There’s been a seismic shift in retail industry since e-commerce took off and smartphones became digital malls where shoppers can pop in anytime from the palm of their hand.
But despite its growing popularity, e-commerce is set to make up just 6 percent of total retail sales in Southeast Asia by 2025, leaving plenty of room for physical retail to flourish in the region.
Yet it’s not a case of business as usual. As consumers’ habits continue to change with the proliferation of smartphones, brick-and-mortar stores must cater for new lifestyle needs and expectations. This is the uncharted and challenging backdrop of the retail landscape for mall operators and retailers alike. It’s also one that provides plenty of fresh opportunities to rethink and reinvent traditional business models, and more broadly, the whole retail game.
A new style of shopping
How do consumers shop these days? Some may browse in-store before doing their own research for reviews and prices online. They may save the item in a virtual basket and then head back to the store to see it or try it. The key is they want to experience the brand and the product before making an informed decision to buy, whether in-store or online.
Most consumers make similar journeys towards their final purchase. Retailers and mall operators are well aware of this; it’s why they’re embracing omnichannel to engage consumers at various touchpoints of their journey. They know that integrating online and offline shopping into their business model will be key in achieving long term retail success.
Indeed, online and offline shopping serve different needs. While online has brought unprecedented convenience, humans also are social creatures who seek interaction with others. Stores continue to play an important role in letting shoppers mingle as they touch and try out new items from clothing to electronics. Online businesses recognise this, too. Driven by the intense e-commerce competition, many have crossed over and set up physical stores to enhance their customer engagement and reach out to new customers.
This is why e-commerce giant Alibaba has been opening its chain of supermarkets, Hema, and a new furniture store Home Times as part of its New Retail strategy. Furthermore, it is building a mall specifically for retailers in Hangzhou called “More Mall” offering products from its Taobao platform while its new Shanghai headquarters, Alibaba Shanghai Center, will boast four storeys of shops.
Other retailers who started life online are also building their physical presence. Take women’s fashion brand Style Nanda for instance. It was South Korea’s most successful online retailer and its first flagship store in Seoul’s trendy area of Hongdae is extremely popular with both locals and tourists.
Getting involved in the digital world
It works the other way too – traditional retailers have realised the importance of having an online presence with malls and department stores getting creative online to provide a seamless shopping experience. Singapore’s largest network of shopping malls, CapitaLand is launching a “shop-in-shop”, aggregating the offerings of the retailers in its Singapore malls on online platform Lazada. To enhance the online to offline experience, shoppers who use the Lazada platform have the option to collect and return their purchases at special set-up counters the malls.
Mall operators must also ensure their physical space continues to evolve, and experiential retail is essential nowadays to keep shoppers coming back for more. Unilever, for example, has set a virtual kitchen in one of Singapore’s newest mall, SingPost Centre for consumers to try out new products using virtual reality. In addition, shoppers can use an app to quickly track down the items they’d like to buy from the supermarket located in the same mall.
Such initiatives highlight how the online and offline worlds need to converge to push the evolution of the retail experience to the benefit of shoppers, retailers and mall owners.
Retail is not simply about buying a product anymore. It’s now an omnichannel experience with multiple touchpoints to build long-lasting relationships between those providing the retail experience and the consumers experiencing it.
Jason Leow is the Chief Executive Officer of CapitaLand Mall Asia