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CONTENTS FOREWORD ASIAN RETAIL OUTLOOK SURVEY 23 26 34 RETAIL PROFILES HOW TAKASHIMAYA IS MOVING WITH 32 THE TIMES HAPPY DAYS WITH SATURDAYS 34 HOW PAVILION IS CONNECTING WITH 36 CUSTOMERS MR DIY BETS ON AUTOMATION 39 EXPERT FORECASTS 47 WELCOME TO THE NEW CUSTOMER 44 EXPERIENCE FOUR TRENDS TO WATCH OUT FOR IN 2021 46 ANALYSIS: LUXURY RETAIL IN THE POST- 47 COVID LANDSCAPE BETTER TOGETHER: WHY PARTNERSHIPS 50 ARE THE FUTURE OF SEA RETAIL THE HEART OF THE RETAIL REVOLUTION 52 APPROACHING ZERO 55 52 The Asian Retail Outlook GENERAL MANAGER is printed by Inside Retail Asia Ltd Jasper Chung asian Retail HEAD OFFICE jasper@insideretail.asia Outlook 2021 1204 Dominion Centre, 43-59 GRAPHIC DESIGN Octomedia Pty Ltd accepts no liability for any errors, omissions, or consequences, including any loss or Queen’s Road East, Wanchai, Sofia Costales damage, arising from reliance on information in this Hong Kong sofia.c@octomedia.com.au publication. The views expressed in this publication Tel: +852 9019 6060 reflect the opinions of the writers and are not necessarily endorsed by Octomedia Pty Ltd. We GENERAL MANAGER recommend obtaining professional advice from an Amie Larter accredited advisor before relying on the information amie@octomedia.com.au in this publication. Octomedia Pty Ltd reserves all MANAGING EDITOR copyright over the content included in this publication. No part of this publication may be reproduced, stored Jo-Anne Hui-Miller FOR MEDIA RELEASES in a retrieval system, or transmitted in any form, as per jo.anne@octomedia.com.au news@insideretail.asia the Australian Copyright Act 1968. www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 21
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From the editor The year that WHERE WERE YOU THIS TIME LAST Y E A R ? Do you remember what your life was changed us all like back then? I can imagine many businesses L A S T Y E A R R A D I C A L LY C H A N G E D R E TA I L , B U T had their noses to the grindstone, focusing on A S T H E G L O B A L PA N D E M I C U P P E D T H E A N T E surviving and thriving, balanced with the health for digital transformation, it also opened the door to growth. and safety of their teams. We’ve all heard the With new standards of engagement continuing to inspire clichés by now, but quite frankly, I can’t think and challenge the industry, retailers are recalibrating their of a better way to describe last year other than a businesses to build on these new norms. rollercoaster of uncertainty, unpredictability and Among the disruptions caused by the global pandemic in many ways, creativity and experimentation. is the tremendous rise of digital, enabling customers to Welcome to the inaugural Asian Retail shop on their terms. Mobile, chatbots, social, curb-side — Outlook, our new annual report featuring a customers can shop anywhere and anytime, and retailers survey that aims to gain a snapshot of where the are meeting them with seamless omnichannel experiences industry is at each year, how retail professionals to increase loyalty and win sales. are feeling about the landscape and the Similarly, young shoppers flocked to social media for more challenges and opportunities presented to them. than just inspiration; purchases from social channel referrals We’ll chat with industry leaders and experts as skyrocketed by 104 per cent, and we’re just getting started. they reflect on the year gone by as well as their Expect to see retailers adjust their brand strategies as young predictions for the future of the sector. consumer behaviour continues to disrupt the retail industry. Unsurprisingly, in our first survey, we “Put your customers first” is fast becoming the gold found that more than 80 per cent of businesses standard among retailers, with more than 54 per cent changed tack due to the pandemic last year, pinning personalised journeys as the main driver for better while around that same amount of respondents customer experiences. To this end, retailer marketers are have invested more in their digital strategies also increasingly turning to artificial intelligence (AI) to lately. It will certainly be interesting to see these deliver cutting-edge personalisation at scale, such as product new plans come to fruition as 2021 rolls on. recommendations. Ultimately, since AI and trust underpin In so many ways, the ‘new normal’ has forced customer experience, the responsibility falls to brands to the retail industry to raise the bar when it comes follow data protection laws and tread the fine line between to customer engagement, digital, delivery personalisation and privacy. and even bricks-and-mortar retail. Customers Personalisation, however, isn’t the only expectation are savvier than ever and their demands and customers have in today’s new normal. While value, expectations have changed in the past 12 convenience and availability were critical factors in 2020 months. (going back to the toilet paper saga), they’re now table In our first edition of the Asian Retail Outlook, stakes, making agility more critical than ever. In fact, those we analyse what the new customer experience retailers with creative pickup options — curb-side, in-store, looks like in the current climate; the rise of drive-through — saw more than 60 per cent growth over young Chinese consumers; how luxury retail those that didn’t during the five days preceding Christmas is tracking right now and the changing role of Day in 2020. physical stores. Thus, although digital will remain the priority, the role Sit back and enjoy this year’s Outlook. Who of bricks-and-mortar stores will transition into two forms knows where we’ll be this time next year? of physical experiences — connecting digital shoppers with products through pick-up services and creating distinctly emotional experiences through pop-ups, brand collaborations, and events. So how can retailers propel growth? By embracing change. While the road to recovery is long, retailers across industries can address distinct customer pain points, personalise their customer journeys, and grow their geographic footprints. If 2020 is the year that changed us, perhaps 2021 can be the JO-ANNE HUI-MILLER year that makes us. Managing Editor, Asian Retail Outlook THE SALESFORCE TEAM www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 23
