< PreviousSUS TAINABILIT Y 30 Vol. 25/03, March 2024 Quick commerce will take over the Middle East shopping landscape In a world now fuelled by an unquenchable thirst for convenience, technology has transformed our behaviour from traditional shopping habits to instant service Quick Commerce (Q-Commerce). Looking at the demand in this sector across the region, in our business specifi cally we’ve seen a 120 percent increase over the last three years. This leads us to the fi nding that at the heart of Q-Commerce is a simple yet powerful insight – modern consum- ers crave more than just products; they demand an experience that is fast, reli- able, and convenient. This enables consumers to spend more time doing things they love, such as prioritising family time and enriching experiences in their daily lives. The evolution of Q-Commerce In the not-so-distant past, the idea of receiving groceries, restaurant orders, or e-commerce items within a 20 to 30-minute window was inconceivable. Consumers were resigned to the notion of planning their purchases, scheduling deliveries for the next day, and arrang- ing the logistics of shopping. However, the advent of Q-Commerce disrupted this status quo by aligning itself with the evolving customer needs. BY WASSIM MAKAREM, SENIOR VICE PRESIDENT OF Q-COMMERCE AT TALABAT ECOMMERCE Q-Commerce has emerged as a game-changer in shaping consumer behaviour and fostering sustainability If I had told anyone four years ago that with a touch of a button, they could have groceries delivered to their door within 20 minutes, I imagine I’d have been met with a few raised eyebrows. Fast forward to the present, this evolution is not just a concept anymore; it’s a reality, sparking a revo- lution in how people shop. In a world now fuelled by an unquenchable thirst for convenience, technology has transformed our behav- iour from traditional shopping habits, to the instant convenience provided by arabianbusiness.com 31 ECOMMERCE The future of Q-Commerce in the Middle East is promising—driven by a convergence of consumer demands, technological advancements and a commitment to sustainability One of the primary catalysts for the Q-Commerce revolution was the real- isation that the burden on consumers to plan their purchases could be allevi- ated. The focus shifted from merely delivering products to solving the inherent challenge of customers want- ing their products promptly. This required a substantial investment in the supply chain and value chain to ensure swift and reliable delivery of a diverse range of products, from pantry staples to electronics. The rise of Q-Commerce gained even more momentum during the COVID-19 pandemic. Despite restric- tions, Q-Commerce not only facilitated the growth of grocery and e-commerce deliveries but also raised the bar for customer expectations. What was once considered acceptable delivery times of three to four hours was swiftly over- shadowed by the unparalleled conven- ience of receiving products within a 20-minute timeframe. According to a recent Statista report, the Quick Commerce market in the UAE is projected to reach a revenue of $141.80m in 2023 and by 2027, the number of users in the Quick Commerce market is expected to soar to 1.2 million users. Q-Commerce now commands a substantial market share of 60 to 70 percent in the total groceries segment in the UAE, underscoring its rapid adop- tion and acceptance by consumers. A shift in consumer behaviour and increased focus on sustainability Beyond the sheer speed of delivery, Q-Commerce has emerged as a game- changer in shaping consumer behav- iour and fostering sustainability. As consumers become increasingly envi- ronmentally conscious, they now scru- tinise product packaging and actively seek recyclable options. This shift in consumer mindset has led to a reduc- tion in food wastage, as individuals embrace the 'buy what you need when you need it' ethos f acilitated by Q-Commerce. The environmental impact of Q-Commerce extends beyond packag- ing choices. Leveraging technology for sustainable last-mile delivery solutions, ised consumer experiences are sure to make people’s lives easier. In the Middle East, the success of Q-Commerce is attributed to several factors. The region’s demographic, with a young and tech-savvy population, places a premium on convenience. Moreover, the aff ordability of Q-Com- merce, in comparison to other global regions, has also played a pivotal role in its widespread adoption. The unit economics in the Middle East are conducive to the success of Q-Com- merce, making it an economically viable and attractive option for both consumers and businesses. The future of Q-Commerce in the Middle East Looking ahead, the trajector y of Q-Commerce is poised for exponential growth. The Middle East has generally been an early-adopter in the world of Q-Commerce, and I foresee the region continuing to lead the way for the evolution of the technology. As the technology continues to evolve, the integration of data and arti- fi cial intelligence