Rethinking Who You Are
22 years after the dotcom boom saw organisations taking their first steps toward establishing an online presence, COVID-19 vastly increased the demand for digital, forcing the accelerated transformation of brands in all categories of retail. As we transition from the pandemic, we face a new reality of hybrid work, a shifting balance between physical and virtual, and changing roles for customer and transactional data. How can you reassess your physical and digital footprint to stay relevant in the digital economy?
This was the topic of a Keynote Panel discussion at the eTail Asia Summit which was moderated by Lui Tong, Director, Direct To Consumer, Swire Coca-Cola HK. Speakers on the panel included Freda Ng, Chief Digital Officer Watsons International, A. S. Watson Group, Avis Easteal, Regional Head of Consumer, LUXASIA, Jheeva Subramanian, Chief Financial Officer, BHG, Piyush Chowhan, Group Chief Information Officer, Lulu Group International, and Tamir Roter, VP APAC & EMEA, Bright Data.
Does the Physical Store Have a Future?
Recent studies suggest that one in eight stores (possibly up to 150,000 units) in the US will close within the next five years, with office supplies, clothing, and sporting goods being hardest hit. Does the physical store have a future?
Recent experience during the COVID-19 lockdown suggests that it does. In Singapore for example, at the height of the lockdown period, online commerce at BHG rose to 25% of total sales.
As movement restrictions have eased due to vaccine roll out, this percentage has dropped to the mid-teens (15% to 18%), with consumers once more taking the opportunity to visit physical stores. However, the role of these units is changing. Whereas in the past, shoppers would browse for products online then complete their purchases in-store, the reverse now tends to be the case.
Stores now provide the opportunity for face to face social interaction, and the physical need to see, touch, and feel products in person, before buying them online. Organisations must therefore rethink the position of stores in their omni-channel strategies, to reflect their changing role.
Rethinking the Role of Stores
With 16,000 stores spread across the globe, health and beauty provider A. S. Watson has had to adopt an agile approach to its physical real estate, turning stores into fulfilment centres in areas where customer movement has been restricted. In other changes, the organisation has put infrastructure in place to connect store representatives directly with customers for advice and consultation, or to arrange delivery of items direct to customer homes.
There are strong indications however, that the store will still play a role in future as a venue for consumers to engage in human interaction and have tactile experiences. Research conducted by A. S. Watson reveals that, particularly among Generation Z consumers, there’s an eagerness to return to stores once the barriers to safely doing so come down.
Meeting the Challenge of Actually Changing Stores
The challenge of actually changing stores to fulfil their new roles in a digital economy can be considerable, especially for hyper markets. Lulu Group International acknowledges that, while the format of stores is currently transactional, this situation is likely to change in future, with stores becoming more experience oriented.
To make the store a place of experience, there are physical and procedural barriers which much be removed. Such barriers currently detract from the customer experience in terms of their freedom to physically move around without putting themselves at risk, the lack of seamless transactions, etc.
In order to achieve this, a similar approach to the personalisation of eCommerce must be extended to the store, making each shopping journey a customised and memorable experience.
Allocating Online and Offline Resources for a Digital Future
At LUXASIA, there is an ongoing process that’s tending toward true connectivity in omni-channel, enabling consumers to connect into the store when offline, or with digital assets when online. Within the organisation this approach blurs the distinction between people, changing roles that were once exclusively offline or online to a blend of both, as circumstances require. A number of technologies and techniques are facilitating this balancing act, such as:
- AI-powered inventory management systems: These tools can make demand forecasts more accurate, and improve a retailer’s ability to satisfy consumers, whether they walk in the door, or interact with the organisation online.
- Pop-up stores & in-store experiences: Physical real estate can drive sales and awareness online through the setting up of pop-up stores and in-store scenarios that deliver tactile and memorable experiences which showcase products to prospective buyers.
- Shopping & payment apps: Enabling in-store customers to scan their items and check out using dedicated apps provides convenience, and a safe, contact-free experience for health-conscious consumers. Apps can also facilitate online purchases for scheduled pick up in-store, or for home delivery.
- Collaborative analytics: eCommerce companies may build collaborative analytics systems based on data sets that span multiple organisations. These systems provide insight into the complete customer journey, enabling partners to craft more personalised customer journeys.