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ASIAN RETAIL OUTLOOK SURVEY 2021 Industry insights: executive voices It’s been a tough year for the retail industry, which has been forced to deal with a challenging economic climate and changing consumer behaviour. We check in on how retail leaders are feeling about 2021 and how the industry has shifted in the past 12 months. THE PANDEMIC MAY HAVE HIT MORE or in upper management at retail businesses (38.97 THAN A YEAR AGO, BUT IT’S CLEAR THAT per cent) and 30.88 per cent of respondents came from the Asian retail industry is still reeling from its impacts, businesses with more than 1000 employees. particularly when we consider our peers in stricken All retail categories were represented in this year’s India right now. survey, with 18.38 per cent of respondents coming To gain an understanding of how the sector is from the fashion sector. Participants also came from tracking right now, Inside Retail launched the inaugural grocery/supermarket (15.44 per cent), pharmacy and Asian Retail Outlook survey in April this year. The cosmetics (10.29 per cent) and food and liquor (5.88 majority of survey respondents were CEOs, owners per cent). Q.1 Which Asian markets do you operate in? 2.94% 7.35% 15.44% Bangladesh % .38 17 Cambodia .65 18 China % Hong Kong 22 .4 7% .79 26 India % Indonesia Japan 11.03 11.03% % Laos 4.41% Macau Malaysia 18.38% 13.24% Philippines Singapore 10. 29% South Korea 2.9 4% Sri Lanka % 10 . 82 .2 9% Taiwan 33 Thailand 33 Vietnam % .0 28.68 Other (please 9% specify) The top five countries represented in this survey were Singapore (33.82 per cent; the Philippines (28.68 per cent); Hong Kong (26.47 per cent); Thailand (22.79 per cent) and China (18.38 per cent). 26 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
Q.2 How would you describe trading conditions in the past 12 months? There’s no doubt that retailers struggled in the past year, with more than 60 per cent reporting a negative experience. Nearly 40 per cent described trading conditions as ‘poor’ (37.5 per cent), while 24.26 per cent claimed they were the worst they had ever experienced. 5.15% 16.18% 16.91% 37.50% 24.26% Best I have Good Ordinary Poor Worst I have experienced experienced Q.3 How did the last 12 months Significantly worse compare to the previous? Slightly worse Remained about the same Almost 40 per cent of respondents (39.71 per cent) described the past year as Slight improvement being “significantly worse” than the previous 12 months, while 26.47 per cent claimed it was only “slightly worse”. Significant improvement 39.71% 26.47% 10.29% 16.18% 7.35% Q.4 In the year ahead, how Q.5 What are the three biggest challenges facing the retail industry in 2021? do you expect trading Impacts of conditions to change? COVID-19 77.94% Rental overheads 30.88% Discounting 11.76% 38.87% Consumer confidence 36.03% Labour costs 11.03% Global economic factors 22.79% 11.03% Taxes 2.21% 50.00% Staffing 11.76% Work health and safety 14.71% Government regulation 19.12% Significant changes Supply chain 25.00% Slight changes Overseas competition 4.41% Remain about the same Half of respondents predict that slight Lack of cross-border travel 26.47% changes will take place this year, while Others 5.88% 38.97 per cent believe the conditions will significantly change. Meanwhile, 11.03 per Overwhelmingly, the impacts of Covid-19 are keeping retailers up at cent predict they will remain the same. night (77.94 per cent), followed by consumer confidence (36.03 per cent), rental overheads (30.88 per cent). ► www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 27
Q.6 How has your revenue from e-commerce changed in the We don’t have e-commerce Increased 8.09% 5.88% 15.44% past 12 months? significantly Increased As has been widely reported in the past year, slightly 31.62% e-commerce sales skyrocketed last year and it’s evident in respondents’ answers. More than 70 per 38.97% Stayed about cent respondents experienced an increase in sales the same online. Almost 40 per cent (38.97 per cent) claim that revenue “increased significantly”, while 31.62 per cent Decreased experienced a slight increase in e-commerce sales. Q.7 What percentage of your total revenue comes from your e-commerce channel? 27.21% 24.26% 17.65% 15.44% 11.03% 1.47% 2.94% 100% of We don’t Less than revenue Less than Less than Less than Less than 75% have 5% 10% 25% 50% revenue While online retail experienced a huge boost last year, for most retailers in the survey, it accounts for less than 10 per cent of sales (27.21 per cent). As restrictions lift around the world, it will be interesting to note how consumers respond to bricks-and- mortar retailers and which online shopping behaviours will remain in the future. WhatsApp 23.53% Q.8 What are the most effective social Facebook 76.47% LinkedIn 19.12% media channels for your business? YouTube 17.65% Despite the introduction of new video apps like TikTok, Facebook remains the social media giant for the retail industry, WeChat 13.24% with 76.47 per cent retail businesses signed up on the platform. The next most popular platforms include Instagram (80 Blog/native content on website 8.82% per cent); WhatsApp (23.53 per cent), LinkedIn (19.12 per cent) and YouTube LINE 7.35% (17.65 per cent). Instagram 58.82% Twitter 6.62% Tik Tok 5.88% We don’t use social media 5.15% WeChat mini 3.68% Little Red Book 2.94% Other 2.21% Zalo 0.74%; Pinterest 0.74%; Clubhouse 0.74%; Snapchat 00.00% 28 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
Online delivery options 38.97% Online delivery speed 44.55% Price 24.26% Q.9 What areas Click-and-collect 9.56% do you think Customer service 18.38% consumer expectations In-store digital functionality 8.09% will increase the most in over the Product quality 8.82% next 12 months? Product variety 11.03% From kerbside pick-up to click- and-collect most respondents Product freshness/ (38.97 per cent) believe that relevance 11.76% consumers will expect more from online delivery options in the Omnichannel 33.09% future, as well as faster delivery (30.88 per cent). Meanwhile, 33.09 per cent of respondents Returns believe omnichannel will be the policy 4.41% name of the game for the future Others of retail. (please 0.74% specify) Q.10 How helpful was your government’s economic Q.11 How have your business plans changed due to response to businesses impacted by coronavirus? coronavirus? 35.56% 25.93% 28.89% 21.48% 17.04% 37.78% We pivoted the business to focus on a new product/category/customer segment 22.22% We fast-tracked our existing plans We are proceeding with our existing plans as scheduled Not at all helpful Helpful We put our existing plans on hold and 11.11% are sticking with the status quo Slightly helpful Very helpful More than 80 per cent of businesses changed tack due to the pandemic, from There were mixed responses here, with 28.89 per cent of respondents entering new categories to accelerating claiming that the government was not helpful at all and more than 50 their plans, but interestingly, more than 20 per cent claiming that they were of assistance last year. per cent were able to continue with their existing plans as scheduled. ► www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 29
