A New Dawn for Retailers in Asia Pacific

COVID-19 sent shockwaves across businesses and the economic order, crippling brick and mortar retail experiences and rocking supply chains the world over.

Prior to the global pandemic, 53% of purchases in Asia Pacific continued to be in-store.

As various levels of lockdown were implemented, retail businesses across Asia Pacific had to scramble and consumers were forced to change their purchasing behaviour.

Although Asia is the fastest-growing region in the global e-commerce marketplace, accounting for the largest share of the world’s business-to-consumer e-commerce market, small retailers and traditional mom-and-pop shops were hard hit because they did not have an online presence, nor were they plugged in to any established delivery network. Even industry giants and stalwarts were struggling as they identified process lapses and legacy infrastructure that simply could not adapt, at speed, to the drastic shift in consumer purchasing behaviour.

On the consumer front, the number one barrier to online shopping was high-shipping fees, followed by concerns over the ability to return items, lack of payment options and security. However, as entire countries shut their stores, and fear of infection increased, consumers were faced with little choice but to move their shopping, even for basic daily necessities, online.

Given the volatile impact unleashed by the pandemic, it is clear that the industry as a whole needs to gear up for a period of uncertainty and change, but as the “new normal” emerges, we will see the industry pushing to align itself with Business 4.0 TM principles: leveraging ecosystems, personalizing at scale, embracing risk, and creating exponential value, in order to pivot their business towards growth, transformation, and sustainability. Enterprises that are purpose-driven, resilient, and adaptable will come of this slump stronger and ready to take on the unprecedented era ahead of us.

Mass Hyper-Personalization
The marketplace of the new normal is an equal playing field devoid of face-to-face service that was often associated with the brick and mortar retail environment. Retailers are having to respond to queries where nuance and context, usually delivered through speech, are missing. Where once, interpersonal service, interior design and physical location dictated consumer perceptions of brand, quality and price, consumers are now faced with templated webpages featuring an array of products from different retailers that look identical and claim to do the exact same thing, but now with the option to sort by price.

Even before the global pandemic shut down shopping malls and boutiques, personalization was a unique selling point (USP). However, delivering personalized experiences is no longer a competitive differentiator. Incorporating personal and transactional information into communications—name, purchase history, birthday, etc.—is a good practice, but not engaging enough to inspire action.

The demand from consumers, seeking differentiators in the sea of sameness, is for mass hyper-personalization.

1. Personalized to the individual: The retailer must interact with an audience of one, with a rich understanding of the consumer, including information such as: profile, preferences and affinities, sentiments, shopping history, rewards membership status, etc. Furthermore, the interactions should be delivered via the right combination of a customer’s preferred channels (whether that is by phone, email, text, mail, website, mobile app or in-person).

2. Contextual to the situation: Retailers need to tailor offers and actions using a contextual understanding of what the consumer is trying to do (their overall goal) and where they currently are on their physical/digital journey. The retailer should understand whether the consumer is still researching products or is ready to buy. It should understand the brand interactions to date, and the next actions that are most likely to favourably influence shopper experience and behaviour. A hyper-personalized experience usually includes integrated digital/physical interactions.

3. Timely: To catch the customer in the act of deciding, retailers need the capability to surface timely recommendations for interactions and offers and deliver them when they matter most. However, hyper-personalization does not necessarily require that retailers provide customers with real-time offers (triggered by data in milliseconds to as long as five minutes). In retail marketing, the most important part of timing is that the response to an input happens at the most opportune time given the consumer’s situation. That could be in seconds, minutes, days or even weeks.

Exponential Value
It seems almost laughable that just a few months ago, we were discussing the “age of new consumerism”—an era driven by experience and transformed by technology, where consumers were constantly reassessing their priorities and increasingly gravitating toward the propositions of “experience” and “value”.

Whilst the WHAT has not changed, COVID-19 has brought about new definitions of HOW experience as a value is delivered and perceived.

With the advent of e-commerce, retailers the world over are already striving to be “future-ready”, but they are having to grapple with fundamental issues:

• 80% of shelf resets result in zero or negative category performance.
• Approximately 70% of items do not break-even on promotion.
• Over 50% key value items are overpriced as compared to the competition.

The NEW new age of consumerism demands new thinking, behaviours, and capabilities to design, deliver, and thrive. Solving these tough business challenges requires a tectonic shift in the way retailers do business. Retailers can unlock exponential value by using the combinatorial power of new age solutions to create automated, intelligent, and autonomous enterprises. The most celebrated examples of artificial intelligence (AI) and machine learning applications in retail have been in areas such as personalization, marketing, and online search and commerce. However, companies can achieve much bigger gains by applying algorithmic retail to areas such as design and sourcing, supply chain, logistics, supplier management, buying, merchandising, and store operations.

The focus must be on being brilliant at the basics, delivering a personalized and fulfilling experience to customers, and creating sustained exponential business value using technology.