will further refi ne the consumer experience. The power of AI lies not just in front-end user inter- faces but in the backend, where it can analyse data swiftly and off er person- alised recommendations based on historical preferences. Q-Commerce is not merely a convenience-driven trend; it’s a cata- lyst for positive change across the entire supply chain. Empowering suppliers to effi ciently target specifi c consumer needs contributes to a more sustainable and consumer-centric retail ecosystem. This approach has a direct impact on businesses and indi- viduals in the region. In conclusion, the future of Q-Com- merce in the Middle East is promising— driven by a convergence of consumer demands, technological advancements, and a commitment to sustainability. As we continue to innovate and address evolving consumer needs, Q-Commerce is set to become the new norm, reshap- ing the landscape of retail, and redefi n- ing the way we shop and experience convenience in the digital age. Q-Commerce is a catalyst for positive change across the entire supply chain, says Makarem including autonomous food delivery robots, electric bikes, and even drone deliveries, off ers avenues to minimise the carbon footprint in the region. Personalised consumer experiences Q-Commerce has unlocked a new realm of possibilities in personalised consumer exper iences. Through predictive algorithms and leveraging AI, we aim to create a seamless shop- ping experience where customers no longer need to plan their meals metic- ulously – a reality we are actively work- ing towards. Imag ine waking up, expressing a desire for a specifi c meal, and having the necessary ingredients delivered to your doorstep within 20 to 30 minutes. Or perhaps receiving a notifi cation that you may want to order a necessity grocery item that could be running out in your kitchen and be able to automate this. These personal-SUS TAINABILIT Y 32 Vol. 25/03 March 2024 Saudi Arabia’s car rental and leasing sector poised for 2024 surge The dynamic growth of the tourism sector in the kingdom and the opening of the local economy has benefited the car rental and leasing market The car rental and leasing sector in Saudi Arabia has been revital- ised following an upswing in travel and tourism backed by substantial government initiatives with Vision 2030 powering its acceleration. Saudi Arabia’s car rental and leas- ing market has witnessed a boom, of late, with forecasters predicting a further surge in demand for vehicles in 2024. The boom is largely due to a spurt in the tourism industry, majorly aided by government initiatives to promote the country as a regional tourist destination for leisure as well as religious travellers. A robust automotive industry is the backbone of every vibrant economy. BY AZFAR SHAKEEL, CEO OF LUMI TRANSPOR T The digitisation of the car rental and leasing process has enabled companies to expand their service offering across Saudi Arabiaarabianbusiness.com 33 TRANSPOR T The growth of the car rental and leasing market in KSA can be attributed to the government’s strong initiatives to develop the local infrastructure and attract more global investments With Saudi Vision 2030 laying out an ambitious masterplan for the rapid economic growth of the Kingdom, companies and brands have a unifi ed vision to work towards a common goal. The Saudi Arabia car rental and leasing market size reached approxi- mately $2.3bn in 2023. The market is projected to grow at a CAGR of 9.40 percent between 2024 and 2032, reach- ing a value of around $3.9bn by 2032. The dynamic growth of the tourism sector in Saudi Arabia and the opening of the local economy has benefi ted the car rental and leasing market. Eff orts to expand the Hajj and Umrah numbers as per the government’s Vision 2030 target of 30 million visitors by FY30, will also see a further rise in the number of travellers to the kingdom. Government initiatives The government’s strategy to develop Saudi Arabia into a global logistics hub will hugely drive demand for vehicle leasing in the years to come. Saudi’s Reg ional Headquar ter s (RHQ) Programme calls upon multinational companies (MNCs) to establish regional headquarters in Saudi Arabia starting January 2024. The revitalisa- tion of the local economy with tax rebates and concessions is attracting more global companies to set up offi ces in the Kingdom today. In 2022, Saudi Traffi c Authorities and Ministry of Interior launched electronic authorisation services for visitors, which allows auto rental offi ces to get authorisation documents for visitors digitally through the elec- tronic platform Absher Business. This has tremendously eased the renting process for both the customer as well as car rental companies. The recent trend among govern- ment organisations to opt for leased vehicles for their local long-ter m operations has proved very benefi cial for rental agencies. Vehicle leasing from cor porate and commercial segments has been on an upswing with the rapid growth of the ecom- merce industry also leading