Q.12 As a result of coronavirus, have you invested more in your digital business? 5.93% 13.33% Yes No We don’t have a digital side to the business Unsurprisingly, an overwhelming amount of respondents (80 per cent) 80.74% identified that they had indeed begun investing more in the digital side of the business. From e-commerce upgrades to virtual consultations and livestreaming, last year most certainly saw a surge in creativity from retailers last year. Q.13 If you have a physical store network, have you consolidated it as a result of the pandemic? Yes - we’ve consolidated 32.59% No - we’ve kept it the same 29.63% No - we’ve added stores 12.59% No - we don’t have stores 25.19% 0 10 20 30 As bricks-and-mortar retailers struggle with rent and overheads in the current climate, it’s no surprise that nearly a third (32.59 per cent) had consolidated their physical store network last year. Interestingly, 12.59 per cent had actually opened new spaces. Q.14 How do you expect leasing terms to change this year? SLIGHT CHANGES SIGNIFICANT More than 80 per cent of CHANGES respondents expect changes to be made to leasing terms in REMAIN the future, with just under 20 ABOUT THE per cent predicting they will 49.63% SAME remain the same. 31.11% 19.26% 30 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
Q.15 Do you think relationships between landlords and 20.74% retailers are more strained as a result of coronavirus? Yes Almost 80 per cent of respondents believe that No landlords and retailers will struggle to maintain an amicable relationship. It will be interesting 79.26% to see which parties will come up with creative solutions in the near future, taking into account changing consumer behaviour around bricks- and-mortar retail and the rise of omnichannel. Q.16 Have you negotiated a change to turnover-based rents? 57.78% 42.22% Given the challenging economic climate, just over half of retailers have come Yes No to a compromise with landlords, negotiating rents based on turnover. 11.11% Significantly more 31.85% Slightly more Q.17 Were landlords willing to reduce rents this year? Remained Nearly a third of retail professionals (31.85 per 26.67% about the cent) found that landlords same were slightly more willing to reduce rents given the impact of Covid, while 26.67 per cent continued paying the same amount this year. Meanwhile, almost 20 per 15.56% Slightly less cent found that landlords were actually less willing to reduce rents. 4.44% Significantly less We don’t 10.37% have stores www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 31
How Takashimaya is moving with the times Japanese department store Takashimaya is nearly two centuries old. Here’s how the retailer is adapting to stay relevant in 2021 and beyond. BY JOYCE ABAÑO FROM USING NON-TOXIC mindsets towards longer-term goals,” and introducing sustainability- PAINT IN STORE TO DIGITISING the spokesperson added. “In the long focused programs in its stores. documents to avoid paper waste, run, being sustainable will actually According to Takashimaya, even more businesses are taking steps to be more beneficial for retailers to before the global health crisis, make their physical operations more attract and retain more customers and businesses around the world were sustainable. reduce expenses.” seeking to become more sustainable, This includes the Japanese but the pandemic moved them to act department store chain Takashimaya. THE JOURNEY TO on those plans. While its bold approach to sustainable SUSTAINABILITY “The crisis has got people store design entails high upfront Takashimaya opened its first store in rethinking what is truly important, costs, it will lead to long-term benefits Kyoto, Japan, in 1831, selling gofuku beyond profits and more about what in the future. (formal kimono). It started expanding kind of roles they want to play in this “Other than playing an active in the early 1930s and is now one new normal,” the spokesperson said. role in reducing our environmental of the largest department store One area in which retailers can take footprint, sustainable store design operators in Asia, with a presence the lead is through eco-friendly store will increase the brand’s credibility in China, Thailand, Vietnam and design. Here’s what businesses need in the eyes of the modern, mindful Singapore. to do, according to Takashimaya: consumer and also saves money in the Since launching in Singapore on long-term with lesser consumption of energy and waste,” a Takashimaya spokesperson said. the famous Orchard Road in 1993, Takashimaya has grown to offer more than 240 brands, including Jurlique, 1 Start by switching to sustainable packaging and bagging alternatives “Change always comes with a price, Pigeon, Seafolly, Adidas and Speedo. The global sustainable plastic but change is inevitable as we need For the past few years, it has been packaging market is projected to to move with the times and shift our promoting a greener retail experience grow by 5.6 per cent, from US$89 32 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
