How the lockdown transformed consumers in the digital era

Speakers at the Retail Asia Summit discussed their forecasts for the retail industry in the next two to five years.

As a result of the accelerated digital transformation due to the global health crisis, the next two years for retail will be about the “complimentary meshing of digital and non-digital options,” Matthew Crabbe, director of Trends for Asia-Pacific at Mintel said at the Retail Asia Summit.

In the following five years, customers are expected to look at a “more purposeful kind of joy” and seek balance in their lives both physically and virtually. This will lead to a “greater appreciation” of spending time with people and brands both online and offline.

Citing data from Mintel reports in 2021, Crabbe said that 71% of Malaysian consumers agreed that most of their leisure activities involve using digital technology, whilst 48% of Indian consumers strongly agreed that they seek fun in all aspects of life.

Consumers want to be “in control” by demanding better access to information from retailers to prove their products or services’ value, especially at a time of inflation. Some customers may want more do-it-yourself products, whilst others would like to make their own menu.

Other consumers are preparing for the worst by relying on technology to measure risks and their own health using trackers or applications and seek solutions.

“There's this idea of consumers using their own information to get something tangible back. It's about this transactional use of data; I give you data, and you give me something that I need in return,” Crabbe said. 

“People are starting to use tech to get better value. They're not only creating new avenues of income for themselves but also creating personalised solutions for their needs,” he added.

Around four in five Malaysian consumers who own a smartphone have used price comparison websites or applications, whilst three in five Thai consumers said that if they had an extra THB1m, they would prioritise using it to start their own business. 

At least one in two Vietnamese consumers said they have tried or would be interested to try personalised food or drink according to their needs, Crabbe said.

Consumers are seeking “flexible spaces” both in and out of their homes. He said that brands can help consumers to maximise their compact spaces at home and other places for people who are travelling.

He noted that there is an “unknown space” such as the metaverse, another opportunity retailers can consider to connect with consumers. 

“The real trick for the future will be for retailers to create really meaningful spaces in which people can feel they can obtain tangible advancement, fulfilment, and joy,” he said.

Rajesh Kumar, CEO Overseas at Ferns N Petals, said omnichannel presence is important as some customers go to physical retail outlets for product identification and selection, but purchase online.

Customers are becoming “more vocal for local,” he said, noting that this is mostly seen in China and India as the governments pushed for local brands.

“The learning and probably action item for the global brands will be to present themselves as a local brand in all the countries wherever they operate,” he said, adding that having vernacular language support is also vital.

Data-driven operations

In attracting customers, hinging on data is going to be an enormous trend that will fuel growth for many businesses to respond more effectively to consumer demands in a “more real-time manner,” said David Llamas, the chief digital officer at Central Retail Corporation.

“If we don’t know our customers, we cannot give them what they need or what they want he said, noting that some of the data they have collected include the customer’s preferred brand, and their delivery address, amongst others, but its use are within the perimeters of data protection laws,” David Lim, senior vice president of Marketing at HappyFresh said.

Leonard Jayamohan, director at Deloitte Consulting Southeast Asia, urged businesses to keep an eye on data privacy laws that are coming up in Southeast Asia as some markets are still in the process of crafting one.

Businesses should also look for technologies that can help in the tokenisation of data, he said. 

Data can help in finding specific products online, a key challenge that was observed during the pandemic, said Fairmart CEO Jan Gasparic. This has been the case for over four million retailers in Southeast Asia.

“They were losing over $4.5b a year in sales to their online competitors, simply because their inventory was not searchable online,” he said, adding that in Singapore, 95% of the transactions are still happening in physical stores despite the prevalence of e-commerce.

To help physical stores, Gasparic said they offer solutions to digitise their products so their products appear on online searches and they capture local consumers.

Fairmart installs a device in-store to connect a barcode scanner for products to provide them with a picture of the available items and then generate product listings containing all other items that are in the inventory.

“The goal is not necessarily for the retailer to sell online, the goal is for them to display their products online and get them into the stores. You can think of this as a modern digital equivalent of window shopping,” he said, noting that if customers do not see local options, they would just opt to buy online.

Gasparic added that they have seen a conversion rate that is six times higher in the last six to 12 months.

Meanwhile, Kumar said that customers have started comparing products and services, wherein they look at product assortment, pricing, and serviceability, and go for the brand that offers those three qualities the best, leading to loyalty slightly going down. To track these consumer behaviours, they rely on various tools such as Google.

But for Ferns N Petals, going with the “app first approach,” focused on developing their website will be their strategy. They have also launched an app via Apple and Android.

Kumar also said that they plan to understand user behaviour by segmenting data and “targetting them as their needs and demands.”

“That will further help us associate more with the customers and then get them back on their website. Priority on data analytics and then app first approach is going to be the focus for this year,” he said.

Going for secondhand

Whilst there was a boom in e-commerce in the region, there was also an increase in overconsumption and waste. This is what the e-commerce platform for secondhand items, Carousell, tries to address, said Penny Cox, head of Recommerce. 

“Previously in the region, buying secondhand was seen as something kind of undesirable and meant you couldn't afford brand new items. Now, we're really seeing the shift towards secondhand. Secondhand finds are actually becoming something to brag about on social media,” Cox said.

In its sustainability report, Carousell found that 72% of its users across its eight markets have made secondhand purchases before, of which three in 10 make secondhand purchases whenever possible.

The younger generations are also more passionate about reducing waste and consuming sustainably, which can be supported by buying unused or under-used products like secondhand goods that are still in good condition.

She cited a Caroussell report that stated a vast majority of millennials in Southeast Asia and Hong Kong felt that purchasing pre-owned items is more sustainable and 50% felt strongly about it.

Aside from this, consumers are choosing secondhand because of value for money.

Cox, however, said some do not choose secondhand because it is not trusted as e-commerce, and it is much harder to shop for secondhand items, making it less convenient.

To address these, she said they are trying to build solutions that will allow them to buy and have their orders shipped within the application, “as quick and secure” as shopping on e-commerce platforms. They have launched authentication services for luxury items to ensure product quality and that they are not ripped off.

To keep customers’ money safe, the platform offers a warranty for electronics. It also offers returns or at least has dispute resolution policies to sort out problems. Carousell also launched the InstantBuy feature where items can be delivered by just clicking the check-out option, removing the need to chat to buy an item.

“Our priority remains to create this lifestyle where secondhand is the first choice because it's as easy as firsthand,” Cox said.

Logistics side

With the rise of omnichannel strategies and brands purchasing from other markets, Martin Tan, head of operations at J&T Express Singapore, said that online businesses can improve the delivery of their products by ensuring convenience and traceability.

Convenience can influence purchases and this could be handled by providing more delivery options to customers.

“Service points and parcel lockers provide efficiency and convenience for both businesses and consumers,” he said.

As consumers want visibility in the delivery of their parcels, businesses could provide them with real-time tracking, as well as delivery notifications to manage customer expectations. 

As cross-border e-commerce is the next frontier with more customers now shopping globally, e-commerce sellers can leverage the network of international logistics companies, which have established robust cross-border shipping capabilities and trustworthy shipping lanes. 

J&T Express Singapore has been advancing their offerings and providing international shipping to over 220 countries and regions for its customers to sell beyond Singapore. “We will allow the cross-border e-commerce to be more efficient and seamless,” Alice Yeung, head of sales at J&T Express Singapore said, adding that international transactions entail more complex processes.