to more demand for leased vehicles. With the forecast of a booming process has enabled companies to expand their service off ering across the country by providing access to every- one with online credentials. Lumi, listed in Saudi Exchange, which has over 36 locations across the kingdom, has a simple four-step online booking exper ience that allows customers to rent a car with the click of a button. The ease with which vehi- cles can be rented or leased today has made it convenient for a population on the move to access transport facil- ities in a country that is growing by leaps and bounds. Rise of electric vehicles The National Strategy for Transport and Logistics Services aims to raise the share of zero-carbon transport vehicles on Saudi roads to nearly 45 percent of the total number of traditional vehicles. With the rising global focus on sustain- ability, on the heels of UAE hosting a historic COP28, more countries are looking for ways to ease pollution on roads by turning to electric options. The kingdom’s decarbonisation eff orts will be refl ected in an expanded electric vehicle (EV) market. Car leas- ing and rental agencies are keeping a close eye to ensure the infrastructure to support EVs is in place so they can expand their fl eet to synchronise with the government’s vision. Saudi Arabia’s strategic location in the export-import market and capabil- ity to manufacture batteries and vehi- cles locally, is also conducive to the local manufacture of EVs, according to experts. In 2022, the Saudi government launched Ceer, the country’s fi rst elec- tric vehicle manufacturing company, lending further impetus. The growth of the car rental and leasing market in Saudi Arabia can be attributed to the government’s strong initiatives to develop the local infra- structure and attract more global investments which in turn has created a demand for logistical support in the motoring sector. Saudi Vision 2030 to deliver a thriving economy on the back of a vibrant society and enhanced qual- ity of life will be fruitful for all sectors in the long run. There is greater demand for competitive car leasing options for clients and workforce in KSA, says Shakeel service sector and a boost in infrastruc- ture construction activities (Riyadh Metro, Makkah public transpor t programme, luxur y hotels, theme parks), a rise in entertainment and sporting events, and the opening of new establishments, there is greater demand for competitive car leasing options for clients and workforce. The transport requirements for daily commute among the growing population has led to a vibrant car rental and leasing market. Digitisation Online car rental platforms have seen an upswing in recent times due to the one-stop-shop convenience they off er customers. Alongside the ease of book- ing, which ensures a seamless experi- ence for customers, who can even opt to have the car delivered to where they are, there’s also enhanced safety due to features such as vehicle tracking. The digitisation of the car rental and leasing 34 Vol. 25/03, March 2024 OUTL OOK Sectoral support is the secret ingredient in Dubai’s recipe for success The F&B sector in the UAE is playing a critical role in the global food network and in diversifying the local economy L ike the tech and real estate sectors, the food industry plays a vital role in Dubai’s economic growth and diversifi cation agenda. The emirate is home to an extraordinarily rich and diverse food and beverage ecosystem that has become an integral part of its identity and a major contrib- utor to its economic prosperity and vibrant social life. In Dubai, the culinary experience off ered at every table extends beyond the skills of our talented chefs and rich heritage. It is a culmination of a robust supply chain, innovative agricultural practices, and strategic international partnerships. Our ability to grow ingredients locally or import them effi ciently from partner nations across the globe is BY MOHAMMAD ALI RASHED LOOTAH, PRESIDENT AND CEO OF DUBAI CHAMBERS OUTL OOK Dubai’s ability to grow ingredients locally or import them efficiently from partner nations across the globe is fundamental to the food industry’s successarabianbusiness.com 35 OUTL OOK Today, Dubai is home to more than 13,000 cafes and restaurants – more than any other city in the MENA region fundamental to our success, and this success is driven by the work we do across the public and private sectors. At Dubai Chambers, our strategic approach encompasses support for technological advancements in food production, sustainable sourcing prac- tices, and a focus on advancing the global food security agenda. We work closely with stakeholders throughout the entire industry to ensure a safe, effi - cient, and reliable food supply chain, in line with the UAE’s long-term food security goals. Today, Dubai is home to more than 13,000 cafes and restaurants – more than any other city in the MENA region. The number of homegrown food service brands in the emirate has also notably increased in recent