billion in 2020 to US$117.3 billion energy sources spokesperson said. by 2025, according to a study from According to Dodge Data & Research and Markets. Analytics’ World Green Building Trends THE #SHOPGREENER CAMPAIGN The study also indicated that the 2018 report, having a green building Takashimaya plans to increase its Asia Pacific region would account for has officially become a global trend ‘phygital’ (technology that bridges the largest share in the sustainable with energy conservation a top the digital and physical worlds) packaging market in terms of value priority. The report indicated that offering in 2021 as it looks to engage and volume between 2020 and 2025. the trend is expected to grow in the online shoppers and work with more coming years. In fact, the share of sustainable brands. 2 Choose sustainable building materials, such as paint, lights and appliances firms that have more than 60 per cent of their projects certified green has grown from 16 per cent to 45 per cent. Just last month, Takashimaya Singapore introduced its #ShopGreener campaign to As demand for sustainable products encourage consumers and brand continues to grow in every sector, the construction industry has also started developing more innovative and 4 Digitise and reduce paper wastage from daily operations owners to be more eco-conscious. As part of the campaign, shoppers can trade in used bottles, jars and green materials. Paper accounts for 25 per cent of tubes from beauty brands such as Retailers trying to reduce their waste in landfill and 33 per cent Jurlique (among others) to receive environmental impact should of municipal waste, according to discounts and freebies. use non-VOC (volatile organic technology company Timico. About “The department store is compounds) or low-VOC paint, also 68 million trees are cut down each constantly evolving with diversifying called green paint. VOCs, which are year to produce paper and paper values and changes in consumer released at room temperature, are products. environment and needs, and has over not only harmful to humans; they Businesses can avoid this by the years realised the importance of also play a significant role in the digitising their operations, such as reducing environmental impact and formation of ozone. While naturally using email receipts. Takashimaya promoting a sustainable future,” the occurring ozone in the atmosphere is has reduced its paper use by about 50 Takashimaya spokesperson said. good for the planet, the type of ozone per cent since embracing digital. “We are looking forward to created by VOCs remains at ground “There will be more retailers providing a platform for more eco- level and harms plant production. changing their strategies across green and sustainable brands to step all fronts — brands have been out in the spotlight and provide 3 Reduce your power usage and switch to alternative sourcing for more upcycled or sustainable materials,” the company’s better, more mindful options for our shoppers." www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 33
ASIAN RETAIL OUTLOOK Happy days with Saturdays Indonesian direct-to-consumer brand Saturdays is on a mission to transform the eyewear retail experience. We chat with co-founder Rama Suparta about the brand’s omnichannel strategy and its new mobile app and try-on service. INTERVIEW BY JO-ANNE HUI-MILLER Inside Retail: How would you describe the traditional way customers have had to buy eyewear, and how has Saturdays helped change that experience? Rama Suparta: The traditional way of shopping for eyewear is not fun and it’s expensive: 1. The optical stores typically display many glasses under a counter, and the store itself is filled with ads and signage with white, displeasing ambience; 2. Customers cannot try on glasses freely as they require staff to help; 3. Glasses carried are from Western brands, with the majority not designed for Asians; 4. Pricing is not transparent and simple. Usually, lens choices are confusing and not included in frame prices, plus complex promos are designed to make customers spend more, not save; 5. The processing time to install lenses can take three to five days and require customers to come back to pick them up; 6. Minimal return policies or with their loved ones, exercise, the customer experience, such as warranties. sleep and be themselves. We want our own stores, website, app, chat to create a lasting impression from and home try-on. While we are Saturdays redefined the offline online and offline channels through inspired by the US-based unicorn shopping experience with glasses lifestyle stores concept by offering and eyewear brand Warby Parker, displayed in a modern cafe. Arabica coffee and fresh-baked the need to localise our products and Customers only need to wait 30 cookies in a modern cafe setting experience is a must. We provide minutes for lens installation, and we where people can hang out and fresh and unique ways to shop for offer free customers coffee while they feel like it’s Saturday any day of eyewear: wait. the week. We also provide special food and beverage promos to • Our stores blend eyewear in a IR: Tell me about how you’re #CitizensOfSaturdays — people modern cafe. We operate eight blending Saturdays’ stores with who wear our glasses — so they can stores in Jakarta and plan to cafes and why they’re called bring their loved ones and hang out expand to more Indonesian cities; lifestyle stores. at our store. • Our home try-on service offers RS: We aspire to provide an an in-store experience but in the unmatched experience for customers IR: How would you describe convenience of the customer’s who have been accustomed to Saturdays’ omnichannel home; shopping for eyewear in dull and strategy? • Our customers also engage with conventional manners. Saturday is RS: Saturdays’ tech-enabled us through chat to help purchase, the favourite day of the week for omnichannel strategy focuses on assist in home try-on bookings, most people as they spend time channels where we can better control and answer any questions. 34 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
