The last two years have reshaped shopping behaviors. Consumers in Asia are now leapfrogging into a new mix of channels and seek simplified shopping experiences based on trust and transparency.
Furthermore, due to a complex fabric of business priorities and challenges, Asian retailers are all at different stages of digital maturity. Thus, further complicating consumer and brand relations.. According to a Google Cloud commissioned digital maturity assessment covering retailers across markets and segments, the ‘digital pulse’ of retailers in Asia is still relatively low, with 73 percent in early stages of maturity.
However, shifts in consumer behavior and changing market dynamics, coupled with retailers being in the early stages of digital maturity, make Asia’s retail ecosystem fertile ground for innovation.
Innovate to Stay Ahead
The current market situation has triggered an acceleration amongst retailers to innovate. Beyond just survival, the main driver for this is the ability to deliver a better customer experience to drive growth and revenue. In addition, there has been an industry-wide shift toward technology.
The Retail Digital Pulse study used case studies from various markets and segments to conduct an investigation and identify retailers’ ‘key innovation hotspots’, as well as areas of investment. The study found that the top three focus areas for retailers in Asia are centered around customer retention, store and warehouse operations, and omni-channel commerce. However, the study also identified that there was a shift in focus areas depending on a retailer’s digital maturity. Typically, retailers at an early stage of their digital journey are focused on creating new channels for revenue growth, improving processes for time and cost optimization, and customer acquisition. However, as digital adoption matures, the focus of innovation shifts to customer retention and optimization of store and warehouse operations. Digitally resilient and mature retailers, on the other hand, are focused on improving omni-channel commerce capabilities, as well as merchandising and assortment optimisation, to differentiate themselves from the competition and offer personalized experiences for their customers.
We are also seeing differences in priorities between markets and segments. For example, customer acquisition and new payment solutions are amongst the top innovation areas in developed markets like Australia, Hong Kong, and South Korea. The convenience and drugstore retail segments are prioritizing merchandising and assortment planning, while online, supermarket, and food and beverage retailers are racing ahead in logistics and distribution digitalization.
Shoppers’ expectations to engage with retailers and brands at any time, anywhere, is driving retailers to focus their efforts on building mobile-first or mobile-only commerce platforms. From a use case perspective, customer experience analytics, demand planning, curated assortments, customer engagement, and digitally-connected product experiences are the top priority for retailers in the next 12 months.
Retailers Supercharging Digital Transformation and Innovation
There are some great examples of retailers in Asia that have embraced technology and innovation to supercharge digital transformation. Let’s look at a few here:
In Japan, Fast Retailing is accelerating a range of initiatives under its Ariake project, which aims to transform Fast Retailing into a digital consumer retailing company. In partnership with Google Cloud, it is becoming an information-driven entity that is proactively focused on its customers. It is creating and delivering products as and when needed, while providing a fun and convenient shopping experience anywhere, anytime. Another example is 7-Eleven Japan, which has built the “Seven Central” platform to connect customer data across more than 21,000 stores nationwide and deliver real-time analysis of store transaction information. This is the foundation for implementing a unified data model that will support the company’s future IT strategies and digital transformation initiatives.
Grocery and supermarket chains have also been fast tracking their transformation. In Australia, Woolworths Group has been investing in data and analytics platform capabilities, in collaboration with Google Cloud, to prevent losses, optimize inventory, and personalize customer offers. In addition, NTUC FairPrice in Singapore has been focused on leveraging technology to capture omni-channel growth. They have been building out their omni-channel retail ecosystem to create a delightful and diversified shopping experience for customers.
What’s Your Innovation Agenda?
Organizations must transcend resilience and innovate to keep up with the ever-changing environment and evolving customer expectations. The biggest challenge, however, is no longer access to technology or the lack of transformation roadmaps, but acquiring the management’s buy-in regarding the value of investment and talent to effectively design, build, and deploy digital technologies.
Increasingly, retailers are forging strategic partnerships with technology players to advance their innovation agendas. A recent example is India’s e-commerce giant Flipkart, which entered into a multi-year strategic alliance with Google Cloud to onboard its next 200 million shoppers and sellers, to accelerate its next phase of growth.
Having clarity on your long-term innovation agenda, along with a good understanding of your biggest value drivers and a robust execution roadmap should be prioritised as a fundamental aspect of every retail CEO’s growth strategy. In this race to not just survive, but thrive, leveraging technology and adopting a culture of innovation will keep retailers in Asia ahead of the curve.
Author : Sameer Dhingra, Director, Retail and Consumer, JAPAC, Google Cloud
*Disclaimer: The views and opinion expressed in the article belong solely to the original author and do not represent the views, opinions and position of Retail in Asia.