In the 2019 AIBP ASEAN Enterprise survey, “Data analytics and business intelligence software” (30%) was ranked the second most beneficial digital tool by respondents in the retail sector, behind having a “Unified platform” (39%). 57% of this group of enterprises also identified improving customer experience as their objective, exceeding the ASEAN average of 41%. The top 3 priorities in digital transformation they cited were “Use Digital Technologies to accelerate new product/services development” (52%), “Roll out data-driven decision making across the business” (40%) and “Develop mature e-commerce and e-business models” (36%).
Omnichannel Retail and Changing Consumer Behaviour in ASEAN
Today, ASEAN retailers are further pressured by the rapid shift in consumer behavior. Consumers are changing where they shop, what they purchase and how much they buy. According to a 2020 World Economic Forum (WEF) report, ASEAN’s middle-class will make up 67% of its population, with consumer spending set to double. WEF also found that 75% of ASEAN consumers comprising the millennial and Gen Z population spend 7 to 8 hours on the internet daily, and 90% of digital consumers searched online for products or services to buy. Digital sources provide consumers with a vast amount of information and choices, allowing them to select and switch between products and brands easily.
It is important to also note that while 80% of shoppers today compare prices online, 90% still made the purchase offline. Even as forecasts from multiple sources show that e-commerce will experience the fastest growth, offline channels will remain large and relevant. Furthermore, the WEF report also notes that the ASEAN retail landscape will remain diverse and fragmented, and Omni-channel retailing will prevail across ASEAN in 2030.
In order to make the most of increasing customer spending in ASEAN, retailers must innovate and keep up with changes in consumer shopping behaviour. Some of the challenges and opportunities involved were brought up in an AIBP Focus discussion involving Indonesian retailers who are moving towards Omnichannel integration.
Omnichannel retail seeks to maximize customer convenience by providing them with a fully integrated shopping experience where a seamless connection is established between online and offline shopping. One thing that successful omnichannel retailers have in common is the emphasis placed on recognizing customer preferences including convenience, personalization and multiplicity of shopping channels. Retailers can make use of data collected from digital and physical channels to better understand their customers’ journey.
The Role of Data Analytics in Omnichannel Retail
Data analytics is key to understanding customer preferences, and enables wiser decision-making. Retailers can tap on advanced analytics as a strategy to transform omnichannel retail practices. Leveraging advanced analytics, retailers can model, predict and adapt to changing trends in consumer demand. This is consistent with the 2019 AIBP ASEAN Enterprise survey results where ASEAN retailers identified Unified Platforms and Data Analytics as the two most beneficial tools for them.
Here are some benefits that retailers can potentially gain by leveraging advanced analytics obtained from their omnichannel data.
Transforming Customer Experience for Growth: Marks and Spencer
Marks and Spencer’s journey to a $10 billion profit in 2019 is an example of how data analytics in omnichannel retail can transform customer experience to drive sales and optimize resource allocation in retail.
The retailer’s first attempt at e-commerce in 2014 was a failure with an 8% drop in online sales after launching their website. It failed to provide customers with a convenient and seamless shopping experience – existing customers were required to re-register on their e-commerce site and technical hitches made shopping online a hassle.
Faced with multiple shortcomings in their first attempt at e-commerce, Marks and Spencer enhanced its e-commerce operations, content management and data analytics capabilities.
In addition to providing customers with a seamless shopping experience, data analytics was used to identify customer demographics and preferences to adjust customer experience elements and supply chain operations. Predictive analysis of customer data also served to enhance content management and product recommendations, contributing to an increase in sales for Marks and Spencer. The retailer launched a revamped e-commerce platform featuring a virtual shopping assistant that incorporated customer data analysis and provided customers with a personalized, multichannel shopping experience.
By incorporating advanced analytics into their retail strategy, Marks and Spencer was able to revive its profitability.
Achieving Customer Loyalty and Effective Target Marketing: Starbucks
For Starbucks, its omnichannel retail strategy aimed to cultivate customer loyalty and provide personalized offers. Matthew Ryan, Executive Vice President & then Global Chief Strategy Officer of Starbucks, thought of digital channel expansion “as the top of the funnel; an enabler of the relationships that we can create that lead people eventually into the Starbucks Rewards Programme”.
Through the use of data analytics in its omnichannel retail strategy, Starbucks was able to roll out targeted marketing campaigns and yield increased returns on marketing investments.
By 2019, Starbucks was able to gain 10 million digitally registered customers into their database through its omnichannel retail strategy which began in 2018. By encouraging customers to register themselves with its online touchpoints, Starbucks is able to collect customer insights. Using the data collected, advanced analytics provided Starbucks with a more sophisticated understanding of customer demand and buying behaviour. This is then used to retain customers by offering personalized incentives and targeted promotions based on customer characteristics, past purchases and preferences.
ASEAN Enterprises Incorporating Data Analytics into Omnichannel Strategies
In ASEAN, enterprises like Kimia Farma, a state-owned pharmaceutical producer and distributor in Indonesia, are beginning to adopt omnichannel strategies. Kimia Farma oversees end-to-end activities for pharmaceutical products from production and R&D to retail and distribution. The pharmaceutical company operates 7 factories and 530 health clinics, and owns 905 pharmacy outlets.
In 2019, Kimia Farma introduced e-commerce services for customers in greater Jakarta to purchase over-the-counter pharmaceutical, personal and beauty care products online. To further expand its reach, Kimia Farma cooperated with GOMART (online shopping service), a subsidiary of GoJek Indonesia, to provide access to products for customers in Greater Jakarta, Bandung, Surabaya, Bali, and Makassar.
Although Kimia Farma is at an early stage of Digital Transformation, it is setting out to be a data driven enterprise by using data collected throughout the organization, from production floors, clinics and omnichannel retail. By leveraging on data analytics, Kimia Farma hopes to identify emerging client demand patterns and optimize its supply chain and production processes.
To sum up, data analytics assists omnichannel retailers in transforming retail practices to drive business growth. Adopting data analytics in omnichannel retail solutions encompasses various processes including data collection from marketing touchpoints, IT infrastructure and solutions for data analysis, as well as employee empowerment to maximise the utility of data analytics. Properly done, data analytics enables omnichannel retailers to make data-driven decisions to achieve enhanced consumer experience and loyalty, and optimize retail practices in merchandising, marketing, supply chains and resource allocation.
AIBP will be hosting a series of online roundtables for topics related to analytics and innovation for the retail sector in ASEAN. Do drop us a note at [email protected] if you are interested in being involved.
11 August 2020