IR: Tell me about the new mobile current eyewear market and for the local market. We aim to be app and the new home try-on the competitive landscape? the dominant eyewear brand in service. Traditionally, it’s been Indonesia, and the one customers RS: Saturdays has been leading the monopolised by a few large continue to shop at again and again. direct-to-consumer (DTC) revolution companies, but in recent in Indonesia since introducing its years, DTC brands have begun IR: Last year, Saturdays received eyewear in 2016. Our new mobile app competing with them. some investment. Can you tell is the first of its kind in our industry, RS: The eyewear market is dominated me about your plans for the and it provides an integrated online- by a single global company that has extra funding? to-offline (O2O) shopping experience been able to keep prices unreasonably RS: In 2020, Saturdays received for customers. The app showcases high and earn huge profits from early-stage funding from local and our full collections, so customers customers. A few large optical players regional venture capital firms Alpha can shop, save frames to a wishlist, in Indonesia mainly distribute brands JWC Ventures, Kinesys Group and try them on virtually, purchase with from this company, leaving customers AltoPartners to accelerate expansion multiple payment options (including with few options. Saturdays is the and strengthen our tech-enabled buy now pay later), and pick up first brand in Indonesia to offer omnichannel experience. in-store. premium quality yet affordable Saturdays also pioneered the home eyewear designed in-house to fit and IR: What are your plans for try-on service across Indonesia, look great for Asian features. We use Saturdays this year? Do you have and we provide a seamless booking the best materials, such as Italian any plans in the works for local experience through the app. acetate and Japanese titanium, to and international expansion? Customers can pick 10 frames of their craft eyewear that is authentic and RS: Saturdays aims to elevate the choice to try, book an appointment affordable (starting at Rp1.295.000 eyewear game further and bring and select a speciality coffee, all for including prescription lenses). an integrated and seamless O2O free! Our licensed opticians will The DTC eyewear market is still shopping experience to Indonesian bring the frames and administer a nascent and highly fragmented in customers. We will add more exciting vision test from the comfort of the Indonesia. We see that no-one else features to our app in the coming customers’ own home. offers the same mix of omnichannel months while also expanding our experience and premium quality lifestyle stores concept to more IR: How would you describe the yet affordable eyewear designed Indonesian cities. www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 35
How Pavilion is connecting with customers The retail industry in Malaysia has struggled during Covid, but shopping centre Pavilion in Kuala Lumpur has continued to find a way to reach consumers. Here, we chat with CEO of retail, Dato’ Joyce Yap, about the evolution and exciting future of malls. INTERVIEW BY JO-ANNE HUI-MILLER Inside Retail: Mwwalaysian (MCO) last June. Footfall at Pavilion IR: How would you describe retail has been reported to be KL reached as high as 75-80 per 2020 for Pavilion last year, at an all-time low. What are cent while sales recovered to about and what were some of the your thoughts on how the retail 50-60 per cent. In December, the interesting ways that the landscape is travelling at the sales and visitors at Pavilion KL shot business pivoted? What were moment? up, where footfall traffic went up some of the initiatives that you Joyce Yap: The last year was by almost 90 per cent, from the first launched last year that have challenging for the whole Malaysian MCO lows of 20-30 per cent. Sales continued into this year? retail industry. Likewise, Pavilion KL followed a similar trend, increasing JY: Twenty-twenty was a challenging has not been spared from the impact 60-70 per cent from a low of about 20 year for Pavilion Kuala Lumpur, and of the pandemic. I am cautiously per cent. while we had to navigate a variety optimistic that the retail sector is It’s encouraging to observe similar of new challenges that came with the heading towards recovery this year, trends in countries like China, where pandemic, it has also been a year that and we are already starting to see trends such as “revenge shopping” pushed us to innovate and be creative some positive indicators. Hopefully are aiding the country’s speedy in order to adapt to this new retail the pandemic will be brought under economic recovery. In fact, China saw landscape. control and we will not see another its economy strengthen in November Despite the challenging retail lockdown. 2020, with retail sales expanding by landscape during the MCO last year, From a big-picture view, previous five per cent. our occupancy rate has remained trends have shown that in the Hopefully, as vaccines roll out stable. In fact, we even welcomed aftermath of major crises like — the across Southeast Asia, and the more than 48 new tenants to Pavilion 1997 Asian financial crisis and the eventual relaxation of the MCO, will KL, including first-in-Malaysia outlets 2007 global financial crisis — the set the retail industry firmly on the from prestige brands like % Arabica retail industry tends to rebound. We path to recovery and growth. We from Japan, Kam’s Roast from hope this is an indication of things to look forward to footfall in the malls Hong Kong, Objects, and Harriston come. returning to pre-pandemic levels, Chocolatier Cafe. We are expecting We saw this play out on a smaller and are excited to welcome shoppers several more openings in the coming scale at Pavilion KL during the to Pavilion Bukit Jalil, which opens at months, including the first Dadi Recovery Movement Control Order the end of the year. Cinema in Malaysia, which is set to 36 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
launch later this year. and accessible. The next generation of Pavilion Bukit Jalil — The Icon of However, we recognise that several personalisation will enable retailers Connectivity — is set to transform tenants were adversely affected last to target both known and anonymous the southern corridor of Kuala year, especially during the first MCO visitors in a cross-device and cross- Lumpur into the new cornerstone when only 35 per cent of our tenant channel shopping environment. of metropolitan lifestyle and retail. mix were permitted to operate. To Pavilion Bukit Jalil is an example help ease the burden of tenants who IR: What are your thoughts on of how a shopping mall targets the were severely impacted, we offered the future of shopping centres in residential catchment area attached rental rebates. At the same time, we Malaysia and what are some of to the mall by featuring a multi- facilitated cost-saving practices such the challenges and opportunities dimensional shopping experience, as flexi operating hours to tenants in for the sector? with a diverse and vibrant tenant need to help cut down their expenses. JY: We are already seeing a radical mix made up of specialty retail, We