Asian retailers digitalise amidst industry hype

Coming up with a solution to a problem you don’t understand will lead to failure.

The fear of missing out is driving many retailers in the Asia-Pacific region to adopt digital technologies without fully understanding their business needs, leading to ineffective transformation efforts.

A key barrier to digital success is the rush to implement trendy tech in response to industry hype, Siddharth Pathak, a senior partner and head of Consumer Industries and Retail for Asia-Pacific at Kearney, told the Retail Asia Summit 2024 in Singapore.

“We had clients come to us saying, ‘We need to do something with generative AI (artificial intelligence) because our board is asking,’” Pathak said. “And that starts a very wrong journey, because now you're trying to solve something… but you don't know what problem you're solving.”

He added that this results in digital initiatives that are more about public perception than tangible outcomes.

Pathak cited a gap between the digital ambitions touted by the industry and the reality on the ground.

“When you go to physical stores across Southeast Asia and Asia-Pacific, when you meet senior executives, when you start working in these companies, either in the company or as advisors, you start noticing that the adoption is much, much less than what the potential is,” he said.

Another challenge is when businesses focus on the excitement of launching new technologies but fail to follow through with critical execution, Pathak said.

“When clients or companies have decided that they want to do something, great documents are made, consumer surveys are done, and great presentations are made,” he pointed out. “After that, when the fancy part of the discussion is done, then it goes into, ‘Let’s get it done now.’ And that’s where there’s a huge gap between the thinking and the execution.”

“That’s when it’s often given to IT. That’s when the budgets are significantly squeezed,” he added.

Pathak also cited IT-led siloed implementations as a major roadblock, saying digital transformation requires that all business units work together.

“If this truly is a business problem, this should be led – like it is in technology companies – by product owners,” he said. “Product owners or product groups are groups of individuals sitting in business, sitting in a commercial or supply chain, sitting in finance, sitting in HR, sitting in IT, sitting in digital, that come together to deliver a certain product.”

Pathak said a digital program does not end at the time it goes live. “It ends at the point of time of change management having completed metrics, [of the metrics] having been hit, and if it hasn’t been done, please redo it.”

Moreover, the lack of clear data and business cases hampers digital efforts. “We see a lot of times, problems, situations are being designed with hypothetical data in mind,” he pointed out. 

Businesses should also be ready to experiment in digital investments, Pathak said.

“I'm a big believer that digital enablement is what this industry needs, be it brick and mortar stores, be it distributors, wholesaler retailers, grocery stores, or modern stores,” he said. “We have worked with all of them, and we've seen the power of what it can bring when done right.”