Home News Physical retail stores are not doomed yet, but brick-and-mortar needs a revolution

Physical retail stores are not doomed yet, but brick-and-mortar needs a revolution




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A successful interactive store must show it understands the customer through multiple touch points


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“Physical retail is dead!” – open any news publication and you’re likely to find a similar headline. The reasons for such fears are aplenty.

Evolving the shopper’s profile

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The Southeast Asian region is very much on the rise. In terms of economic growth, the ten countries that make up the ASEAN trading bloc are equivalent to the world’s ninth largest economy. From 2010 through 2020, ASEAN GDP growth is projected to reach 5 percent: Vietnam is set to grow by 6.8 percent on average over the decade, with Indonesia clocking in at 5.5 percent[1].

This region’s burgeoning economic health is also apparent in the steady rise in disposable income levels – creating a critical and fast-growing mass of youthful, urban, middle-class consumers who are hungry for the best digital retail experience technology can offer.

Rise of the digital-savvy natives – The Millennials

By 2020 the majority (60%) of the world’s millennials (18-29) will live in Asia2. Being digital natives, millennials rely on mobile devices to meet all their needs – making purchases, doing research, hailing a cab, or booking a flight.

Booming e-commerce sector

With economic growth in the region surging, internet access has become more affordable. Steady improvements in the price-to-performance ratio of mobile devices – coupled with improvements to battery life – have helped consumers bypass infrastructure roadblocks, especially in the less developed markets.

With mobile devices providing the gateway to most internet access, mobile is certainly revolutionizing consumer retail behaviour: allowing shoppers to research goods while in stores. Tools such as QR codes, online coupons, and even augmented-reality product overlays can help retailers tap into this trend.

The tech-savvy Southeast Asian region has skyrocketed the booming e-commerce uptake, with recent research by Google and investment firm Temasek Holdings predicting that e-commerce sales in the region will grow at a 32% CAGR from $5.5 billion in 2015 to $88 billion in 2025, when they will make up 6% of total retail sales.

Growth and evolution of e-commerce

In Singapore, vacancies in the city’s main Orchard Road area, a magnet for tourists lured by malls and Japanese department stores, have risen to a five-year high across the island, the highest since 2009[2].

The simplest explanation for increasingly vacant shopping centres is that e-commerce has taken over. The ability of retail sites, led by Amazon, to make online shopping convenient and safe, fits the needs and expectations of the millennial generation that lives online. Improved presentation of a wider range of products and the ability to obtain value and choice through cross-border shopping, together with increasing ease of ordering and return, are appealing to Asia’s shoppers and are driving rapid growth in online sales.

Also read: Amazon entry is an urgent wake-up call for Singapore retailers

About 230 million Southeast Asian individuals are relying on digital means to purchase products and services, helping the region’s internet economy to balloon to more than $50 billion[3]. Over 60% of people research online before buying in-store, while 27% research in-store before buying online.

The changing consumer behavior – Knowing what consumers want

Here lies a key factor influencing the retail sector today: the shopping experience. People used to make several trips to a store to find the best option before buying an expensive item. On each trip, they were likely to make lots of other small purchases as they wandered around.

Today consumers do all their prep online – reading reviews, exploring alternatives on social media, finding the best discount – which means less ambling through shopping centres and less making incidental purchases at adjacent stores. This behavioural change means predictive analytics have to change. Store and digital research data sets have to be connected to produce the real insight needed to understand how consumers research and respond to offers.

As the customer journey changes, retailers are shifting their focus where the customer is increasingly at the centre of a perpetual shopping experience. This journey sees the customer moving through the organisation with data being collected at every touch point (store, app, website, contact centre, email, etc.) in ever greater volumes.

To improve the holistic experience, leading retailers are creating much fuller and richer single view customer datasets, that capture and process all this data in real-time. This data is used not only for insights, but also to trigger promotions, marketing activity, and alerts to deliver a more personalized, intimate in-store experience.

One retailer that has recently committed to providing data-driven, personalised customer experiences is Macy’s. In order to attract and retain customers, Macy’s tapped into various apps, mobile wallets, and online promotion codes which make it easier for shoppers to research, compare, and purchase their items. Going a step further, Macy’s integrated their application with social networks, which enables them to serve customers faster, provide recommendations, and launch new features such as image search – where customers can take a picture of something they are looking for, then find that product at Macy’s.

Recognising that customer preferences were shifting, London Theatre District has also embraced technology in its sales platform, providing a secure booking engine, interactive seating plans, customer reviews, and real-time availability. With their open API platform, LTD has expanded their sales through a variety of partners including airlines and hotels, providing a superior customer experience, as well as enjoying increased customer loyalty.

Also read: Omnichannel marketing engages users across all touchpoints, and this 6-step checklist will help in your campaign

Another mainstay in the industry, Marks and Spencer, is empowering their business analysts to use data to enhance decision-making without IT support. Using data visualisation technology, the staff are able to understand information without needing to interpret it – allowing M&S to transform into a truly data-driven organisation, entirely focused on improving the customer experience.

Does this mean traditional brick-and-mortar retail is dead?

If it’s experience that is driving a shift in a shopper’s preference, there will always be a place for stores. To get ahead of the digital wave, traditional retailers must use digital technologies and innovations to create new products and services, understand more about customers’ experiences, and reinvent their business.

In order to truly compete with pure-play, online-only stores like Amazon, Alibaba, and Lazada, physical retailers need to go beyond having both an online and physical presence. They must be able to provide interactive stores that integrate traits from both, combining the physical and digital to offer an entirely new shopping experience.

Frost & Sullivan views this changing retail model – evolving from a single channel of interaction (in-store or online), to omni-channel (interacting across multiple channels) – as vital in adapting to the changing consumer landscape.

A successful interactive store must show it understands the customer through multiple touch points: online footprint, loyalty programs, preferred payment method, and more. It must replicate the “online” experience in store: immediate product info, sizing options, similar recommendations, stock checking, and deliver-straight-to-your-doorstep.

It is nearly impossible for any brand to survive or grow today without having some sort of digital presence or digital marketing in their business strategy. Amazon’s success in e-commerce stems from an understanding of the way people shop, and the friction points that make shopping hard. To effectively compete and stay relevant today, physical retailers need a total willingness to experiment and commit to omni-channel strategies, as well as engage with consumers to see what works in the quest for seamless shopping experiences.


[1] Accenture analysis of data from HIS Global Insight, 2011.

[2] http://www.straitstimes.com/singapore/from-clicks-to-bricks-online-stores-setting-up-shop-in-malls?

[3] http://asia.nikkei.com/Business/Consumers/Southeast-Asia-digital-consumer-market-to-hit-50bn-in-2017-report

The post Physical retail stores are not doomed yet, but brick-and-mortar needs a revolution appeared first on e27.
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