are practising cost cutting move towards an omni-channel gastronomic F&B, leisure and exercises internally to save costs retail experience, with more retailers entertainment. wherever we can. moving from online to physical Strategically located on a gross We have continuously worked with stores. Retailers need to embrace area of 3.48 million square feet in all our tenants to come up with robust the omni-channel approach and the heart of Bukit Jalil, this hyper- marketing strategies to encourage see the rise of e-commerce as a regional mall is well connected with customer traffic and spending, complementary source of growth excellent accessibility. Its well- including creating promotional areas rather than competition. Embracing planned infrastructure, easy access at high traffic areas, assisting with digital technologies and services is points to more than 5000 car park shopping and dining vouchers, and not a disruption, but provides an bays, coupled with an attractive mall continuing with our shopper rewards additional channel for branding, facade, provides exposure from afar, and redemption programs. reaching a wider base of consumers giving tremendous advertising value and increasing footfall. and brand visibility. IR: When the MCO took place It is clear that consumers don’t limit Like Pavilion KL, Pavilion Bukit in Malaysia, what was that themselves to a single channel, and Jalil goes beyond retail. With a experience like for Pavilion and therefore neither should we. If we net lettable area of 1.8 million what were the trends that you don’t embrace the emerging trends sqft, Pavilion Bukit Jalil connects observed? model, we risk our own long-term communities through immersive JY: The pandemic has brought success. Retailers that solely rely on experiences and leisure. Its on unprecedented challenges for traditional outreach formats must impressive outdoor venue, Pavilion retailers. It is the survival of the adapt or get buried as the industry Bukit Jalil Piazza, which is covered fittest and those with diversified constantly reshapes and redefines with a 35-metre-high canopy, will business models were best equipped consumer expectations. be the preferred venue for outdoor to pivot to the fast-changing retail I believe the future of shopping entertainments, concerts, and events. environment, and adapt to evolving is also a hyper-personalised and Additionally, Pavilion’s grand annual consumer behaviour — putting experiential customer experience, festivities and year-long activities will them in a better position to survive powered by the hybrid model take place at the Centre Court, while and grow during the pandemic. of online and offline shopping. consumer fairs and exhibitions will Many tenants have realised the This means stores providing and thrive at the Exhibition Centre. benefits of using multiple channels recommending what the customer With five retail floors, Pavilion to reach out to their customers and needs, when they need it, with the Bukit Jalil will be anchored by the offer an omni-channel experience. power of data and AI. It also means newest Parkson departmental store Businesses that offer customers both having a unique in-store experience in Malaysia. Other specialty anchors physical and online store options tend with optimised store layouts, mall include the biggest Dadi Cinema in to see higher customer engagement facilities, customer service and of Malaysia; first-of-its-kind concept and sales. course, safety measures. supermarket The Food Merchant, by the team behind Village Grocer; IR: How would you describe IR: What do you think makes Harvey Norman Superstore; Blue Ice Malaysian customers’ current an excellent shopping centre Snow Park, featuring aurora lights lifestyles and shopping experience in this day and age? that simulate the Northern Lights for behaviours, and how is Pavilion JY: An excellent shopping centre a unique night skating experience for catering to that? experience is not only about creating families; karaoke and entertainment JY: Consumers and their needs have happy memories for shoppers but it outlet K11 Karaoke; Grand Harbour rapidly evolved in the past year. The also matches the customer’s desires restaurant; and kids’ store Toys R Us. demand for personalised customer and wants. It encompasses research, Unique to this mall will be the experiences has increased. In order referrals, price points, variety, planned Asian-themed precincts to fulfil customer demands and win environment and budgets. Pavilion offering retail, food, arts and culture their hearts, we, as retailers, need KL achieves this by hosting unique from Japan, Thailand, China, Korea to understand and cater to their events such as Kuala Lumpur Fashion and Malaysia. They will seamlessly changing behaviour and trends. Week, which has a planned digital connect shoppers to each country For 2021, I see personalisation presence and builds into the shopping through its diverse retail mix and and customer insight-related mall, transforming into a giant functional layout, providing an technologies making the biggest fashion runway with breathtaking elevated and interactive retail impact as they become more robust decorations. experience for shoppers. www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 37
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Mr DIY bets on automation Malaysian home improvement brand Mr DIY has turned to automation to take the business to the next level, having recently opened a RM5 million robotic e-commerce warehouse. Mr DIY Group vice president of marketing, Andy Chin, shares how staff have embraced automation and how these technologies are improving the shopping experience for customers. BY JOYCE ABAÑO Inside Retail: How do these using technologies such as sensors for importantly, user-friendly for our staff. programmable robots work anti-collision features and QR codes, and how have they increased that serve as an indicator for their IR: How has technology helped operational efficiency? directions. We also have a dedicated your company adapt to the Andy Chin: Our programmable Robotic Management System (RMS), new normal without causing robots have increased operational that is tailored to our operation frustratons for customers and efficiency significantly by 200 per requirements, to help us determine the staff? cent. Traditionally, stock picking is optimum route from point A