The recently concluded World Retail Congress Asia-Pacific held in Singapore recently provided a snapshot of the retail industry’s current landscape and what’s new in the horizon. Retailers agree: mobile commerce and social media are the most exciting development in the e-commerce space in the Asia-Pacific region.
"While e-commerce has been in play for quite some time, its new flag bearer is mobile commerce. Buying and selling with the touch of a finger is now a reality. This development has not only facilitated the exponential growth of e-commerce but also made it mobile and convenient for the users," Shayaan Tahir, CEO, Homeshopping Network Pakistan, at the sidelines of the World Retail Congress Asia-Pacific held in Singapore recently.
HSN Pakistan is a pioneer in e-commerce and cash on delivery in the country. From its modest beginning as a startup in 2006, it is now earning revenues of more than USD1 million per year.
Tahir sees the e-commerce trained developing at a healthy pace, albeit a little behind from other regions. "We see progress by the day, people love having the freedom to shop from their homes and get products delivered to them without any hassle," he said.
Tahir shares with other retail CEOs the view that social media channels are equally important to e-commerce. “Facebook, for one, provides retailers an easy way to communicate their message and create more custom awareness for products, sales or promotions. YouTube, on the other hand, provides a space for brands to showcase products or services," he said.
Christine Liu, CEO, of Affinity China, added that in China alone, WeChat has replaced Weibo as the "it" social media channel. "There are now 600 million WeChat users now globally. Among all young social media savvy Chinese consumers living in China and those outside of China are on WeChat. What’s exciting about it is their next phase of moving from just messaging service to one that enables micropayments. It’s definitely the platform to watch," she said.
In other regions of the world, e-commerce is also ramping up in a bigger scale. The announcement made last year by Amazon that it is planning to offer deliveries via drone-like ‘Octocopters’ is a giant leap. Mobile apps also now allow retail store shoppers to skip checkout lines in groceries in other physical stores.
Vhishesh L. Bhatia, CEO of Jumbo Electronics, a consumer electronics retailer in the United Arab Emirates, however, sees a different kind of cool that is shaping up as retail’s future. He enumerates.
• Co-browsing shopping or shopping together with friends, virtually.
• IP intelligence: Mouse Movement Analysis such that moments before a potential log-out, consumers are presented with new offers to induce them to reconsider their buying decision. Check out Picreel.com.
• Virtual Subway stores: You place an order when you go to work in the morning at the subway; items delivered to your home by the time you return in the evening. Check out www.amusingplanet.com/2011/09/world-first-virtual-store-opens-in.html
• Mobile app lets retail store shoppers skip checkout lines. The convenience of popping to the shops for a few grocery items can be hampered by long queues. This was something the brains behind QThru recognized when they developed their app, which allows shoppers to browse, scan and buy products all through their phone. Skipping the queues is an appealing prospect for many.
• The Internet of things: Brazilian fashion retailer displays Facebook ‘likes’ for items in its real-world stores
The Middle East Region, where Jumbo Electronics operates, is on a roll when it comes to e-commerce and Bhatia has reason to see a better future: the region now has an estimated 30 million shoppers, up 20 percent from 2011. The e-commerce market is set to grown from USD9 billion in 2012 to $15 billion by 2015.
Of that USD15 billion, Saudi Arabia will account for USD2.7 billion, Qatar will account for USD1.25 billion, and the UAE will account for the lion’s share at USD5.1 billion. (Today, the report estimates that these markets are valued at USD1 billion, USD700 million, and USD2.9 billion, respectively).
The healthy growth in online spending in the Middle East is due to a number of factors: new consumers purchasing online for the first time; retailers establishing an online presence or increasing the sophistication of their current online offering; a number of major international retailers marketing directly to consumers in the region and finally, the explosive growth of mobile commerce," Bhatia said.
"And finally, what are consumers buying on-line? Not surprisingly, Travel dominates the list (circa 48 percent), followed by consumer electronics, computers, jewellery and watches, event tickets," he added.
In Asia-Pacific, retailers believe there is a very exciting growth opportunity for retail. Following are excerpts of some interviews:
What is the most exciting growth opportunity for retailers at the moment in Asia-Pacific?
