The retail landscape continues to change rapidly as the COVID-19 pandemic rages on across the globe. Physical stores are no longer always viable, and retailers face mounting pressure to adapt or close their doors permanently. For instance, household names like the Metro department stores in Singapore and Indonesia, and Jaya Grocer in Malaysia had to reorient themselves and venture online as an additional platform to their brick-and-mortar stores to reach their customers.
The pandemic has resulted in the acceleration of digital retail at blistering speeds. In 2020, the Southeast Asian e-commerce market nearly doubled from USD 38 billion to USD 62 billion; and there are no signs of it slowing down with sales in the region projected to hit USD 172 billion by 2025.
Customers have also moved online, prompting businesses to join them—there have been 40 million new internet users added in the region of Southeast Asia since the pandemic first hit a year and a half ago. This use of digital services seems to be sticking, with 94% of new digital consumers indicating they intend to continue with online services post-pandemic. This online migration has empowered customers by providing them with more accessible choices.
Modern digital consumers are also able to make decisions at a comfortable pace and on their own terms. Given the increasingly competitive landscape, businesses are placing greater emphasis on customer-centricity by offering consumers what they want, at their convenience. As businesses digitalize, they must be mindful of adopting technology in meaningful ways to cater to their customer.
Using data to speed up retail
The blazing speeds of the internet revolution have forced retailers to get up to speed as well. Increasingly, customers are demanding instant results, with lower tolerances for long wait times. In fact, 46% of millennials are willing to pay more for same-day delivery, which highlights their desire for immediacy. To keep customers satisfied and continue creating value for them, businesses must become more efficient and expeditious.
One innovation to ensure retail businesses’ supremacy is “real-time” retail. Gone are the days where businesses just had to be fast. Now, they must be instant—or as close to it as possible. Using real-time information across a multitude of data points allows companies to have an accurate and updated view of current supply and demand. As a result, lead times— for both forecasting and reacting to demand changes—are significantly shortened. To achieve this, businesses can implement digital inventory management solutions to help monitor and track different facets of their value chain in real-time.
A good example of “real-time” retail is Australian grocery store chain Coles, which has digitized and automated its fresh produce ordering system. Through this system, their replenishment of produce is centralized and automated using information such as sales history, weather, and even local community events. This helps Coles to not only ensure that the freshest produce is always available to customers across its supermarkets when they want it, but also reduces food wastage.
Apart from digitalizing their supply chain, “real-time” retail also requires businesses to keep a finger on the pulse of their customers. This can be done through many ways, such as collecting information on a consumer’s preferences, decisions, and lifestyle. Doing so ensures that businesses have sufficient data points to predict demand and meet their customer’s needs and desires.
Online fashion retailer Shein exemplified this, redefining the fashion industry by leveraging big data from its customers and the value chain. It has become the second-largest e-commerce site globally. User data is collected through their consumer platform, which enables them to predict demand and update their factory floors instantly. As a result, they can respond quickly and produce on-demand apparel at lightning speed. Shein’s tight integration of customer data with every part of its value chain allows it to deliver low prices on quality and trendy items.
Leveraging an omni-channel approach
Digital and physical retail are often viewed to be at odds with one another, with e-commerce frequently seen as hemorrhaging business from physical stores. However, this does not have to be the case, as online retail can supplement physical channels instead of disrupting them.
Central Group, one of Thailand’s largest mall operators, launched the Central App, marking their foray into digital and omni-channel retail. With the app, customers can directly access an extensive catalog of lifestyle products, shop, and make payments online. They can also check for promotions or make reservations online prior to their visits with ease. This encourages customers to plan their next trip to the mall.
Other retail businesses have expressed a similar desire to not only reach customers via more channels, but also combine both online and offline worlds. Retailers recognize that physical stores can be viable under certain conditions in this day and age as customers prefer to experience some products in person. This has resulted in a resurging interest in physical stores but with a digital twist.
