What's The Future of Bricks and Mortar Businesses in the MENA Region?

Published December 8th, 2020 - 04:00 GMT
What's The Future of Bricks and Mortar Businesses in the MENA Region?
A May study expected 75% of the region's restaurants and cafes to close their business permanently. (Shutterstock: berni0004)

It is no secret that almost every business has had its challenges this year, even ones that managed to thrive because of the pandemic, but bricks and mortar businesses have been facing a various set of obstacles, some of which might be long-lasting.

Businesses' ability to cope with this global crisis has varied based on several factors, and only the lucky ones have been able to benefit from an unprecedented health crisis.

The worldwide emergency has resulted in a number of changes when it comes to consumers' behaviors, and consequently businesses' ability to overcome the crisis. Consumers have now reprioritized their needs based on their needs, their declining purchasing power due to not only massive layoffs but also the looming uncertainty of an economic recovery anytime soon.

Additionally, consumers' tendencies to purchase products, services, or experiences have greatly considered the new safety factor, as they remain quite careful of being close to other individuals as not to contract the dangerous virus. Also, government-imposed lockdowns and restrictions meant that many services were unavailable for a prolonged period of time throughout the year, such as being able to go to recreational centers, restaurants, cafes, or hotels, not to mention travel halts that had major economic damage on several industries.

Hence, plans to overcome the contingency didn't work for everyone. Resorting to e-commerce, many businesses have been able to cope with the crisis and quickly make up for the major losses they endured during the first few months of the year. According to experts of the Intelligent Orchestration of Retail Experience, the GCC e-commerce market is expected to reach $19.7 billion by the end of this year. Besides the digital transition that rescued many stores, many businesses have decided to reduce the number of branches by close the ones with the lowest revenues.

Last May, as most MENA countries lived through full and partial lockdowns, a survey by Caterer Middle East expected 75% of the region's restaurants and cafes to close their businesses permanently if lockdowns were had not been eased during the summer. However, closures following the second wave during the fall seemed to have affected several industries just as brutally.

In the UAE, the fitness sector reported the devastating consequences of spring closures, which resulted in several gyms closing their doors across the country.

Facing a vicious second wave of infections, Jordanian restaurants and cafes have reported a 70%-80% drop in sales, while more than 3000 businesses have closed their doors permanently, including many of the country's famous spots. 

Similarly, 30% of Kuwait's restaurants and cafes have also been permanently closed, due to the pandemic.

Battling a severe economic crisis and the economic consequences of COVID19, Lebanon has seen many international brands close their doors indefinitely, such as Forever 21, American Eagle, and Pinkberry operated by the Kuwait-based Al Shaya group. a number of local businesses have gone broke over the last year as well.

Now, hopes of an end to the on-going travesty have been inspired by news of successful vaccines do suggest that most sectors are bound to a recovery. Yet, fears continue that consumers who have enjoyed experiences of shopping online from the comfort of their homes might never return to in-person shopping stores, which could generate new long-standing changes in the markets, most evidently in workers' layoffs.

Do you think life will return to "normal" after vaccines are internationally distributed? Do you prefer to purchase your needs in person or online? How has the pandemic affected businesses around you?


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