2022 was an extraordinary year in many ways. Be it the swinging geopolitical situation or a controversial but highly successful World Cup (a first in the Middle East region), the year has definitely made its place in the ‘books of history’. 

Speaking of creating history (strictly from a technology PoV), it is safe to say that 2022 witnessed its fair share of steadfast growth in digital transformation, too, led by OpenAI’s ChatGPT adoption (gaining a million users in a week after launch) and investments towards digital engagement.

In fact, as per the State of Personalization report by MoEngage, 52% of brands invested more in marketing technology in 2022.

But that’s not all. Let’s look at the other end of the spectrum. The rise of the GenZ population and the increase in digital usage are reasons that prompted consumer brands to infuse capital toward digital transformation.

In the GCC region alone, 53% of customers preferred buying products online, and 32% visited a banking app or website for daily banking transactions.

While much of the focus remained on digital engagements in 2022, with the re-opening of brick-and-mortar stores and the looming recession threat, digital transformation is expected to witness a paradigm shift in 2023 and beyond.

A Peek Into the Future of Digital Transformation

Meaningful engagement, customer delight, personalization, retention, omnichannel, and privacy are key terms that will pave the way for the technology transformation of 2023. Here is a quick look at the trends that will drive digital transformation for consumer brands in the Middle East:

  • Investment (and disinvestment) will become a priority: Unlike the pandemic years, when brands invested heavily in technology to acquire customers, 2023 will necessitate them to draw a retention-led strategy and prioritize technology or platforms that come with an ecosystem or partner products to provide meaningful engagement. Standalone solutions are expected to witness higher degrowth.
  • If data was gold, insights are the new diamond: Much emphasis has been laid upon collecting data and using it to provide basic personalization, primarily limited to the first name basis. However, as we move forward in 2023, consumer brands will focus more on understanding customer behavior and drawing insights related to affinities, likes, and dislikes, amongst many other things – to provide a curated and hyper-personalized service.
  • AI/Analytics will give a facelift to transformation: Speaking of personalization, today, more than 80% of customers expect their brands to personalize their shopping experience. AI-enabled capabilities and analytics will help consumer brands improve loyalty, increase sales, and thoroughly understand their customers — all in real-time. In fact, using AI, consumer brands can customize their website or app content based on each specific customer, leading to a better conversion rate.
  • Phygital will dominate the upcoming years: As online/digital dominated the last couple of years, the re-opening of physical stores has brought a new angle to digital transformation, aka Phygital. To remain omnipresent while remaining mindful, consumer brands will invest in technology that curates insights from all the channels (physical and digital) to gain a holistic picture of every customer.
  • Understanding and respecting digital body language: Reports suggest that 4 in 5 customers are interested in sharing their data for personalized services if the brand is transparent on how it will be used. While privacy and consent will remain prevalent, consumer brands must also be mindful of how customers respond to their communications. With multiple channels as an option for brands, it will be crucial to understand the customer’s stage and then communicate (or not communicate).

As countries in the region shed their tags of a petrostate and shift from an oil-based economy to a tech-driven economy by leading the digital transformation front, there still looms certain challenges or obstacles which brands will need to overcome in the near future.

Challenges Are Really Our Opportunities

The GCC region remains a bright spot in the world economy amidst a global slowdown. The shift from an oil-focused economy to a tech-driven one has resulted in a robust post-pandemic rebound.

While there has been tremendous growth in digital-first brands, many companies, if not all, have only concentrated their efforts in a few select countries. This presents a massive opportunity and should be addressed.

With the rise in digital adoption by the GenZ population of tier 2 countries of the region, brands will need to look towards scale and growth by organically expanding into such countries.

Another challenge that persists is that many brands are still burdened with legacy architecture and infrastructure, limiting their interaction and engagement opportunities with customers – more so with the discovery of a new channel  around every bend. And, ofcourse, the debate around cloud adoption and data protection is still very much alive. Can it be time to shake off the burden of that which exists and start as if you had a clean slate so you at least know where your digital transformation could lead to? 

Talent is at a premium the world over – even when nearing an impending global recession. Post-pandemic hiring was hard by all accounts as people had moved on to other opportunities, never to return. We are part of that same world, And we continue to aim to hire the best and brightest – with one caveat – at what premium? Given the macroeconomic climate, companies must strike the right balance between hiring, hiring right, and compensation. Needless to say, some brands have started addressing these challenges by fostering regional and global ties, nurturing talent (offering more equity, flexible work culture, unlimited holidays, and other welfare programs), and becoming capital efficient. 

To Conclude

It is safe to assume that digital transformation has gradually started witnessing a paradigm shift in the region. With spending expected to increase by 16% year-on-year in 2023 and beyond, it will be central to how brands leverage new technology to keep pace with the market and their customers. 

The mantra(s) for those involved in digital transformation in  our region is simple for 2023 : 

  1. Be extremely clear about what needs to be digitally transformed
  2. Be nimble and agile – it really can’t be a 2 year outlook
  3. Be able to measure the impact of this exercise for the business
  4. Be ready for unannounced change – that’s the world we live in!