years. This places Dubai at the forefront of driving food security, reduces reliance on imported foods, and stimulates economic growth while promoting environmental sustainability. In recent years, Dubai’s F&B sector has received several awards – from fi ne dining to hidden gems – and given well-deserved recognition to the emir- ate’s culinary excellence. However, our ambition stretches beyond accolades – it is embodied in tangible economic impacts and sector-specific support that underscores Dubai Chambers’ commitment to the F&B industry. On the sidelines of Gulfood last month, we brought together over 400 F&B experts and industry players from around the world and provided them with critical insights on key trends and investment opportunities within the emirate’s F&B sector. This is just one example of how we help businesses unlock the potential of the F&B sector while attracting international compa- nies and foreign direct investments (FDI) to Dubai. Dubai’s vibrant F&B industry and growing culinary scene contribute to accelerating growth in FDI and the tourism sector – two fundamental pillars of the Dubai Economic Agenda (D33). This, in turn, attracts more busi- nesses and visitors and positions Dubai as one of the world’s top cities in which to live and work. Last year, we launched six F&B sector-specifi c business groups, a move aimed at boosting the dynamism of the industr y in Dubai. Our proactive approach is refl ected in our support for businesses through our network of international offi ces, facilitating growth at regional and global levels. We guide businesses and enable them to embrace new technologies to stay competitive in a fast-changing market that is increas- ingly becoming digital. The UAE’s strategic geographical location and robust food trade network, coupled with a 75.2 score on the Global Food Security Index in the GCC between 2018 and 2022, highlight our pivotal role as a regional trade hub. This status is not accidental but the result of thorough planning, strategic invest- ments, and an unyielding commitment to innovation and sustainability, as outlined in the UAE’s National Strat- egy for Food Security. Our engagement at Gulfood under- score our approach to supporting the F&B sector by providing a platform for dialogue, exchange and strategic part- nerships. As we look forward, the F&B sector remains a beacon of opportunity, innovation and resilience – and with the continued support of Dubai Chambers, the UAE is set to meet the challenges ahead while thriving on the global culi- nary stage. The emirate’s food scene is ulti- mately much more than a collection of menus and dining experiences. It is a refl ection of a deep-rooted strategy that blends cultural heritage with economic ambition, sustainability with innovation, and local fl avours with global appeal. Through initiatives like our Gulfood Breakf ast Br iefings and sectoral groups, we are not only show- casing Dubai’s gastronomic opportu- nities but reinforcing its position as a global hub for culinary excellence and food security. What ultimately lands on your plate is the culmination of count- less hands, minds, and hearts working together – from the kitchen to the boardroom – proving that many cooks in the kitchen can, contrary to the old warning, produce excellence when they share a common vision and goal. $7.63BN The annual revenue of more than 2,000 food and beverage manufacturing companies in the UAE The UAE’s strategic geographical location and robust food trade network highlight the country’s pivotal role as a regional trade hub, says Lootah In 2023, Dubai’s F&B market was propelled by robust demand driven by a growing population of 10.1 million and an infl ux of 17.2 million tourists. The economic vitality of this sector is evident in the greenfi eld investments it attracted between 2019 and 2023, which were valued at $577m and created 1,698 jobs and demonstrating the sector’s dynamic growth potential. At Dubai Chambers, we are not just observers but active participants in shaping this landscape.36 WELL-BEING The overlooked metrics: A closer look at Gen Z’s mental health crisis As adults responsible for the next generation, we’ve been asleep at the wheel It’s tough being a Gen Z-er today. While their lives might seem easier due the tremendous progress and innovations made in almost every fi eld in the last few decades, there are perhaps other metrics we should consider. Metrics that matter more to their human spirit, their sense of purpose and their overall wellbeing. A failing grade By most accounts, we are failing this generation. In the years leading up to the pandemic, feelings of persistent sadness and hopelessness – as well as suicidal thoughts and behaviours increased dramatically among young people. The Centres for Disease Control BY MARILYN PINTO, FOUNDER OF KFI GLOBAL WELLBEING Until we can make the shift in our thinking, our current efforts at tackling the youth mental health crisis will be incomplete, ineffective and woefully short-sighted Vol. 25/03, March 