- In-house robotic delivery: Services combining human logistics and autonomous systems can now schedule and execute delivery to specific locations, on the basis of a photograph of that destination.
Agility is key to maintaining such an approach, and is an attribute that organisations will need to foster, as this hybrid situation looks set to persist for the foreseeable future. Simply having one plan and sticking to it won’t cut it, in the weeks and months ahead. At the very least, you need a Plan A, and a Plan B, to allow for contingencies and change. This enables your organisation to quickly respond to changing circumstances and apply responsive marketing strategies that can convince people to shop both online and in-store.
Making the Most of Available Data
Information gathered from the markets, customers, and other relevant sources can assist organisations in deciding how and where to allocate resources, both online and off, and how best to deploy inventory and product assortment. Data from real-time sources on the web is also enabling consumers to make appropriate purchasing decisions. And in turn, web data collection is empowering organisations to make decisions on how best to optimise traffic from search engines, where to intervene on social media, and where to invest.
Looking ahead, as visual technologies like Virtual Reality (VR), Augmented Reality (AR), Artificial Intelligence (AI), and holographics are implemented in-store over the next five years, the store of data coming in from physical real estate will enable organisations to better incorporate their offline channels into the overall strategy blending digital and physical.
Q&A: What can you say that malls are just a fitting room and people will still buy online?
Tamir Roter, VP APAC & EMEA, Bright Data:
The past year has brought major changes in online retail and consumer behavior. The e-commerce sector has enjoyed an increase of over 40% in the digital population and activity. Once-reluctant consumers, such as senior citizens, have now shifted to shop online. This kind of growth, however unprecedented, is clearly here to stay. Major e-commerce brands have adjusted to the changes and are moving their physical stores to serve as showrooms where consumers can “feel” the products. Local brands that were fast enough to move online are now enjoying global exposure and a global consumer base.
We live in a world or market in which you are either a disruptor or are being disrupted. Therefore, I think that this is the time to “read the map” and make sure your real investments are being put toward increased online activity. Our online data shows it – consumer sentiments around the world have clearly shifted to increased digital activity with richer product lines and exposure to multiple global brands.
Retail brands should hone their ultra-competitive instincts like never before and use the one weapon that, without fail, will help them win additional market shares. This weapon is online data, and it always provides a truthful market snapshot everywhere.
Freda Ng, Chief Digital Officer, Watsons International A.S. Watson Group:
In our global survey covering over 22,000 customers in over 20 markets conducted during the pandemic, 100% of respondents said they will go back to physical stores for shop-ping, especially Gen Z, with one third saying they will even shop in stores more often. This showed that custom-ers still have strong desire for human connection in physical stores – the chance to see and engage with friendly faces and experience products in real life. So as retailer, we can elevate the game to create great customer experience and a great reason to shop, either online or offline
Piyush Chowhan, Chief Information Officer, Lulu Group International:
The foot traffic has fallen by 22% percent even before the pandemic based on Deloitte studies, and, the way people shop has changed drasti-cally with the push of Covid. Browsing is a big part of in-store shopping as it offers the benefits of escape, socialization, and just simple fun. But with the Covid, situation, safety is the number one concern for customers. So, for now, at least until the pandemic’s over, it will be happening. But, consumers, will in a way be back on in-store shopping.
Avis Easteal, Regional Head of Consumer, Luxasia:
People will shop where suits them, some will want to experience the product and take it home immediately other times they will want to order online. The trigger is what is going on in the consumer lives, their micro moments and needs will decide where they purchase. Shopping in store is here to stay as a channel alongside ecomm.
Jheeva Subramanian, Chief Financial Officer, BHG:
The future does point towards an increase of purchase patterns from online platforms. However, this is still expected to be around 15% to a maximum of 35% of total sales (depending on categories). Consumers are using the online platform in various ways. Some do research online and then buy in store whilst some do research in store and then buy online for convenience. At BHG, we used to advertise online and drive consumers to the store - we are now using stores as advertising platforms and let the consumers then buy online. The role of the store is changing to a more of an ambassador - where it is the place to recruit consumers to touch, feel and resonate to a brand with experiences, workshops, events, etc. Ensuring that the shopping journey is then seamless to whether the consumer purchases in store or continues their shopping journey online is key. Therefore it is not just a "fitting room" but still plays a vital role in acquiring the consumer and also retaining the consume