Whether they’re browsing online or buying in-store shoppers have more choice than ever, forcing retailers and malls to get creative to attract their attention.
With the region’s middle class predicted to double to 1.32 billion by 2020, Asian consumers – and their expectations – are changing rapidly.
Adam Cook, retail project and development services lead with JLL Asia Pacific, explores some of the emerging trends changing the way retailers are connecting with consumers:
- The new virtual shopping reality
Technology is now the most dynamic force in the retail industry, opening up new channels and engaging new audiences while simultaneously feeding new levels of competition. Virtual Reality (VR) may be progressing slowly in the consumer space, but the tipping point of adoption in retail is fast approaching. The 2015 Future of Retail Study from Walker Sands found that around a third of consumers would shop more online if they could interact with products virtually first. VR technology is now allowing shoppers to experience a virtual fashion show, wander around a virtual store and explore a virtual mall with many other innovations to come as retailers experiment with the technology. It’s poised to generate an entirely new sale channel for retailers in the next few years.
- Enhanced customer relationship management (CRM) technology
As the battle for the consumer dollar intensifies, loyalty will become the new currency of commerce – with a little help from technology. Electronic payment methods such as Apple Pay and AliPay are being used in conjunction with increasingly sophisticated location-based services like iBeacon – Apple’s indoor positioning system – to give new levels of insight into buying behaviour. Retailers can now provide shoppers with real-time information based on their user profiles and engagement history.
ShopperTrak recently announced a partnership with Shopkick for a shopping app allowing retailers to interact in real-time with customers while they are shopping. There are already 10 million users on the Shopkick app and more than 8000 shopBeacons deployed in retail stores. Insights help retailers connect with relevant consumers at an exact location and in real-time, which in turn can be refined to maintain loyalty.
- Robots in disguise
While some brands are experimenting with innovations such as drone delivery, regulations are likely to ground most commercial drone ideas in the short-term. Instead we’ll see the continued rise of robots and humanoids in retail situations. Already a feature in many Japanese stores, robot technology is improving at a meteoric rate. And with rising labour costs, it is not hard to imagine a near future when basic retail tasks such as making coffee or manning an experiential store is handled by a humanoid. Nippon Venture Capital recently launched a $42 million fund in Japan by to accelerate and commercialize humanoid technology and neuroscience applications, many of which are being designed for the retail industry.
- Cross-border shopping
Consumers are flocking to digital retail markets that are increasingly country agnostic to hunt out the ideal product and the best deals. Asian consumers already spend more than the global average on cross-border shopping, and this is only likely to increase as a new generation of consumers look to spend their disposable income.
- Brand extensions
Experiential stores such as Google’s new (and so far only) shopping experience in London allow consumers to play with products before buying them, usually online. But this can sometimes have the unintended consequence of revealing the limitations of the brand’s core products. Thus, another way for brands to differentiate themselves is to extend their reach beyond their core offering. Food extensions have become popular recently as retailers seek to diversify and grow. Concepts such as the bar and cafe within Alfred Dunhill shops are a good example of clothing brands moving into the food and beverage space. Expect this trend to gather pace as the battle to maximise dwell time and share of the shopping basket heats up.
Historically, men are highly underserved in the fashion industry – and there is evidence that their buying preferences are evolving. Bain & Company estimates menswear growth has outpaced womenswear for the last six years, growing at between nine and 13 per cent annually – almost double that of womenswear. As brands seek to maintain growth, we will see a re-focusing of the retail industry to target men. Brand partnerships, particularly in athletic and sportswear, will continue to grow and will become a key feature of retail plans in the short to medium-term.
- The rise of the Asian fashion house
European and American dominance in Asian high fashion has been the norm for many years, and the vast majority of luxury brands with strong Asian sales are owned by Western firms. As the retail market continues to develop in Asia, we expect to see the rise of an Asian luxury brand -most probably in the fashion space – which will equal or exceed the popularity of Asian-American fashion icons such as Alexander Wang, Vera Wang and Philip Lim.
With Western designers completely absent from Shanghai’s Fashion Week in 2014, fashion critics focused on emerging Chinese designers, and it’s likely that many of these brands will develop loyal customers beyond China and meet the global fashion industry through the key markets of Hong Kong, Tokyo and Seoul. Asian fashion designers will soon be on par with the likes of fashion houses such as LVMH, Prada and Michael Kors, and will kick-start a new era of Asian retail innovation and leadership.
- The new flagship
Intricately connected to the emergence of the experiential trend is the resurgence in retailers operating flagship stores. Driven by a desire to reconnect with consumers and the need to evolve from a static entity to an engaging experience, the new flagship will re-imagine a retail store. It will be a statement, a brand ambassador. Increasingly these spaces will blur the line between retail and leisure, and become places where shoppers are encouraged to play and stay. This trend is most noticeable in leading markets like New York, Japan, and even Sydney where single-brand luxury and fast fashion retailers are signing larger leases and investing more into the in-store environment.
- 3D Printers
We are at the tipping point of 3D printing and very soon it will become the norm in every aspect of our lives. The first 3D printed building was recently unveiled in China and everything from cars to guns has followed. For shoppers looking for a personalised experience on their own terms, 3D printing offers an almost unlimited array of options. Jewellers are already allowing customers to print their own designs, while everyone from chefs to cycle shops are experimenting with the technology’s application in the retail space. This is genuinely game-changing technology, and one that will certainly come to define retail in the coming years.
This column was originally published on JLL’s Real Views.