By: Andreas Hassellöf, CEO at Ombori

Do businesses need to jump on this bandwagon of AI? 

In recent years, the retail sector in the MENA region has experienced significant growth, with Saudi Arabia leading in consumer spending, exceeding 16 billion U.S. dollars in 2024. As innovation becomes the cornerstone of success, integrating Artificial Intelligence and Machine Learning is crucial for improving efficiency, optimizing service, and increasing productivity. But why do businesses need to embrace AI? 

The newest generation of adults, Generation Z, demands modernized marketing strategies. Born into a digital environment, this generation resists traditional marketing and actively seeks innovative approaches. Technology has streamlined nearly every aspect of life, and with the widespread adoption of Generative AI, consumers now expect seamless shopping experiences. In retail, balancing between enhancing customer experience and optimizing operational efficiency is an ongoing challenge. AI can be the tool brands need to create unique experiences and stand out in the competitive marketplace. 

Here are some ways AI can be incorporated:

  1. Personalization

In the Middle East, AI has revolutionized the retail industry, emphasizing the importance of personalized online and in-store shopping experiences. By analyzing vast datasets, AI can decipher individual behaviors, preferences, and purchasing patterns, allowing marketers to create tailored campaigns. Personalized advertisements or messages that specifically address individual needs and interests can help brands stand out, improving brand loyalty and fostering positive brand perception.

  1. Enhanced Customer Experience

A study by checkout.com reveals a 56 percent increase in the number of MENA consumers engaging in e-commerce weekly or more since 2020. Using AI for customer service enables businesses to handle larger volumes of support requests efficiently, all while ensuring customer satisfaction and fostering customer loyalty. Chatbots and shopping assistants are transforming the customer experience by enabling businesses to interact with their audience 24/7. These AI tools can automate routine tasks and manage basic queries, allowing human agents to focus on more complex and value-added responsibilities. Furthermore, the insights collected by AI-powered chatbots can further assist marketers in making informed choices in terms of marketing strategies to further enhance the customer experience.

Moreover, AI is also changing how businesses handle customer experiences. It helps them listen and gather insights more effectively, and decide where and how to act based on feedback. AI-driven sentiment analysis empowers businesses to monitor and manage their brand reputation. By identifying and addressing conversations that are aligned with the brand, companies can strengthen brand perception and encourage customer loyalty effectively. 

  1. Inventory Management

Using customer purchase data alongside supply chain analytics, AI forecasts upcoming purchasing patterns, adjusts inventory accordingly and identifies and enhances areas for improvement, boosting overall profitability. Moreover, generative AI can improve inventory management by predicting demand, thereby decreasing excess inventory and shortages, and automating the restocking process. This ensures that retailers maintain appropriate product levels and reduce wastage.  

Real Use Cases

The UAE and Saudi Arabia are pioneering efforts to reduce dependence on oil and gas, aiming to establish themselves as global centers for tech entrepreneurship and innovation. Hence, it is no surprise that AI has already been integrated into various sectors to enhance customer satisfaction, company productivity, and brand perception.

Dubai Airports: Using AI and Machine Learning-driven Material Requirement Planning (MRP) tool improves service levels, optimizes inventory management, and boosts operational efficiency. This initiative by Dubai Airports has resulted in a 24 percent increase in service levels, facilitating quicker response times for facility maintenance and improving the overall guest experience.  

Avolta: The travel retailing company has revolutionized airport shopping using Phygrid Clienteling with Mobile POS. This innovation, implemented across Dufry airport stores, addresses challenges of customer service and employee empowerment. The Mobile POS system enables staff to scan a product to view key selling points to ensure employees are able to provide knowledgeable service to customers. Moreover, the system integrated clienteling features that gives staff access to customer profiles, purchase history and recommendations to enhance and personalize shopping experiences. 

Majid Al Futtaim’s Carrefour City+: The Carrefour in Mall of the Emirates is the first cashier-free retail outlet in the region. Instead of traditional checkout counters, customers utilize their smartphones to access and shop in the store. This AI powered store tracks customers’ movements based on their body structure, without using facial recognition or biometric data. The cameras detect when items are picked up or returned, automatically updating the shopper’s digital shopping basket linked to their MAF Carrefour app account.

As Artificial Intelligence gains traction in the Middle East, businesses are integrating it into their marketing strategies to elevate customer experience, tailor campaigns and services, and improve overall productivity. In today’s digital age, where consumers expect unique shopping experiences, leveraging cutting-edge technology is essential to stand out in the crowded market.