to point AC: Our aim was to solve the order done manually and we rely heavily B, using smart logic. The RMS gathers fluctuation issues, to survive and on labour manpower. There was a data from daily operations and with thrive in the new normal. We only limitation of quantity as we could the use of Big Data Analytics, we have one e-commerce warehouse only fulfill nine orders at a time. By can review and optimise operations fulfilling orders nationwide. Hence, it automating the stock picking process, further. is taxing for the warehouse operations 28 orders can be fulfilled at a time The main problem we wanted team when there is a drastic increase without the presence of a manual to solve using technology was in orders. We decided to implement stock picker. It significantly saves manpower issues, as we realised robotic technology in this warehouse, the time and effort required by a that our staff ended up spending because this is the most dynamic warehouse staff in order fulfillment a lot of time and effort to conduct warehouse with high order fluctuation as well. In addition, the robotic repetitive tasks that can be to ensure that our online customers system minimises human errors such automated. We wanted to find the get their orders fulfilled in time. as picking the wrong item from the simplest way to solve the fulfillment We have invested our efforts in wrong rack. After implementing bottleneck, especially during peak training and upskilling our staff, to this technology, in total, 1500 to 2000 seasons. Ultimately, we decided ensure they are equipped with the orders can be fulfilled in a day. on implementing a technology right skill sets in anticipation of the The programmable robots operate that is scalable, flexible, and most new industrial revolution. Here in the www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 39
robotic warehouse, we have trained our warehouse staff in first level troubleshooting knowledge to ensure they have the right problem-solving skills when any component of the automated process isn’t working as planned. For example, Liza, one of our warehouse staff, was one of the success stories of the Mr DIY robotic warehouse. She was interested in warehouse management, and started her journey with us as an assistant supervisor for Mr DIY’s marketplace in 2017, assisting with online order fulfilments. As we designed our robotic warehouse, we saw an opportunity to upskill Liza to manage the robotic warehouse system. Today, she has learned the skills required to manage the robotic warehouse system, and has been promoted to be the supervisor of our robotic warehouse. Our employees have been, and will always be, our most valuable asset. Eight-five per cent of our workforce consists of Malaysians. We want to our customers’ experience at Mr DIY come in via our e-commerce platform, lead the way for other Malaysian as a whole?’. On our e-commerce hence investment in this warehouse businesses, showing that investment platform, you’ll be able to purchase is timely and warranted to prepare in Industry 4.0 is not only necessary products that can be found in our ourselves for this. to thrive in the future, but also brick-and-mortar stores, as well Mr DIY serves a mass market contributes towards nation-building as bulkier items that are difficult with a wide range of customers. for a better Malaysia. to display in store. This robotic We also recently launched Mr DIY warehouse has also enabled us to also for Business, a B2B platform for IR: How did the business perform increase our online product offerings businesses to make bulk purchases online and in stores with all the by 23 per cent, from 16,400 to over directly from us, with less hassle. challenges that 2020 presented? 20,000 SKUs. This makes our e-commerce platform AC: As a group, Mr DIY owns and the perfect channel for SMEs to operates over 700 stores in Malaysia, IR: How pivotal has technology purchase essential items with a serving everyone in the country. been to the success of the wholesale discount on top of our Although foot traffic dropped during company this year? competitive prices. We have over the beginning of the pandemic, due AC: Technology has been playing 1200 SKUs ranging from cleaning to restrictions of movement and the an important role. We are now tools, hardware, electrical items, to temporary closure of many retail heavily investing into e-commerce face masks, hand sanitisers, and even stores, we managed to overcome this and adopting new technologies, stationery. by strengthening our online presence. in order to increase operational Foot traffic has now rebounded and is efficiency further. Given the current IR: What expansion plans in the stronger than ever. circumstances due to the pandemic pipeline for 2021 and beyond? Brick and mortar is our core, and is and overall transformation of the AC: We just launched our 700th Mr what we’re very good at. Before the retail environment, we believe DIY store in Malaysia in March, and first MCO, our sales came primarily that investing in automation and debuted a ‘store-in-store’ concept from our retail stores. Now, online upskilling our employees will be with one of the brands within our purchasing has surged naturally beneficial to us in the years to come, portfolio, Mr Toy, housed within the and is continuing to grow steadily, to breakthrough and serve more same premise. In 2021, we plan to as many customers have become customers better. open 175 new stores across our three accustomed to online shopping. Our brands - Mr DIY, Mr Toy and Mr 2020 online sales saw a 300 per cent IR: Are there any e-commerce, Dollar. increase, compared to the previous social commerce or consumer Digitalisation and automation corresponding period. trends that the company is are very much part of our business When we first embarked on our interested in right now? strategies, and will be implemented online e-commerce platform, mrdiy. AC: Given that e-commerce has as and when it brings the most com.my in 2017, our aim was to create boomed exponentially since 2020, we benefit to our business. We have an omnichannel retail experience. observed that there are high demands plans to automate the entire packing, We asked ourselves, ‘How can we and a high potential for growth in downstream, and picking process in use e-commerce as a tool to enhance this area. We expect more orders to the near future. 40 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
