, broken items, and incomplete orders is key to a retailer’s success, especially as one scales their business. Using an integrated omnichannel order management solution, you can automate the entire fulfillment cycle efficiently, accurately, and quickly. Businesses can track all orders through a unified dashboard.

3. Stable Logistics Integration:

E-commerce businesses use multiple shipping partners, marketplaces, ERP/ POS, and accounting software to run their operations. To ensure seamless operations, e-commerce businesses can leverage a middleware solution that creates a centralized command with a large number of stable logistics integrations.

4. Omnichannel-enabled Warehouse Management:

This solution enables e-commerce companies to manage multiple warehouses at any given time, automate purchase management, route and track shipments, and ensure location allocation at multiple warehouses simultaneously.

Read: How Kuwait-based Toyfull streamlined Warehouse Management Operations!

Explore – Top Warehouse Management System in the UAE

5. Omnichannel Order Management:

Online retailers receive orders from multiple sales channels, including physical stores, apps or websites, social media, online marketplaces, and messaging apps. Omnichannel order management system makes it convenient for consumers to shop through their preferred medium with a hassle-free experience. Even though the channels differ, all orders, inventory, and data are managed in one location, thus using a centralized workflow to process all orders efficiently. The software keeps updating as orders are placed and fulfilled, creating a seamless experience for the customer as well as the retailer.

Explore – Multichannel Order Management System to Maximize Business Profitability in the UAE!

The Bottom Line

Fashion is one of the largest retail categories in the United Arab Emirates, a country that is home to some of the more trendy and luxurious malls, branded stores, and shopping centers in the world. However, several retailers are struggling to compete in a world where more and more consumers are shopping online. The quality of their online retail experience needs to catch up with their vibrant, high-quality in-store experiences, thus enabling them to capture digital market share.

To address fashion and retail challenges in the UAE, companies must leverage tech-enabled solutions to compete in a digitally-driven world and reach their full potential. By making early investments in solutions such as returns management, quick order fulfillment, omnichannel-enabled warehouse management, omnichannel order management, and stable logistics integration, retailers will be able to bring a competitive edge to their digital engagement and sales. These steps will empower brands to focus on core business aspects that demand creativity and strategy and drive a higher return on investment.

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