We had the opportunity to attend the “New Retail” Asia Forum from 16 – 17 January 2018.
Focused on “customer-led omni-channel digital retail“, the event brought together 120 business leaders from different stakeholders in the retail environment with companies like P&G, Walmart, Tencent and Alibaba.
CHECK OUT OUR 3 KEY TAKEAWAYS FROM THE EVENT:
1.NEW RETAIL DRIVES HIGHER EFFICIENCY & BETTER CUSTOMER EXPERIENCE
Costs of customer acquisition has grown by 20 – 30 times more expensive today. Hence businesses are looking to leverage on technology to optimise their operations and manage rising costs.
For Alibaba, it has used its DNA as a platform provider to recreate that same experience offline. With AI operations, it can improve on the product selection on display, analyse customer profiles and manage delivery logistics.
BestLife (良品生活) is one of the stores that has utilised Alibaba’s “New Retail” technology and now has over 2,000 smart stores. Their stores have seen a 260% increase in gross merchandise value with an 11% membership re-purchase rate via integration of the HemaOS.
2.GEN Z WANTS OMNI-BRAND NOT OMNI-CHANNEL
Whilst a lot of focus has been placed on millennials in recent years, businesses should be increasingly aware of a new set of consumers : Generation Z (Gen Z).
According to The North Face, an American company which specialises in outdoor products, Gen Z consumers are true digital natives and will make up 31% of the workforce by 2025.
Gen Z’s 3 distinct characteristics:
- self image : they live in a world of diversity and they pursue an individualistic approach to everything they are doing, e.g. wanting to bring something different, achieve fame in their community, etc.
- experience : everything is shared on mobile, they do offline to online (O2O) in their own ecosystem
- immediate : if they want something, they need it now.
It has a prompted a consumer shift: Gen Zs demand experiences, customization, democracy, new & now.
Hence The North Face re-imagined their stores to focus on “omni-brand experience” where the store is not just a place to buy what you want but also a branded experience. The concept of “Outdoor Training Stations” created stores with more space but it was not to display more products for sale. Instead, they approached it as an opportunity to use the space for workshop activities such as yoga classes.
However The North Face also admitted that these opportunities are mainly useful for retaining customer loyalty and may not actually be profitable activations.
3. RETAIL NEEDS TO ADAPT TO DIGITAL
Stores are symptomatic of the traditional supply chain by aggregating demand in a central location and offering a fixed range of curated products.
But this also created problems in engaging in digital transformation, as companies struggle with getting the best talent and adapting their organisational structure.
McKinsey shared that the return on investment (ROI) is less than the capital spent on 48% of digital initiatives!
However, all is not lost for retailers.
To minimise the costs, they can consider partnership models to build up their ecosystem of services. For example, Tencent launched its UMall concept to centralise about a high-potential buyer using technology such as facial recognition and more. Through a data partnership, Mondelez was able to sell Oreo Cheesecake bundles to interested customers who would be able to re-create the recipe with the package’s Oreo biscuits, Philadelphia Cream Cheese and Cadbury Chocolate.
Brands and retailers alike need to be aware of the opportunities in data-driven decision-making for their business at every customer touchpoint. Greater personalisation through specific recommendations will strengthen the relationship between businesses and their consumers, helping them continue their growth in the fast-changing region.