Retail trends to watch

Image of Pepper the robot
Retailers are expected to increase their investment in in-store tech. Photo: Bigstock

Developments in web, mobile and social commerce are set to continue reshaping retail shopping throughout Southeast Asian markets, says global supply chain optimisation provider Manhattan Associates.

Manhattan Associates forecasts that continued pressure on margins from prevailing economic conditions and an increasingly inflationary environment will force both bricks-and-mortar and online retailers to invest in strategies and technologies that make their assets work harder and help them reach new customers in new markets.

“Online-only retailers have, by and large, been the winners to date in the ongoing retail revolution that continues to see the volume of goods bought online grow and grow,” said Scott Gillies, director of retail, Asia Pacific at Manhattan Associates.

“However, traditional bricks-and-mortar retailers are starting to fight back by investing in services and technologies that will help them remain both profitable and relevant. They are implementing what consumers like about e-commerce into their stores at the same time as investing in their own online offer, and making the overall cross-channel shopping experience seamless for their customers.”

Manhattan Associates identified six top trends that are set to influence the Southeast Asia retail scene over the next 12 months:

1) Online retailers facing tough competition

Malaysians spent a total of US$344 per person online, which was well below the global average of US$725 in 2012. However, total shopping spend has seen a marked increase and is expected to reach US$1.64 billion by 2014 from US$645 million in 2011.

Whilst online-only retailers may have taken a large slice of the online sales market in recent years, bricks-and-mortar stores are investing in their multi-channel offering, meaning that online retailers will now have to up their game to retain market share. This trend is particularly strong in Thailand and the Philippines, where the growing number of online shoppers has prompted retail brands to offer innovative services such as online gift registries or online shopping combined with in-store pickups and delivery services.

With more intense competition in the online retail world, traditional retailers can differentiate against their online only competition through focus on providing an excellent overall service experience by investing in their supply chain and associated technology that supports an optimised fulfilment process. They may also need to consider improving visibility of their brand via pop-up shops, kiosks and other types of ‘product-less stores’. All of these initiatives can put stress on sub-optimised supply chains that are not using the proper technologies, but implementing these operations effectively will differentiate them against online only retailers.

2) Mobile commerce is here to stay

Annual smartphone shipments are predicted to soar to 1 billion globally for the first time this year, and over 172 million tablets will be shipped internationally in 2013. Almost 60 per cent of the total Malaysian population will own a smartphone in two years, and currently almost 40 per cent of the population own two mobile phones with 137.7 per cent penetration.

Increased mobile penetration leads to increased mobile shopping and will force retailers to optimise their websites and online shops for smartphone and tablet access. Retailers will also need to offer brand, store or product mobile interactions to their shoppers. Examples include quick response (QR) codes, gift cards stored in mobile applications like Apple’s Passbook or free applications to scan a product’s barcode and have an instant quote on delivering the same product direct to their home. Profitably integrating the mobile channel into their existing supply chain networks will require retailers to invest in their supply chain technologies.

3) Winning the showrooming battle

Increasingly consumers visit bricks-and-mortar stores to look at products but then buy them online at a lower price – commonly known as “showrooming”. A study of 38,000 people in 43 countries has found that 33 per cent of shoppers admit to showrooming and approximately 71 per cent of the people surveyed in Asia have gone in to stores to compare prices.

In Singapore, the strong Singapore dollar may drive more shoppers towards online avenues, negatively impacting store-based sales. Singapore shoppers are also becoming more discerning and frequently compare product prices between different sales channels.

To win this showrooming battle, retailers will need to build customer profiles based on previous purchases to encourage future transactions. Many traders are also in the process of deploying omni-channel strategies, such as buy online and pick up in store. To connect all channels and obtain a holistic view of customer activities it will be essential to run an effective and reliable order management system in tandem with efficient supply chain systems and other enterprise systems.

Furthermore, those merchants that are most likely to combat showrooming are those that provide a great in-store experience, run outstanding loyalty programmes, offer private labels or exclusive brands, embrace both consumer and business technologies, and provide consistent superior customer service across their multiple and integrated channels.

4) Investment in in-store technology accelerates

The next months will see more technology integration between the store and other channels to ensure customers get what they want when they are actually in the store. At the front-end, tablets, apps, QR codes and interactive screen technologies will be used in innovative ways to facilitate search, payment, and other in-store service options. At the back-end, order and warehouse management systems as well as supply chain intelligence tools will ensure stock availability and visibility for the orders generated across those multiple channels.

We will see more deployments of these types of initiatives as retailers look to maximise the potential of their high street real estate. In terms of back-end systems, many retailers will need to take a hard look at the legacy systems that they may have relied on for many years to get products into the hands of their customers but which simply do not support the new way of operating in the fast-changing, multi-channel retail world in which they now exist.

5) A seamless shopping experience across multiple channels will become critical

Consumers demand a cohesive view of the retailer, whether in-store, on the retailer’s website or on its mobile shopping application. They expect to find consistent items, prices, availability, payment methods and promotions across all channels. For example, retailers like MPH Bookstores have installed interactive kiosks in-store where consumers can choose to order books via the online shop or reserve titles in other MPH outlets.

To meet these increasingly complex demands requires creating a single view of the world that can be facilitated by a distributed order management solution, which provides flexibility in the way supply chains are able to execute fulfilment.

Moreover, an intelligent supply chain management solution helps to move beyond the simple view of inventory held in stores or at the distribution centre and widens the field of vision to encompass all the channels through which the company interfaces with the consumer. By being able to see – and make available for sale – as much inventory as possible, the opportunity presents itself to sell more.

6) International expansion to accelerate

As international retailers continue to realise the business growth opportunities that exist in Southeast Asia, many international brands will continue to accelerate expansion throughout the region. H&M, Uniqlo and Sephora are just a few of the international brands that have enjoyed success in the region in recent years.

Rakuten just opened its online stores in Malaysia last November 2012 but is already seeking to invest US$10 million in new startups in Singapore, Indonesia and Malaysia.

With international stores increasingly penetrating the market, local brands have a fight for survival on their hands and will need to maximise service levels, provide a seamless shopping experience for their customers at the same time as ensuring they’re matching supply and demand in an efficient and effective manner as possible.

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