E-ATING
The advent of e-commerce will undoubtedly disrupt the F&B sector in Abu Dhabi. Only those players who are fast to adapt and embrace digital sales channels will stand a chance of surviving in the long term.
While Abu Dhabi remains an attractive destination for retailers, accounting for 36% of all shopping malls in the UAE, local and international retailers operating in the Emirate cannot ignore the imminent advent of e-commerce, probably the most disruptive technological change of the past decade. Undoubtedly, those players who successfully embrace the e-trend and adjust their supply chains accordingly are the ones most likely to survive in the next five to 10 years. Industry experts from top consulting firms believe it is not a matter of competing but surviving. A first major signal to the market was given in spring 2017, when Amazon ensured the acquisition of Dubai-based online retailer Souq.com, valued at over USD1 billion. At the time, the F&B industry did not necessarily perceive the purchase as a threat, except for the fact that five months later Jeff Bezos announced the acquisition of Whole Foods, sparking a fierce competition with the industry.
Surely, e-commerce will not hit Abu Dhabi all of a sudden. After all, UAE residents are known to be avid mall shoppers, with 265,760sqm of retail space under construction in Abu Dhabi alone and an additional 650,000sqm, likely to be added by 2020, according to research firm CBRE.
Euromonitor International noted that the value of the UAE's retail sector stood at USD56.6 billion at the end of 2016, while the UAE's retail sales turnover is expected to exceed USD71 billion by 2021. However, at a time when consumer spending is going down, grocery spending in Abu Dhabi keeps growing. This is why F&B companies that traditionally rely on a B2B model, furnishing stores and retail outlets, may see e-commerce as an opportunity to grow their top-line swiftly and efficiently.
Market fragmentation will also represent an additional opportunity. Given the highly fragmented market, the top-five F&B retailers account for slightly more than 15% of the whole market share. While still dominated by Lulu, competition remains tight, with none of the other players—Carrefour, Spinneys, and others—having any intention of letting go of the local hypermarket giant.
For this reason, e-commerce offers an invaluable opportunity for the F&B industry. Frost & Sullivan, a consultancy, expects the UAE's e-commerce industry to be worth USD10 billion by 2020, despite reduced purchasing power. Surely, customers are becoming more and more price conscious, but they also want quality, which is why established, quality F&B manufacturers could exploit digital sale channels and take advantage of both the already existing Zoomato.com, Talabat, andTrolley.ae platforms, or they could establish their own distribution segments. Some companies may partner with the various Aramex, FedEx and UPS, others will maybe have an in-house logistic department. What matters in the end is consumer price and process transparent.
The untapped potential of e-commerce represents also an invaluable opportunity for foreign companies that yet have to step in the UAE. Indeed, only 25% of grocery offerings are produced domestically in Abu Dhabi, a number which could potentially spur the expansion of international players within the Emirate itself.
Aside from the usual emphasis on quality of services, e-commerce in Abu Dhabi will most likely value a “first-come, first-serve" approach. This is why there is reason to believe more established F&B powerhouses on average are likely to score higher on the IBM Artificial Intelligence Readiness Index, which will provide a first basis to assess how ready or not a certain firm is to integrate AI and digitize its operations, and on the degree of available cashflow to invest in the market. Despite the presence of some of the world's biggest and mix-used malls, Abu Dhabi's F&B sector is set to leapfrog with the most advanced markets in the e-commerce segment.

TABLE OF CONTENTS
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