Retail staff shortage dents GCC shopper satisfaction

• Poor service threatens sales
• Shoppers look to other global cities
• Hiring processes more complex

Shoppers across the Gulf Cooperation Council countries are being put off their purchases by a shortage of skilled staff in the region’s retail sector, as prices of products continue to rise.

Annual retail sales in the six GCC countries are expected to grow to $300 billion by 2028, a 37 percent increase from 2022.

But growth could be held back by problems recruiting shop staff, which are damaging the customer experience, a report from the industry analyst Strategy& says.

“The insufficient number of skilled retail workers can lead to a less than satisfactory shopping experience, which means lower customer satisfaction when compared with global competitors,” the report said.

A report by the workflow company ServiceNow in April said that nine out of 10 UAE consumers were likely to switch brands after a poor customer experience. Almost a quarter said they were less loyal to brands than two years ago because of disappointing experiences with companies.

On top of customer service concerns, shoppers are also facing higher prices for the same goods. Cosmetics, clothing, footwear, jewellery, and watches typically cost 10 to 20 percent more in the GCC than in European shopping destinations.

The Strategy& research put the higher prices down to the belief that shoppers in the Gulf have higher disposable incomes. But it also pointed to a lack of domestic manufacturing, which results in a dependence on imports, with customs, distribution, franchise, and shipping costs putting pressure on prices.

The staff shortage coincides with the retail sector enjoying massive growth. Occupancy levels this year at Emaar Malls’ prime venues in Dubai is at 99 percent, resulting in the Dubai Mall in June announcing a $400m expansion plan. 

In Saudi Arabia, Cenomi Centers, the kingdom’s largest mall owner, operator and developer, saw average occupancy levels this year rise 1 percentage point to 92.5 percent. The company is aiming to hit 94 percent by the end of December.

However, the staffing and customer service issue has already seen some shoppers voting with their feet. The Strategy& research said that some customers are “prone to search for shopping experiences outside the GCC region, precisely what governments want to avoid.”

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The analysis looked at six global cities, Dubai, London, Milan, New York City, Seoul and Tokyo.

Dubai recorded a retail spend per capita of approximately $14,000, second only to New York City. Around one in five of the emirate’s workforce is employed in the retail sector, the highest ratio of all six cities, and the sector makes up a quarter of the urban GDP.

The retail talent shortage persists despite figures from the International Labour Organisation showing that 17.5 million people in the Arab states wanted to work in 2023 but did not have a job. That translates into a jobs gap rate of almost 24 percent.

Last year the employment rate for youth stood at just over 19 percent, in contrast to the 53 percent rate among adults, according to Statista. In Saudi Arabia, youth unemployment stood at 16.25 percent in 2023.

GCC retailers, including the Chalhoub Group, and mall operators such as Majid Al Futtaim already offer training programmes aimed at making the retail sector a more appealing career choice.

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Naresh Moolchandani, HR manager at the electronics store business Jacky’s Retail in Dubai, said: “The shift towards digital skills and enhanced training programs reflects a proactive approach to addressing the ongoing challenges. But the impact on customer service is a notable concern,” said

Jacky’s Retail has extended its scope of recruitment from traditional markets such as the Indian sub-continent and North Africa, to Russian and Chinese speakers.

Leher Dewani, managing consultant at the recruitment company Robert Walters, said the skills shortage in the retail sector was having an impact on existing staff.

“Frontline retail workers are experiencing increased workloads, high customer demands, and increased sales targets. This may have led to a decrease in quality of retail staff. That can in turn have an impact on customer satisfaction,” she said.

“We are seeing more complexity in hiring processes, interest in international talent from more developed markets such as Europe, and a bigger focus on personality as opposed to experience on paper.”