Social Bella, Indonesia’s leading beauty-tech startup, recognizes this. Despite being only an e-commerce platform previously, they decided to launch ten physical stores with omni-channel capabilities in strategic locations last year. Using Social Bella’s SOCO mobile app, customers who visit their physical stores can scan the product barcodes to read product reviews. They can also first select products online, and then try them in-store before purchasing them.
To quote Social Bella’s co-founder and CMO Chrisanti Indiana on the move to open physical stores, “We started out as an e-commerce platform with Sociolla, but we are aware that offline shopping experience is essential in purchasing beauty products. Customers want to be able to touch and try on the products directly.”
Another way to have an omni-channel approach is to supplement physical retail stores with digital solutions, enabling customers to have an experience that cannot be replicated online. For instance, Singapore fashion retailer Love Bonito uses its physical stores as both a showroom and a dressing room for consumers, which incentivizes them to increase their spending both offline and online. Retailers that creatively combine tech with new channels will be able to create the best value and experience for customers.
Social commerce—a new rising star
A crucial part of retail is engaging customers and helping them discover the retailers’ products or services. As more businesses go digital, reaching potential customers online has become a new challenge—one that social commerce is uniquely poised to overcome.
Social media is a powerful force when it comes to shaping markets. Evidence of this can be found simply by browsing the internet—customers shape trends through reviews and personal recommendations on social media channels. Businesses have responded to this phenomenon by utilizing social commerce—employing digital influencers and social network communities to drive e-commerce sales. This has proven successful in boosting traffic, with influencer marketing content delivering 11 times higher ROI than traditional forms of digital marketing.
Understanding this potential, companies like beauty retailer Raena are racing to utilize social commerce in spectacular ways. Previously a startup seeking to help influencers launch their e-commerce brands, Raena pivoted in 2020 to provide a platform where influencers can sign up to become social sellers for curated beauty products. By bulk-ordering and stocking selected cosmetic products, Raena allows influencers to purchase products from them at cheaper rates and drop-ship to customers at a higher profit margin. By adapting and leveraging on social commerce in creative ways, Raena saw a revenue growth of 50 times during the pandemic, proving the impact that social commerce can have on businesses.
While influencer marketing has proven effective, the stage is shifting with a new segment of influencers coming to the fore—Key Opinion Consumers (KOCs) who livestream themselves endorsing and interacting with various products. This style of social commerce provides an even more personal and immersive experience, as audiences readily interact with KOCs in real-time. Countries like China and Korea are leading this trend, with Southeast Asia quickly catching up. In 2020, “live-selling” accounted for 39% of all engagements happening via e-commerce.
Every day there are people who become “live-selling” celebrities overnight. Individuals like Ngoc Ha, a teacher-turned-livestream seller in Vietnam, went viral selling leather shoes sourced from local villages. Similarly, Max Kee uses livestreaming sites like Facebook marketplace to sell seafood for Lian Huat Seafood in Singapore. Larger companies are also recognizing the benefit of this new trend, with e-commerce giant Lazada launching LazLive, an in-app feature that allows sellers to “live-sell”.
“Live-selling” is proving to be another effective way to promote brand awareness and attract customers by making it more interactive and injecting elements of trust and authenticity. As retailers digitalize, they should also keep an eye out for how customers want to be engaged. Businesses must be willing to quickly adapt and experiment with a growing array of social technologies to maximize their reach.
Keeping sight of retail’s north star: the customer
As retailers shift online, technology itself can be a double-edged sword. With the number of cybersecurity breaches edging up, retailers need to pay more attention to data privacy and risk management. After all, part of serving customers better is to serve them securely.
Retailers forging into this space must not forget to orientate themselves to find true north—the customer—and orchestrate data, experience, and technology to deliver on the customer promise.
About the authors: This piece is co-authored by Richard Mackender, Tan Shuo Yan, Jerome Teo, and Lim Shu Jun.
Richard Mackender leads the Deloitte Southeast Asia Innovation team, a cross-function, cross-country unit dedicated to driving innovation as a long-term value creator across Deloitte’s Southeast Asia operations. This article was co-written with Tan Shuo Yan, Jerome Teo, and Lim Shu Jun, who are members of the team.