Takeaways from AIBP Insights Retail & Real Estate: Omnichannel Retail – Maximising Customer Touchpoints
We kicked off our 2021 AIBP Insights series today with the first session for Retail & Real Estate. Our panelists from COMO Group, Filinvest, Kino Indonesia, Luxasia, Matahari, Nippon IndoSari, Uhrenholt, and solution providers Microsoft and Magnifi Machines came together to share about their observations and insights about Omnichannel Retail - Maximising Customer Touchpoints.
AIBP Insights is a series of closed-door regional roundtable discussions which are part of our ongoing engagement with enterprises in ASEAN to look at topics affecting digital transformation for their businesses. The purpose is to enable the exchange of ideas between industry stakeholders and spearhead creative collaboration across industries and countries.
According to a 2020 World Economic Forum (WEF) report, consumer spending in ASEAN is set to double, and 75% of these consumers comprising the millennial and Gen Z population spend 7 to 8 hours on the internet daily with 90% of them searching online for products or services to buy. In 2020, changes in the retail and real estate industry have largely been driven by necessity amidst social distancing measures during the COVID-19 pandemic. Looking beyond the new normal, the ASEAN retail landscape will remain diverse and fragmented, and omni-channel retailing will prevail across the region.
Key areas of discussion today include E-commerce Opportunities & the Future of Brick-and-mortar Retail, Omnichannel Strategies & Touchpoints, as well as Challenges in Digitalisation for Omnichannel Retail.
E-commerce Opportunities & the Future of Brick-and-mortar Retail
Majority of our panel are from enterprises that started out with traditional retail. Luxasia, has always been a consumer-facing distributor with multiple points of sale for luxury brands. Satyaki Banerjee, Chief Operations Officer, Luxasia, shared that their pivot towards e-commerce and omnichannel retail began 5 years ago from the top, and what began internally has now allowed Luxasia to set up an ecommerce enabler for brands to get into e-commerce. Ferdiano Pradipta, Head of e-commerce, Kino Indonesia, shares that the company’s long-term goal is for e-commerce channels to grow their total revenue through the integration of all the channels they are active on.
Having worked with many enterprises, Vony Tjiu, Small & Medium Corporate Director, Microsoft, observed that the COVID-19 pandemic has accelerated business and digital transformation among traditional retailers. To increase customer loyalty among customers who want everything to be available to them on mobile, retailers and FMCG businesses are looking to personalisation for their customers. In order to get benefits out of omnichannel retail, enterprises must obtain a 360-view of their customers through profiling and understanding them.
Likewise for Nikolaus Ong, Chief Digital Officer, COMO Group, customers in the luxury sector are very well-connected, with high expectations for personalised services. Customers are now mindful that technology is enabling high-touch services, sharing an example of how returning hotel guests expect the management to know their preferences. While COMO is understanding customers a lot better with the data they are collecting, Nikolaus believes that businesses should seek to do well in specific areas rather than spread themselves too thin.
Marrying the Digital with the Physical
While customers may purchase online, they still enjoy being physically present in-stores. Omnichannel retail strategies will still encompass physical retail which is seeing a trend towards experiential retail.
Physical stores may also optimize omnichannel strategies. Joselito (Joey) Santos, Senior Vice President For Mixed-Use, HRB/Niche and Retail, Filinvest, shared that their malls were competing with online shopping channels prior to the COVID-19 pandemic. In the new normal however, they will have to cooperate with online shopping channels instead. Filinvest malls have come onboard online channels to offer delivery and personal shopping services for customers for a more curated experience with the use of omnichannel data.
For Joey, the key is to enhance shopper activity in the mall through offering increased convenience of purchases and potentially onboarding online marketplaces as tenants to maximise the use of mall space and locations.
To enable physical retail to incorporate digital channels, Winho Choy, CEO, Magnifi Machines, highlights the importance of customised connectivity solutions for clients offering different products and services.
Omnichannel Strategies & Touchpoints
It is generally agreed that multichannel touchpoints are necessary for retailers today. Arief Alfanto, Chief Sales Officer, Nippon Indosari shares how, as a bread production business, they are looking to develop their own application which will feature interactive communication and seek to replicate the in-store experience for bakeries. As bread is a perishable product, the use of historical databases for demand and supply planning will be integral. Vony suggests that incorporating conversational AIs to customise conversations based on their profiles and preferences will open up new possibilities of engaging customers and optimising demand and supply chain planning.
Online Marketplace Strategies
For Uhrenholt which distributes dairy products with specific shelf-lives and delivery requirements, Roger Lau, Head of Regional E-commerce, Uhrenholt, shares that they are exploring solutions to optimise logistics and deliveries for online orders.
Ferdiano added that Kino Indonesia had tried to set up their own warehouse, and eventually realised that enterprises should consider technology partnerships and e-commerce enablers for warehousing and inventory management and forecasting. This will allow retailers to focus on business strategies and growth. Sreekanth believes that it is difficult for traditional retailers to compete with digital natives, and retailers may instead benefit from strategic partnerships with them.
While marketplaces do allow for wider access to customers, Satyaki brings up a caveat of marketplace strategies - retailers are not able to gain access to data on online marketplaces. He believes that demand generation from running their own e-commerce site cannot be replicated by online marketplaces.
Challenges in Digitalisation for Omnichannel Retail
Satyaki notes that online store operations are complex, with an entirely different value chain for e-commerce. Enterprises have to invest in digital solutions and capabilities to process data. In addition to complex retail operations, our panelists agree that demand flow planning and delivery is an added challenge for them. For Satyaki, the key question is how an intelligence layer may be built for all their systems and integrating them.
How Does Data Facilitate the Omnichannel Journey?
Digitalisation enables multichannel retail to be elevated to omnichannel retail. Omnichannel retail is heavily dependent on the company’s digital capabilities - both back-end and front-end.
For Matahari, the key was to make use of existing assets and make them available online by connecting points of sale to backend enterprise resource planning platforms, as well as embedding configurable AI and algorithms to provide a single view for all customers across multiple channels.
More importantly, Sreekanth thinks of technology as an enabler, but it is critical for enterprises to maneuver processes to incentivise and encourage its usage, which Roger and Nikolaus both agree with. They believe that it is important to have the right stakeholder backing and operational support.
Customer Trust and Data Security
A key part of the omnichannel strategy is to create a trusted network for the customer. Vony shares that enterprises should make use of technology to be independent and to protect customer data. In addition, equipping people with the right skills and capabilities will contribute to the creation of a trusted network.
Upcoming sessions for this week’s AIBP Insights Retail & Real Estate include Digitalisation for the New Consumer on 3rd March and Digital for Sustainable and Mixed-use Real Estate on 4th March. AIBP Insights Logistics and Supply Chain, Manufacturing and Distribution, Government, and Banking and Finance will be held in the next few weeks. Do reach out if you wish to find out more about our upcoming sessions!