“Physical retail is dead!”—open any news publication and you’re likely to find a similar headline. The reasons for such fears are aplenty.
Growth and evolution of e-commerce
In Singapore, store occupation in the city’s prime shopping Orchard district has reached the lowest point in five years, the least since 2009.
The simplest explanation for increasingly vacant shopping centres is that e-commerce has taken over. Around 230 million Southeast Asians are going digital in purchasing products and services, driving the region's internet economy to an over $50b growth. Over 60% of people research online before buying in-store, while 27% research in-store before buying online.
Booming e-commerce sector and the millennials
With economic growth in the region surging, internet access has become more affordable. The tech-savvy Southeast Asian region has skyrocketed the booming e-commerce uptake, with recent research by Google and investment firm Temasek Holdings predicting that e-commerce sales in the region will grow at a 32% CAGR from $5.5b in 2015 to $88b in 2025, when they will make up 6% of total retail sales.
Moreover, around 60% of the world’s millennial population ages 18-29 will live in Asia by 2020. Being digital natives, millennials rely on mobile devices to meet all their needs—making purchases, doing research, hailing a cab, or booking a flight.
The changing consumer behaviour—knowing what consumers want
Here lies a key factor influencing the retail sector today: the shopping experience. Before an expensive purchase, people used to go back and forth to a store to scout for the best deal.
The way companies uses predictive analysis need to change as today consumers do all their prep online—reading reviews, exploring alternatives on social media, finding the best discount—which means less time spent going around stores and lesser unplanned purchases at nearby establishments.
As the customer journey changes, retailers are shifting their focus where the customer is increasingly at the centre of a perpetual shopping experience, enabling stores to obtain customer data through website, in store or email in exceedingly high volumes.
Retailers are constantly working on improving customer’s holistic experience through the data they have managed to obtain. The data will provide greater insights for upcoming marketing campaigns and product alerts to achieve a personalised and intimate experience for the customers.
One retailer that has recently committed to providing data-driven, personalised customer experiences is Macy’s. In order to attract and retain customers, Macy’s tapped into various apps, mobile wallets, and online promotion codes which make it easier for shoppers to research, compare, and purchase their items. Going a step further, Macy’s integrated their application with social networks, which enables them to serve customers faster, provide recommendations, and launch new features such as image search – where customers can take a picture of something they are looking for, then find that product at Macy’s.
Recognising that customer preferences were shifting, London Theatre District has also embraced technology in its sales platform, providing a secure booking engine, interactive seating plans, customer reviews, and real-time availability. With their open API platform, LTD has expanded their sales through a variety of partners including airlines and hotels, providing a superior customer experience, as well as enjoying increased customer loyalty.
Another mainstay in the industry, Marks and Spencer, is empowering their business analysts to use data to enhance decision-making without IT support. Using data visualisation technology, the staff are able to understand information without needing to interpret it – allowing M&S to transform into a truly data-driven organisation, entirely focused on improving the customer experience.
Does this mean traditional brick-and-mortar retail is dead?
If it’s experience that is driving a shift in a shopper’s preference, there will always be a place for stores. To get ahead of the digital wave, traditional retailers must use digital technologies and innovations to create new products and services to understand more about customers' experiences, and reinvent their business.
Frost & Sullivan views this changing retail model—evolving from a single channel of interaction (in-store or online), to omni-channel (interacting across multiple channels)—as vital in adapting to the changing consumer landscape.
To effectively compete and stay relevant today, physical retailers need a total willingness to experiment and commit to omni-channel strategies, as well as engage with consumers to see what works in the quest for seamless shopping experiences.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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An experienced senior executive with over 25 years in the information technology industry, Erich Gerber is the TIBCO General Manager for Asia Pacific and Japan (APJ). With a mandate to accelerating the growth of the company and engaging deeply with customers, partners, and alliances in the region, Erich is the sales, strategic marketing, and business leader for TIBCO Software in APJ.
Erich has a Bachelor’s degree in Management from BPIH, Switzerland and a Master’s degree in Marketing from the Swiss Federal Institute. He is married, a father of two, and is a sports enthusiast who engages in skiing, cycling, and jogging in his spare time.