2024arabianbusiness.com 37 WELLBEING We need to change the way we view the world, not just how we can get the most out of it, but how we can all actively contribute to a bett er world and Prevention’s Youth Risk Behaviour Surveillance System puts in this number at about 40 percent among youngsters in the United States. The situation isn’t much better elsewhere around the world. A Gallup-WWF study said that compared with older generations, Gen Z-ers are much more likely to report experiencing negative emotions such a stress, anxiety and loneliness. Social media pressure, military conflicts, natural disasters, climate change, crushing debt, economic insecurity, lack of community and connection – all play central roles in contributing to this worrying statistic and the ensuing mental health crisis. As adults responsible for the next generation, we’ve been asleep at the wheel. The comforting delusion that we can continue with ‘business as usual’ is wreaking havoc on the lives and futures of these Gen Z-ers. They live in bigger houses but lonelier homes. They have lightning fast 5G internet connectivity but have to contend with a deep void of human connection. We’ve got them overly concerned about GPAs and college entrance tests while we breezily brush aside their concern for the state of the planet they live on. We tell them they are the leaders of tomorrow while providing poor examples of true lead- ership today. Sins of omission Our sins of omission might overshadow those of commission – our deafening silence in the face of injustice, our numbing apathy at the violence against the powerless, our blatant disregard for the pleas of the vulnerable. We’re promoting toxic traits – favouring independence over interde- pendence, which is shown to be a mark of maturity; individualism, instead of collectivism where everyone benefi ts; and isolation rather than embracing community, which provides the crucial social and psychological support they need to thrive. Care, compassion and courage While none of this wasn’t intentional, the ongoing impact is undeniable. If we want Gen Z-ers to have a fi ghting chance at happiness and fulfilment, we need to reassess our values and priorities. We need to change the way we view the world, not just how we can get the most out of it, but how we can all actively contribute to a better world. Not just mindless consumption at the expense of the poor and the planet, but mindful utili- sation and fair distribution of resources. Not just what’s best for us individually, but what’s best for society as a whole. We need to reexamine and repair our social fabric. We need to show care, compassion and courage for those less fortunate. We need to realise how inter- connected our lives and paths are. A paradigm shift Until we can make this shift in our thinking, our current eff orts at tackling the youth mental health crisis, which primarily centre around medication and individual therapy, will be incom- plete, ineff ective and woefully short- sighted. It’s high time we take a more holistic view and demonstrate the stew- ardship required from us. Undoubtedly, this transition won’t be easy, g i ven that we’ve been entrenched in this way of thinking for so long. It’s so much easier to prescribe quick fi xes rather than to re-evaluate the very foundations we’ve built our lives on. But this is now a moral imperative – the future of Gen Z hangs in the balance. $3.5BN The annual loss in productivity in the GCC due to mental health issues, according to a 2022 study by PwC The comforting delusion that we can continue with ‘business as usual’ is wreaking havoc on the lives of Gen Z-ers, says Pinto Gen Z-ers are much more likely to report experiencing negative emotions such a stress, anxiety and loneliness, according to a study38 Vol. 25/03, March 2024 SUS TAINABILIT Y The cost of carbon emissions is rising The European Union is introducing a tariff on imports of carbon-intensive products with implications for exporters around the world — including those in the GCC imported into EU countries. It forms part of the European Union’s ‘Fit for 55’ climate policy initiative to help member states reduce greenhouse gas (GHG) emissions by 55 percent by 2030 compared to 1990 – and it plugs an important gap. Domestic emissions reduction measures, such as the Emissions Trad- ing Scheme (ETS), incentivise cleaner production processes within Europe, but they bring a new problem: carbon leakage. If EU companies face higher production costs at home due to carbon pricing, they are likely to shift produc- tion to countries with looser regulations – exporting the emissions problem instead of addressing it. CBAM removes this loophole by attaching a carbon price tag to imports entering the EU. If carbon tax is already paid in the originating country, it will be adjusted accordingly to avoid double BY ASHISH SHARMA AND CARLO STELLA, PARTNERS AT ARTHUR D. LITTLE MIDDLE EAST AND INDIA SUS TAINABILIT Y The UAE has a proven track record in sustainable action underpinned by concrete