Leveraging Ecosystems
If there is anything good that has come out of the COVID-19 pandemic it is that ecosystems have grown out of nowhere, supporting once overlooked and underserved communities, whether retailers or consumers.

In the specific case of Singapore’s food supply chain, the high cost of delivery was the key reason that consumers preferred to shop in-store. This same high cost of delivery was also a reason that hawkers and small mom and pop shops were unable to list their wares on delivery apps and were left in the lurch when Singapore implemented circuit breaker measures.

However, due to pure necessity, informal delivery networks, staffed by individuals whose jobs were affected by the pandemic lockdowns, popped up to support hawkers and small retailer who previously had no means to list on delivery apps. For these hawkers, the barriers to listing on delivery apps went beyond just monetary and included language, digital literacy and access to technology.

This also brings to the forefront that urgent need for governments to ensure that no citizen is left out, by expanding and enhancing digital access and promoting digital inclusion by design. Because there is no doubt that the post COVID-19 world is a digital world.

Embracing Risk
Risk has always been something to be mitigated or avoided by business. In order to succeed post COVID-19, companies are expected to continually adapt to new trends and more importantly, deliver innovation, with consistency.

To do this, they will need to evaluate how they approach risk. This is not the time to be taking reckless decisions or encouraging short-termism, it is about reducing the cost of failure whilst continuing to drive innovation.

For retailers, the biggest risk they should be taking right now is a calculated investment in infrastructure that sets them up for digital readiness. Whether that investment comes in the form of developing their online presence to generate a new revenue stream (Or perhaps create the only one able to perform during pandemic lockdowns), or creating a system of hybrid shopping environment, where consumers can seamlessly perform their actions across both online and in-store, at their convenience. Click and collect, and in-store returns of online purchases, are examples of such processes that involve investing in integrating order management, parcel tracking and contact-center systems.

At the end of the day, putting your consumer at the heart of the investment mitigates the risk because it immediately removes any “recklessness”. Although in times of crisis, it is hard for retailers to do anything other than react to the situation as quickly as possible, these times also provide retailers the opportunity to study their markets, identify loopholes and lapses, and arm their businesses with the infrastructure and processes that allow them to instantly react to market changes.

Purpose Driven, Resilient, and Adaptable
Retailers across Asia Pacific have had to move quickly to continue serving their customers, whilst ensuring their employees don’t lose their jobs and their communities are safe, all the whilst reacting to local, regional and global situations that impact their ability to even remain open. Tactics like curbside pickups for delivering essentials to building virtual platforms, retailers have had to look at innovative and practical ways to build their capabilities to serve customers.

A strong driver of how companies adapt themselves to disruptions is the way they look at their purpose. This involves shifting from the regular to a new level of consciousness.

Companies that show compassion and emphasize building strong communities are in the spotlight right now. Organizing the business around purpose is a very strong driver of business transformation involving business models, operations, and execution of processes and technologies. Whilst nature’s vicissitudes have urged businesses to reach a higher moral ground, the most successful will be those who have leveraged technology to deliver on purpose. As companies bounce back, businesses that uphold clear values and back moral statements with practical action will stand out.

Businesses that adapt to unprecedented disruptions with a purpose-driven approach transform into resilient organizations that can sustain periods of economic uncertainty.

Holistic revival and sustenance necessitate actions across the entire value chain. For example, addressing the issue of inadequate availability of stock requires retailers to have a view of the total inventory a vendor can supply in the shortest possible time; this will allow the retailer to onboard new vendors or identify substitute products that can fulfil the demand. Similarly, if there is a drastic negative impact on demand, retailers should be able to quickly deal with fast movers, seasonal products, allocations and open purchase orders, and in-transit products. By infusing resilience, retailers can prove to be the most valuable to their customers, a caring employer for their associates, and a great enterprise for the larger communities that they serve.

Adaptability is being able to think ahead and build capabilities to respond to future exigencies. Lack of imagination and foresight is one of the major deterrents for adaptability. Whilst disruptions, like the global pandemic, have no precedence, the larger issue is the failure to take action even when there was sufficient reason to act.

In the post COVID-19 world, agility, scalability, and automation will be the watchwords. Going forward, designing businesses around the cloud; building micro-supply chains; taking a platform view and leveraging ecosystems; and repurposing assets through an adaptive core will be at the heart of a resilient and adaptable organization.

In order to emerge as leaders post COVID-19, retailers will need to re-visit, re-evaluate, and re-imagine their business strategy. It will be all about innovation, speed, and refresh.

Retailers must apply their learnings from COVID-19, discard past practices that weigh them down, and forge ahead. A long-term strategy to lead in the post COVID-19 world requires focused effort across the retail value chain from product strategy to supply chain re-alignment; transformation of facilities, partner ecosystem, and resources involved in the value chain orchestration with a view of scalability, reliability, and flexibility; and re-design of stores and customer propositions.