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August 6, 2019
For a lot of companies in the UAE and the GCC, the economic downturn of recent years on the back of low oil prices, coupled with slow economic growth and low consumer spending was the ultimate test of survival and resilience.
While many companies buckled under immense financial pressures, however, the strongest, fittest and most agile of enterprises have used the soft economic situation as a time to evolve, pivot, expand and reaffirm their strengths and relationships. Proving true the adage, “Necessity is the mother of invention,” these companies show that there are also upsides during the downturn and that even innovations can be birthed during the most challenging of times.
For retail legend Ishwar Chugani, Managing Director of Giordano which has been operating in the region since 1993 with some 230 stores under his team’s purview, a flexible approach is as important as a solid start in a downturn. With every retailer in the region inevitably affected by challenges, he says the brand was able to prevail by focusing on what the customer wants and needs. “You need to be able to bend with the times and not snap against it. Companies who take pro-active steps and have the flexibility to respond to the market changes are less affected than those who take their time or do nothing at all. By continuing to focus on our customers’ requirements in terms of quality merchandise along with a great shopping experience, we have managed to enhance customer loyalty even in tough market conditions.” He also adds, “Our strengths lie in our ability to deliver what our customers’ need and what is relevant to them whatever the season. It is the trust that we have developed with our customers what has helped us through these difficult times.”
CEO of Prime Group of Companies, Mary Jane Alvero Al Mahdi echoes the same views. She says that despite a weakening of their income in lieu of reduced sales and slower payments from clients, her company employed agility to move with the times to deflect the negatives. They expanded their offerings, taking their business from construction laboratory to analytical chemistry, allowing them to provide other useful services like food analysis, making their company a one-stop-shop for clients. They have also gone into public-private partnership and have taken the time to invest in marketing and market research while strengthening their team and cutting down on costs. She shares, “We have capitalized on our existing customers, continuously invested in quality and mastered our core competencies. Most importantly, we maintained our reputation because we strongly believe that it is every Prime’s employee commitment and responsibility.”
Strengthening relationships and improving product and service offerings was also central to Jovy Tuano’s strategy in the last two years. The CEO of Asia Gulf Trading and Founder of La Carne Premium Meats reveals, “The negative impact was minimal to our retail business since most of our regular customers put more value on quality. The decline in expat customers was covered by the increase in new local customers. Still, we focused on maximizing the use of our available resources to improve operational efficiency and grow our customer relationship rather than expanding our market coverage.” Jovy also states that they have used the time for professional development as well as product innovation, allowing them to launch Filfood – a food innovation initiative created to bolster the local Filipino food sector.
Apart from the impetus to innovate and expand into new areas to generate revenue while strengthening customer bonds, the entrepreneurs have also found other upsides which they have leveraged fully to help improve their bottom line.
Ishwar shares, “There were a lot of opportunities available to us despite the soft economic situation. We were able to open new stores in good locations at lower rents. Landlords have also become more understanding of the situation and are open to renegotiating rents, which helps to reduce our operating overheads. Contractors and suppliers were more flexible in their terms and prices during tough times, and we were able to negotiate better rates and payment terms.”
“We have also reviewed our suppliers,” Mary Jane concurs. “This [downturn] has opened opportunities to take advantage of cheaper prices from suppliers of equipment and technology that could help us to update our services.”
Another upside to this challenging period for businesses was the hard lessons companies have gained from having to reexamine and reset their priorities in order to survive and thrive, in effect allowing them to focus on what’s most important to their organization.
“Tough times encourages companies to go back to their roots and do what it does best. An economic downturn highlights the tiny fractures of a business that went unnoticed during the good times. This has given the smart retailer a chance to learn from the legacy of the past to form the wisdom of the future,” Ishwar points out. He continues, “Shopping is all about relationships. Today’s customers rarely buy from a company; they buy from a person, a person they trust, a person that is knowledgeable and a person that delivers what is promised. Companies need to go back to basics to make shopping enjoyable and make sure factors such as time, treatment of the customer, efficiency, price point, physical and technology aspects are taken care of as all of these elements are importance in terms of customer’s expectation of their in-store experience.”
Still, on relationships, Mary Jane underlines the value of keeping strong bonds in helping businesses weather the storm. She says, “Every company must develop and maintain strong relationships with their customers. What matters is not whom you know but how you are known to them.” She also adds that investment in technology is essential. “Technology leverages the world towards a platform of understanding. Adapting to this trend, companies benefit from enormous economies of scale in production, distribution, marketing, and management. People want all the things they have heard about, seen, or experienced via the new technologies.”
Jovy on the other hand, emphasizes on the need for companies to stay nimble and effective, “As the saying goes ‘Innovate or die!’ Collaborate with other industry players and put your ears on the ground. Listening to fast-changing customer demand is vital to pivoting your business model to ensure a flowing revenue stream. Also, convert fixed cost to variable cost and improve liquidity by maximizing cash sales over credit sales.”
With a more promising economic forecast as 2020 approaches and with the World Bank and economists projecting that growth in the UAE is expected to strengthen over the medium term, companies are optimistic, not only with the gains that are expected to come in conjunction with the Dubai Expo 2020 but also for the country moving forward.
“We are all very optimistic not only about 2020 but beyond 2020,” Ishwar remarks. “The region has all the ingredients to support the growing retail market. The UAE’s geographical location will always be an asset, and the continued influx of regional and international tourism will keep feeding the growth. We are fortunate to be located in a very resilient and dynamic market. There will always be opportunities to expand, but we have to be on top of our game, and for us, it does not just come down to fabrics and fashions but also the value and service we offer our customers.”
Mary Jane sees that the Dubai Expo 2020 will have a direct effect on their business. “Our core businesses are related to certification, inspection, and verification of goods. Since Dubai Expo 2020 will be attended by participants from different countries, I can see clearly the opportunities which will open up for Prime.” She says that the company also plans to sustain and drive further the initiatives they have taken during the downturn, “We have set our footprints globally. Prime has opened branches in India, the Philippines, and Japan. Maintaining and sustaining these offices and laboratory will not be easy to sustain, but with the right amount of courage in facing the challenges and appropriate measures to monitor impacts on our business activities, we will be able to achieve positive results.”
Advice for Other Entrepreneurs
Do differently from others. Master your craft, know your edge in the market, and be strategically competitive. Most of all, maintain and invest in customer relationships. Always value your customers.
You can only grow your business if you innovate or change the way you produce or trade your products and services to meet customer expectations.
A company’s culture is the ultimate competitive advantage. Competitors can steal your products or services or even key employees. However, they cannot steal a great company culture.
Forget about product distinction. Today’s retail market is short on the ‘distinct experience,’ so when you create one, you create an instant relationship with your customers.
To succeed, retailers need to embrace the challenge of relationships by leveraging technology as a means to establish and maintain an omnichannel so as to connect with shoppers effectively. Retailers also need to empower their associates to serve the customers quicker and more efficiently. The future will offer every business an opportunity for growth provided; we prepare for it and have a clear strategy on dealing with today’s fast-changing digital world and knowledgeable consumers.
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