targets and pioneering projects W ith the climate crisis show- ing no sign of easing, the European Union (EU) is moving beyond good intentions and turning climate goals into law. In doing so, the bloc is aiming at carbon-inten- sive industries – and the impact on such exporters could be profound. With global attentions distracted by recent COP events, the introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM) may have gone relatively unnoticed. In essence, CBAM is a tariff on carbon-intensive products arabianbusiness.com 39 SUS TA INABILIT Y It is important to drive wider awareness and to collaborate with industry alliances, NGOs, and research institutions to mobilise research and action for a broader decarbonisation movement taxation – but whatever the fi nal calcu- lation, there is no escaping the bill. The initial scope of CBAM targets six key sectors that account for almost half of the EU’s industrial emissions embedded in imports: cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity. However, the scope is expected to expand to encompass addi- tional sectors, potentially impacting many more industries. Across sectors, CBAM will be implemented in two phases: the transi- tional phase and the operational phase. The transitional period began in October 2023 and is scheduled to run until December 2025. During this time, importers must report quarterly GHG Scope 1 and Scope 2 emissions to the ‘Net Carbon Account’ of their respective countries, without making any fi nancial payments or adjustments. This allows everyone involved – importers, produc- ers, and regulators – to learn the ropes and gather data on their products. After the initial trial run, the information gath- ered will be used to fi ne-tune the system. The operational phase is scheduled to begin in January 2026. At this stage, companies will be required to report the amount of goods they imported into the EU in the previous year and the related GHG emissions. They will then need to provide the corresponding certifi cates under CBAM, priced based on the weekly average auction price of ETS allowances, expressed in euros per tons of carbon dioxide equivalent (€/ tCO2) emitted. Meanwhile, the free allocation of EU ETS allowances will be phased out between 2026 and 2034. For an exporter in the GCC, this comes as a warning. The advantage of cheaper manufacturing costs that GCC exporters enjoy is likely to be negated by the CBAM tariff s and EU importers will be compelled to look elsewhere for deals. Take aluminium for example. The GCC is one of the primary exporters to the EU in the aluminium industry. If the new CBAM tariff is assumed to be EUR 100/tCO2e, some estimates place the potential carbon tax at approximately EUR 700-750 per ton. This is likely to shift the scales to countries with stricter climate norms and greener technologies. • Assess your exposure: Assess compliance costs by identifying prod- ucts, emissions, and CBAM liabilities, while incorporating fi nancial planning and budgeting for potential investments and managing cash fl ow disruptions. • Invest in cleaner technologies: Explore clean technologies, assess feasibility, evaluate cost-eff ectiveness, optimise emission-intensive processes, adopt best practices, and prioritise investments for maximum emission reduction impact. • Decarbonise your supply chain: Engage suppliers, set expectations, collab- orate on emission reduction, provide support and incentives, assess viability of carbon credits and transform the supply chain with sustainable practices. • Engage with policymakers: Industry should step up engagement with policymakers to formulate a wider response across the domestic and inter- national ecosystem. It is important to drive wider awareness and to collabo- rate with industry alliances, NGOs, and research institutions to mobilise research and action for a broader decarbonisation movement. By embracing its potential and taking proactive steps, industry leaders can emerge as winners in the race to a low-carbon future. Sustainability is no longer a niche concern; it is the new competitive edge and it’s deciding winners and losers. Industry leaders can emerge as winners in the race to a low-carbon future, believes Sharma (left) and Stella The European Commission esti- mates that annual revenues from the tax covering CBAM products both inside and outside the EU will reach EUR 9.1 billion (almost $9.9bn) by 2030, with 25 percent distributed among member states for domestic use and 75 percent allocated to broader climate action. With CBAM’s transitional phase underway, proactive adaptation is crit- ical – and for some carbon-intensive industries it is a game of catch up. An increasing number of companies across sectors are already implementing inter- nal carbon pricing (ICP) into their operations and decision making on a voluntary basis to divert investments away from carbon-intensive activities. Given CBAM’s immanency, indus- try leaders may wish to accelerate their response and consider the action points below: Next >