UAE retailers gear up for evolving landscape in 2025

As the year comes to a close, retailers in the UAE are gearing up to meet the challenges of an increasingly evolving landscape. A number of factors are likely to influence the sector in the coming year, experts say.

The hybrid shopping model, also known as ‘phygital’ retail, will take greater precedence in the coming 12 months.

According to Oliver Wyman, 87 per cent of GCC customers use a mix of online and offline channels for their shopping needs. A Dubai Chambers forecast predicts UAE retail sales will grow 6.6 per cent annually, reaching $70.5 billion by 2025. Within this, store-based retailing is expected to grow at a CAGR of 5.7 per cent, while online retail is forecast to grow at a faster rate of 14.8 per cent.

A key retail trend that will continue to gain prominence in 2025 is personalised shopping experiences – retailers will be expected to become more responsive towards individual consumer needs and preferences, thereby paving the way for the rise of truly bespoke shopping journeys. “We are already seeing how consumers are choosing to have both online and offline interactions before making a purchase. This approach requires flexibility from the retailer, and as such, pop-up stores will become more common as they provide temporary spaces where customers can physically experience products before buying them,” Shafi Alam, director and head of the direct-to-consumer and corporate marketing division at Samsung Gulf Electronics, told Khaleej Times in an interview.

According to Mohammad A. Baker, deputy chairman and CEO of GMG, in 2025, several key trends will shape the retail landscape:

• Seamless Omnichannel Experiences: Retailers will further focus on integrating in-store and digital shopping through click-and-collect, self-service kiosks, and mobile apps.

• Sustainability: Environmental concerns are increasingly influencing purchasing decisions. With 53 per cent of Middle Eastern consumers (compared to 46 per cent globally, according to PWC) willing to pay more for sustainable products, initiatives promoting eco-friendly packaging and locally sourced goods will gain further traction.

• Rise of Alternative Payment Options: Conscious spending and flexible payment solutions like Buy Now, Pay Later (BNPL) will continue to rise in popularity.

• Rapid Delivery: The demand for fast delivery, including same-day and even 15-minute options, is pushing retailers to invest heavily in logistics and local fulfillment networks, particularly in urban centres like Dubai and Riyadh.

• Experiential Retail: Retailers are increasingly focusing on creating engaging experiences through pop-up shops, art installations, and sensory interactions.

• Catering to Gen Z and Gen Alpha: Lastly, GenZ and Gen Alpha audiences are becoming increasingly important and dictating retailer strategies - for retailers to be successful with younger shoppers, they must align with social causes, which includes implementing measures such as greening the supply chain and demanding sustainability credentials from suppliers. Retailers who want to delight the Gen Alpha demographic must prioritise user-friendly, intuitive and secure online shopping platforms. Features such as one-click purchasing, personalised product recommendations, and interactive catalogues can enhance the online shopping experience.

In 2025, Omnichannel is expected to move beyond basic data collection to offer hyper-personalised experiences. “This means leveraging data to understand individual customer preferences, purchase history, and real-time behaviour to tailor product recommendations, promotions, and even in-store experiences. However, success hinges on significant investments in technology, infrastructure, and employee training, along with addressing data privacy concerns. Retailers who prioritize these areas will be best positioned to thrive in the evolving retail landscape” Al Baker told Khaleej Times.

“We expect omnichannel retailing to thrive in 2025. The improvement of technology combined with the adoption of more efficient logistics processes enables customers to experience the promptness of an in-person purchase while shopping online. We have seen this trend closely in our pop-up spaces at Dubai Mall and Mall of the Emirates during the launch of our flagship devices,” Alam said.

One of the major shifts that has been seen is the rising spending power of younger consumers, adding a new layer to retail dynamics. “In 2025, we anticipate that this audience segment will continue to have a strong influence on retail strategies in the UAE,” Al Baker said.

“Building lasting customer relationships is crucial in a world of evolving choices. Samsung focuses on personalised experiences and ongoing engagement to foster loyalty. Our omnichannel strategy ensures a consistent and tailored experience across all touchpoints,” Alam said.