Leading retail experts from the Asia Pacific region had come forward to lend their thoughts at the Asia Pacific Retail Congress 2015. What came across through several retail bigwigs was the changing perspective in the way the business of retail is moving towards customer centricity and the larger markets giving way to smaller markets. What was observed was that the long-term trends will continue to dominate the retail scenario this year too. Much discussed areas were the growth markets, keeping consumers in the focus and m-commerce and its impact. Key retailers who participated at the Congress included Alibaba, McDonald's, Rakuten and SPAR.
Sachin Marya, President, Franchise India and Publisher of Retailer Magazine, a participant at Asia Pacific Retail Congress, sees India as the biggest consumer market.
"In India, retailers tend to overestimate opportunities, but underestimate challenges," held AnupamYog, International Marketing Director, Virtuous Retail.
ArvindSinghal, Chairman, Technopak Advisors and Ajit Joshi, CEO, Infiniti Retail, Tata Group discussed how to profitably grow modern retail business in India.
Key Retail Findings
" As the markets in China and India are becoming more competitive, retailers are showing a preference for the smaller ASEAN tiger cub markets.
" The markets to watch out for are: Indonesia, the Philippines and Myanmar.
(Leading retailer SPAR has launched three stores in Indonesia in a joint venture with local partner Ramayana and is eyeing 15 outlets by year end. Japan's e-commerce giant Rakuten is interested in expanding into the ASEAN region, especially the Philippines. Consumer spending in Philippine retail is now at its highest since 1998, with total retail sales comprising 51%, increasing 3.2% from the previous year. Modern retailers like grocery chain City Mart have demonstrated profitability can be achieved in Myanmar. It has been a sleepy market in Myanmar with no retail legacy. This increases opportunities to speed up development here.)
" The key is to find the right local partners that can help a company navigate regulatory hurdles or locate suitable real estate.
" Retailers should focus on long-term strategy rather than short-term gains to be successful. Both China and India hold market specific challenges for retailers.
" The existing fundamentals build a strong case for international retailers, driven by GDP growth in most markets, combined population growth and favourable young demographics, plus a burgeoning middle class.
" Higher disposable income will steer towards aspirational consumerism, with an appreciation for premium offerings and brands. This will fuel demand for modern retail and consumer goods.
Learnings on the China retail market
" "If you're not successful in China, don't blame it on the competition, blame it on your strategy." (Yoep Man, Marketing Director, SPAR China)
" Marking products down, rather than trading up to bank on China's rising wealth, is a common error made by international retailers.
" Many international brands fail to localise their offering to Chinese consumers.
" In China's fragmented retail market, the top 100 retailers still take only around 11% market share.
Insights on India retail market
" Retailers need to keep an eye on the challenges.
" Regional diversities and cultural nuances between India's different states are commonly overlooked by international retailers. The difference between some states can be as huge as that between, say, Greece and South Africa.
" Expanding too fast geographically should also be approached with caution, as lagging infrastructure between different states poses huge challenges to distribution networks.
" For foreign retailers, the key is finding the right local partner to assist with cultural and structural challenges.
" Spreading investments, responding swiftly to situations and re-evaluating strategies will lead retailers to gain a foothold in the market.-(Planet Retail)
Consumer-centricity to spark holistic shopper experiences
The consumer it was learnt was driving the retail world. The change from product focus to customer focus is what the retailers find challenging and have to deal with. "It's not how you use digital to give discounts, but how to enhance the customer experience," said Daniel Lee, Senior Director, Digital Experience Lead APMEA, McDonald's.
Emotion in reference to customer experience cropped up many a times during the Congress. And it was concluded that the blueprint of any retail strategy therefore should be to understand the fundamentals of consumer shifts.
"Designing a holistic shopping experience that adds value, evokes emotions and incorporates consumer participation can enhance loyalty. Retailers are more likely to retain customers that are passionate about them, and "irrationally loyal to the brand," said Tim Kobe, Founder & CEO, Eight.
Retailers should not lose track of local preferences and cultural sensitivities, even within a single country. Shopping experiences will therefore have to be tailored according to consumption values in each identified market, said Nick Everitt, Global Content Director, Planet Retail. Customer-centricity for retailers also requires understanding past behaviour, present drivers of purchase decisions and anticipating a shopper's next action from which more tailored experiences can be developed. Retailers must be able to adapt quickly to these changes and be one step ahead in innovating experiences.
Online retail gravitating toward m-commerce
There is an increasing integration across online and offline channels. With rapid smartphone penetration across most Asian markets, coupled with a (young) surging middle-class, retailers all acknowledged the opportunities mobile shopping promises.
While bricks and mortar retailers increasingly use digital to leverage physical assets and improve shopping experience, e-tailers are spreading out physical touchpoints, e.g. pop-up stores, for brand building and winning consumer trust through a tangible human face.
Incorporating social media as a platform to create communities and drive social shopping will steadily develop in the mobile realm. "Online retail will increasingly move from B2C to C2C," said Ken Ma, Head of International Business Development APAC, Alibaba Group.
According to Nick Everitt, Global Content Director, Planet Retail, South-East Asia, in particular, is an exciting market laden with m-commerce potential, with around half of the region's 600 million people under 30. They have some of the highest levels of digital engagement in the world. This is dramatically changing the nature of marketing in the region. He also pointed out that Mobile ownership is allowing shoppers to make purchases more quickly and easily, as well as opening up convenient payment options. But m-commerce is still largely untapped in most parts of Asia, apart from Japan and South Korea.
The Congress became a platform to make aware the Asia retail fraternity about primary developments that are likely to rule retail. In addition, the retailers and industry professionals exchanged a lot of experiences and predictions which made the 5th Retail Congress Asia Pacific a worthy business platform.
Text courtesy: Christina Rosen, Associate Analyst for Planet Retail and Retail Congress Asia