Kesri Kapur, CEO, RSH Singapore: The Asia-Pacific economies have been growing for the past few years and are set to grow even further in the coming year. With this growth, the middle class population in Asia-Pacific is also expanding rapidly. As such, with more disposable income, an increasing number of brands are made more affordable to this expanding middle class.
We believe that the most exciting opportunities are happening in markets with large population bases such as Thailand, China, Indonesia and Vietnam. With a growth in the infrastructure and assets in these countries, we also see a growth in retail.
James Roy, Senior Analyst, CMR: Since China is my main focus (and in my opinion still the most exciting and opportunity-rich market in the region), I’ll answer from a China perspective. A clear key opportunity for retailers in China, and probably the central trend in the market, is the rapid growth of online retail. B2C e-commerce is still growing at 70 percent in 2013, following back-to-back years of over 95 percent growth.
Chinese consumers are now full-blown avid online shoppers and are turning to the Internet for better choice, convenience, and service than they can find in brick-and-mortar stores near them. With many of the early worries about payment security and vendor trust overcome they are broadening the range of products they are buying online beyond apparel and electronics to many other categories, including even groceries. This presents a huge opportunity for retailers across the spectrum, provided they can find the right offering and platform that fits the way their target customers are spending their time and making purchasing decisions online.
Christine Lu, CEO, Affinity China: The most interested development in regards to consumer behavior among the demographic I focus on (Chinese luxury consumers) is a shift away from purchasing for status and projection of wealth and a focus on individual style and sophistication of taste. It’s no longer enough to expect Chinese consumers to purchase a handbag featuring a large luxury brand logo. Consumers are becoming more savvy about their personal style and also much more subtle in how they project their wealth. When they travel outside of China, they are seeking new designers and brands that are not available in China.
What is the most important factor that you must consider when defining your growth strategy in these markets?
Kapur: The most important factors to consider are whether the market is ready for the brands we represent, whether there is a steady influx of labor in the retail sector, the free flow of goods into a country and whether we have the local expertise and management bandwidth to deliver.
My advice for other companies would be to take small steps into building their business. Although the markets are growing, they are not exploding. They have to be mindful of increasing overhead expenses as they represent a high proportion of operating costs.
Which challenges is the retail sector due to face over the coming year?
Terry O’Connor, CEO, Courts Asia Limited: Retailers will have to grapple with increased competition, rising business costs and the availability of prime real estate locations. All this will have to be managed on the back of a muted global economic environment.
Roy: A key challenge is that overall retail spending growth in China has been slowing for the last 18-24 months, from 23.3% in 2010 to 13-14 percent in 2013. Malls are seeing lower traffic and there is a glut of commercial property in many cities due to over-investment, and consumers are making shifts in their spending choices as the reality of more sustainable growth dawns on them. One such key shift is the trend in discretionary spending away from merely buying "stuff" and towards accumulating life experiences. Retail in China is becoming more lifestyle-oriented and retailers will need to find a way to present not just products but rich experiences to keep customers interested and involved, and be successful there.
What future trends are you keeping an eye on?
O’Connor: The rapid proliferation of the Internet and smartphone usage will give rise to even more innovative multi-channel retail experiences, allowing us to elevate the customer journey and respond to customers more efficiently and effectively.
We have also kept a close eye on the growth potential and rapid urbanization of Indonesia, and will be opening our first ‘Big-Box’ Megastore in Eastern Jakarta in 2014, with plans to open more in years to come.
Roy: In all businesses — but in retail especially — it’s hugely important to meet people face to face and exchange ideas. Asia is so large and so dynamic, with so many different developments happening in different places, that bringing people together from all parts of the region presents an invaluable opportunity to keep up with developments in other regions, learn from others’ experiences, and get inspiration. The chance to network and challenge your own (and, perhaps, others’) thinking helps you stay fresh, think more broadly, and make connections, all of which are key ingredients in innovation.
The 4th annual World Retail Congress Asia-Pacific had 5 of the biggest retailers in Singapore and the top 3 retailers in Thailand in attendance. Fifty-nine percent of attendees are from Asia and more than 24,000 outlets across Asia were represented.
Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.