Digital acceleration is firing up across Southeast Asia, as the region continues the pace of breakneck digital evolution in coming years. As outlined in Boston Consulting Group’s (BCG) recent report, Revolution and Reinvention: The Future of Retail in Southeast Asia, the region’s dynamic digital landscape has been supercharged by the Covid-19 pandemic, amplifying existing shifts towards deepening digital habits and online commerce engagement.
Across the region, shoppers in major markets of Indonesia, Philippines, Malaysia, Thailand, Vietnam and Singapore saw a broad 50% increase in online shopping habits, outpacing growth in more developed markets like China.
These digital shopping habits are becoming ever more complex as new digital tools come into play. The use of digital wallets, subscriptions to streaming apps, the rise of super apps, and purchases from chat groups have all been on the rise in an energised post-Covid digital landscape.
This shift has led to a growing share of customers leveraging multiple digital channels as journeys become increasingly omni-centric. The value proposition for customers is now moving beyond core products and services, into a truly engaged ecosystem of experiences and relationships. It is time for retail to embrace the promise of an omnipresent future that meets the desire for everything, everywhere, all at once.
Adopt, adapt, and thrive in the new era of retail
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Companies need to adapt to this changing consumer landscape and evolve to meet new expectations. This presents both an exciting opportunity and an imperative for retailers to embrace change.
This transformative opportunity is readily apparent in the sheer volume and variety of customer interactions in today’s landscape. This is unlocking a treasure trove of high-volume customer data, with data captured across a wide variety of sources and platforms. New channels and content formats are constantly emerging to add depth and nuance to this data.
Brands now need to go beyond seamless channel integrations to deepening connections, informed by this wealth of user insight. It is time to become connected to customers whenever and wherever they are.
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Standout brands such as Sephora Singapore are already embracing these opportunities, with an ambitious and highly integrated experiential offline-online approach to customer engagement. In June, Sephora also launched its first Store of the Future in Asia, incorporating tech and digital elements to offer customers curated products, tailored and personalized services, and multiple digital touchpoints to enhance their in-store experience. The brand’s app even includes skin-tone-matching augmented reality features that show how expanding data insight can drive genuinely personalized recommendations that deepen connections.
Brands now need to respond and evolve alongside new shopping paradigms. That includes segments such as shoppertainment, social commerce, and conversational commerce — three experiential and engagement-based opportunities that necessitate new, value-driven opportunities for customers. The projected value of Asia Pacific’s Shoppertainment segment alone is expected to reach US$1 trillion ($1.34 trillion) by 2025, with key growth markets projected to deliver a remarkable 60% CAGR.
These new, interactive and personalized approaches allow brands to directly engage with customers throughout the purchasing journey via a content-first strategy. This reflects the desire for omnipresent touchpoints that engage customers across the purchasing funnel.
Recognise reward but respect the risk
This new and rapidly evolving industry dynamic presents very real risks for retailers. Brands that do not adapt risk the possibility of falling short of customer expectations, and losing out competitively in this experience-driven market.
We already see signs that brands are struggling to fully harness the power of this high-volume data ecosystem. It is important to go endto-end across omni-centric customer journeys and drive and embed a customer-centric view. This often necessitates breaking traditional silos within an organization. These silos can act as drags on fast-paced iterative innovation required to meet changing demands in a period of industry evolution.
Retailers looking to evolve should seek to enhance their data capabilities to generate high-value customer insight. They should work to build in-depth customer understanding and drive customer-centricity through the personalized approach that Asia Pacific consumers crave.
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There are already valuable examples across the regional landscape. These are dominated by loyalty programs that are moving beyond mono earn-and-burn mechanics to enable first-party data and drive engagement through a wide variety of features to scale personalization efforts.
The reality is that use cases which successfully leverage data to drive personalization are relatively nascent in Southeast Asia. Successful examples are primarily driven by consumer technology firms such as Lazada, Shopee and Grab — digital natives with a strong understanding of the value of data.
Across the global landscape, retail operators such as Walmart are leveraging increasingly sophisticated data-driven approaches to win in this area. It’s time for retailers in Southeast Asia to do the same. Regional brands can take advantage of the data they already possess to become revenue generators. This presents a significant opportunity to unlock value in Southeast Asia’s lucrative US$4.2 billion digital advertising space.
Act now and win
Omnipresence has emerged as the leading path to purchase for consumers around the globe, as the rush to be everything, everywhere all at once heats up across the retail universe. Retailers should act now if they want to win. The region’s increasingly digital customers expect brands to meet their needs across multiple channels, meaning an omnipresent future is the sensible next step to create value across Southeast Asia.
Jason Moy, is managing director and partner, and Wayne Yeang is principal at Boston Consulting Group
