Retailers need more than personalised service to make the cut

Consumers are becoming less tolerant of generic and inauthentic customised experience.

Artificial intelligence (AI)-driven personalisation will be a key focus of Asia-Pacific brands in 2025, but retailers should contend with rising consumer demand for authenticity and relevance, an analyst said.

"In 2025, AI personalisation is changing what understanding people will look like,” Andrea Ng, a Singapore-based Asia-Pacific insight director at Canvas8, told Retail Asia. “Sophisticated AI means that personalisation isn’t just about tailored recommendations anymore."

Consumers particularly in Hong Kong are becoming less tolerant of generic, inauthentic personalised customer experience, she said. Nine of 10 Hong Kongers said they would quit a brand that fails in this regard, she pointed out.

For brands, the challenge will be to create a dynamic, responsive, and human-like customer experience.

Consumer agencies will also play a key role this year. “Agencies will become the focal point of customer engagement and tech innovation,” Ng said. As consumers seek greater control over their interactions with brands, companies will need to offer a seamless experience that allows personalisation and greater decision-making power.

In the Philippines, for example, platforms like GCash are changing the banking sector by offering accessible and customisable financial services, Ng said.

Another major trend brands should embrace is the shift from hyper-convenience to speed, efficiency, and simplicity. “It is useless if it's not efficient, and speed alone won't be enough," she said. “People will reject experiences that feel complicated, even if they're speedy. So it's all about how brands can make their lives easier, quicker, but also simpler.”

Ng said “hyper-personal liberties” would become increasingly important in shaping choices and consumption. “People are refusing the status quo for the sake of personalised lives.”

She added that consumers, especially Gen Z, would continue to prioritise flexibility in their work and personal lives, which will affect their purchasing decisions and expectations from brands.

Financial pressures, including the rising cost of living, will continue to shape consumer behaviour.

“Instead of panicking about the financial pressures, people are actively adapting to new money realities,” Ng said. “So it’s all about financial pragmatism and adaptability. Help their money work smarter, not harder.”

Retail strategies

In Singapore, more than 90% of people aged 21 to 39 reported having been affected by rising prices, prompting many to embrace more minimalist lifestyles and focus on financial resilience.

Technology would also continue to play a key role in consumer behaviour, Ng said. “This region, in some ways, has always been quite ahead of the game, [and is] at least open to developing the industry.”

Seven of 10 employees in the region use generative AI at least once a week, showing that consumers are increasingly relying on AI to optimise their lives, Ng said, citing a study.

Retailers will also face trust issues. “With AI, with scams on the rise, with deepfakes, people are wary and seek trustworthiness and assurance from brands.”

A report by Twillo in October 2024 found that 56% of consumers in the Asia-Pacific region would avoid buying from brands they do not trust.

Brands should also address the tension between consumers' values and practical constraints. “People want to uphold idealistic values, but realistic pressures make it really challenging to do so,” Ng said. Consumers may want to support sustainability but face financial barriers, she pointed out.

The retail landscape is also expected to evolve, with online and offline experiences blending more seamlessly. “Innovations in technology like AI and virtual reality — these will bring a lot more sensory textures of real life into the digital realm as well.” 

In India, the retail industry is projected to reach $2t by 2032, but the rise of ghost malls shows that physical stores should adapt, Ng pointed out.

"AI will play a very important role in bringing some of these strategies to life," she said, as brands integrate AI to create a seamless omnichannel experience.

About six of 10 consumers want AI to play a bigger role in their shopping experiences, while 52% want more personalised products, according to IBM.

One example is IKEA’s use of AI to blend physical and digital shopping, though it is not yet available in Asia. In China, 52% of merchants use generative AI tools.

“The move to incorporate AI into retail strategy should not feel rushed like it is a technologized rat race,” Ng said. “It should be a very careful and mindful adaptation.”

Moreover, social media would continue to be a powerful force in shaping purchasing decisions in 2025, she said. AI-powered virtual influencer campaigns would continue growing in Asia and shape how brands connect with their audience, she added.

Ng noted that Chinese companies are heavily investing in virtual influencers. In Japan, IKEA worked with a virtual influencer to bring the concept of “happiness at home” to life in-store, showing how digital personalities are influencing consumer behaviour.

Amidst economic uncertainties, consumers would likely balance caution and indulgence, Ng said. “Despite a lot of the unpredictability with the layoffs and financial uncertainties, it doesn’t mean that people are letting go of life’s pleasures.”

In South Korea, gamified shopping platforms help consumers maximise the emotional and monetary value of their purchases. Naver’s shopping app, one of the most popular e-commerce platforms in South Korea, offers features that incentivise spending using game mechanics.