Asian retailers should consider investing in omnichannel experiences to stay relevant

Retailers gearing up for 2020 may have been urged to double down on technology to deliver the elusive optimal customer experience that hits all the right notes across the virtual and physical worlds of commerce. However, even as the expectations of the next generation consumers are at an all-time high thanks to unrelenting tech evangelism, retailers from Singapore to Hong Kong remain divided on differentiating trends from fad and investing in the latest retail tech obsession du jour.

Our latest Asia Digital Transformation Report has found that when it comes to “flashy developments” such as in-store robots, drone deliveries and virtual reality, retailers are yet to be convinced. Instead, respondents saw a safer bet in scan-and-go technology (50%), same-day delivery (38%) and in-store shoppable screens (33%). For example, one of Singapore’s leading fashion retailers has taken on the latter, providing in-store availability information and plenty of interactive features that encourage customers to try out the Augmented Reality (AR) Walkway and selfie-centred areas around the store.

The majority of Asia’s retailers also plan to change up their priorities, from focussing on data analytics as an investment priority to increasing investment in technology to deliver omnichannel experiences. More than half (53%) said they will invest in e-commerce platforms such as point-of-sale (POS) systems and mobile app and mobile POS in the next year. This is no surprise in Hong Kong, where the e-commerce penetration rate is expected to hit 73% in just two years’ time.

Mobile apps are especially hot in Singapore, a market top of the class for using apps for almost every aspect of day-to-day life, including shopping. For example, at another one of Singapore’s most popular retail outlets, shoppers have the option to book a fitting room within a 1km radius of the shop so they can continue browsing whilst waiting for their turn.

Business expectations have changed as well, driving demand for a single settlement statement across all channels, simple integrations between payment activity and financial reporting, and a common, holistic view of customer behaviour across channels worldwide. There is enough evidence to prove that in addition to increased spending, omnichannel shoppers were also more loyal. However, achieving omnichannel retail is the biggest challenge for retailers in Asia.

Asia’s massive potential
Asia remains the largest region for online retail sales globally. It’s hardly surprising that China, a market that has reached the forefront of financial technology globally, has become the first market to reach US$1t in online retail sales in 2018 and continues to be the largest market, accounting for 82% of Asia Pacific online retail sales. This figure is further expected to double and reach US$2t by 2023 .

The local authorities also have a prominent role to play in supporting and fuelling the retail sector. For instance, the Singapore government recognised the need to help local retailers to evolve and stay relevant and laid out a comprehensive plan or a roadmap for the retail sector. In Hong Kong, banks and mobile payment systems have also played a part in removing friction from the customer retail experience. For example, HSBC has expanded its PayMe system for businesses, allowing Hong Kong retailers to receive payments from a customer’s e-wallet app.

The Retail Industry Transformation Map aims to create a vibrant retail industry by 2020 that comprises a mix of highly productive omni-channel retailers, local brand owners with global footprints supported by a professionally skilled workforce. In this case, the government’s support is critical as the vitality of Singapore’s retail sector will have an impact on economic growth, domestic consumer spending and tourism receipts, sustaining 3% of the country’s workforce and contributing to 1.4% of Gross Domestic Product (GDP) .

Government support is crucial as the majority of retailers are reportedly still chasing the curve when it comes to the transformational technology of artificial intelligence (AI). Only 15% of retailers surveyed for the Asia Digital Transformation Report have deployed AI, compared with 28% of the global respondents surveyed by Capgemini in another report.

AI holds the promise of delivering hyper-personalised offerings to shoppers in real time, by understanding on a very deep level what each consumer’s contextual personal preferences are and anticipating what they want before they know it themselves. Early adopters in Asia are using AI in more established territories for marketing (65%) and online operations (60%) and less so in stores (35%).

Many also cite integration with legacy systems as the key deployment challenge by a huge margin. And even if retailers match the enthusiasm of innovators to adopt new technologies, the reality is that most retailers face significant barriers to entry to keep up with the Amazons and Googles of the world. Whilst many retailers may buy into the idea of building an omnichannel approach, not all of them may have the required resources or capabilities to implement the solution. Take the launch of Amazon Go for example. It was introduced in 2016 and has been hailed as the catalyst for the unmanned store movement. However, to date, not many other retailers have had the expertise or budget to replicate this technology.

Overcoming the roadblocks
Retailers could alternatively consider partnering with technology companies on their digital transformation journeys. This would allow them to gain access to external expertise and new technologies, in order to respond more quickly to market challenges, which is crucial in today’s fast-moving marketplace.

The traditional relationship between retailers and technology suppliers has evolved into a much more strategic partnership in recent years and has proven to be mutually beneficial in many instances. Whether it is a large fashion giant like Uniqlo working with Google to speed up their supply chain, or a local retailer investing in mobile tills, retailers in Asia are also increasingly partnering with technology companies to drive new, innovative customer experiences. This trend is set to continue into the next decade.

Ultimately, as digital transformation becomes an inevitable path to survival, it remains interesting to see if retailers would merely jump on the bandwagon to keep up with their peers or retain a ‘wait and see’ mindset to avoid the pitfalls that a competitor may have experienced in early adoption. As to whether the new-fangled retail technologies can serve as the gamechanger in a competitive landscape, the proof is the pudding.