KPMG www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 41
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ADVERTORIAL What’s next for Hong Kong retail? By Angelica Leung, Head of Consumer Products, Invest Hong Kong It is time to take a fresh look at Hong “Hong Kong is a beacon for Japanese where new ideas are welcomed and Kong as life starts to return to normal manufacturers, and we regard the city startups thrive and retailers rethink expansion to be a considerable facilitator of new Hong Kong’s startup ecosystem stands strategies - Hong Kong has always investments or ventures from Japan.” out in Asia for its dynamism and provided a high-functioning and government support, and overseas sophisticated ecosystem for businesses Exponential e-commerce growth companies looking to invest or expand looking to build a presence in Asia and A combination of sophisticated in the region come to Hong Kong for this decade will be no different. logistics infrastructure with high digital its trusted legal system and business- adoption has laid the bedrock for friendly environment. Hong Kong remains very strategic exponential e-commerce growth in “In Hong Kong there is a vibrant for Mainland China market Hong Kong. E-commerce companies entrepreneurial environment to start Hong Kong is part of the Guangdong- are also making use of Hong Kong a company, and the administration is Hong Kong-Macao Greater Bay Area to expand their Greater China and relatively easy. People are also easy (GBA) together with nine Mainland overseas footprint. going and open to new ideas,” says cities plus Macao. Contributing about JD.com utilises Hong Kong as its hub Delphine Dultzin, Co-founder & CEO 11% to China’s economic output, to bring the “product supply chain + of OnTheList. Peter Yen, Co-founder this area has an economic output of logistics supply chain” ecosystem to and CEO of Pinkoi agrees, “Hong Kong US$1.68 trillion in 2019 (higher than Greater China and overseas markets. is a gateway to many Asian markets South Korea, Spain or Australia) which Chris Choi, GM of JD Global Sales of — it has a diverse consumer base and is expected to reach US$4.6 trillion by JD International explains, “JD Hong enables us to keep pace with the latest 2030. Kong’s unrivalled geographical location global developments.” With 72 million people living in an and sophisticated transport and area of 56,000 square kilometres logistics network has enabled a lot of Where opportunities connect (0.7% of the size of Australia) and business opportunities.” InvestHK’s vision is to strengthen ever-improving connectivity, this Shopee sees Hong Kong a strategic Hong Kong’s status as the leading burgeoning consumer demand is set location for its status as Asia’s international business location in to strengthen Hong Kong’s status as an eCommerce hub. “Hong Kong has Asia. The mission of the department international retail hub. sophisticated logistic infrastructure is to attract and retain foreign direct that supports our supply chain investment which is of strategic Local consumption remaining robust operation, allowing us to build importance to the economic For Hong Kong’s 7.5 million residents, better services for our cross-border development of Hong Kong. shopping neighbourhoods and eCommerce,” says Jianghong Liu, InvestHK has been providing shopping malls provide an important Head of Cross Border of Shopee. support and advice to companies at curated mix of retail, entertainment, Meanwhile, Vestiaire Collective is different stages of their businesses, food and beverage and educational using Hong Kong as a hub to targeting and our services are offered free of brands. both sellers and buyers in Hong Kong charge. Drop us an email to One of the retailers which enjoyed and across Asia. “Hong Kong is a great cp@investhk.gov.hk and we look growth by focusing on Hong Kong middle ground, very multi-cultural, forward to helping you grow! local consumers is DON DON DONKI. lots of mixed influences and plenty of Mitsuyoshi Takeuchi, President fashion lovers!” says Fanny Moizant, & Director of Pan Pacific Retail Co-founder of Vestiaire Collective. Management (Hong Kong) Co., the operator of DON DON DONKI, says, Vibrant startup ecosystem: A city www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 43
ASIAN RETAIL OUTLOOK Welcome to the new customer experience The ‘new normal’ now requires a reimagining of how e-commerce and bricks-and-mortar work together in retail. BY SALESFORCE IN TODAY’S NEW NORMAL, THE SHOPPING EXPERIENCE IS NO longer defined by the boundaries of bricks-and-mortar, but by the customer journey as a whole. While building trust along that journey has always been critical, it’s becoming ever more time-sensitive. Consumers now expect retailers to engage them whenever and wherever they want, with a shopping experience tailored to their individual needs. To do so, marketers are leveraging more data, technologies, and channels to create this type of relevant and customised customer journey. As digital-first shopping is here to stay, retailers must invest in connected experiences — and success hinges on frictionless operations. 1 Creating cohesive customer experiences Today’s consumers expect more with only about half saying their goals are aligned. automate answers to questions such as “Where’s my order?” And consumers can feel it. Only 13 This is generally well-received than just personalised experiences. per cent believe that companies excel by younger consumers, including More than 67 per cent attribute a at delivering connected experiences. millennials and gen Z-ers, 68 per cent contextualised, connected customer To close this gap, 44 per cent of of whom say they prefer personalised journey as being a key to winning retail and consumer goods marketers shopping experiences that are their business. say they are now leading customer based on their purchase history. In This is particularly relevant in the experience initiatives across their addition to driving engagement for retail world, where technology is organisations (versus just 24 per cent retailers, AI-powered personalisation blurring the physical-digital divide in 2017), and metrics are being shared. is also a revenue generator, since and disrupting how consumers shop Sales effectiveness and customer online shoppers who act on product from pick-up-in-store programs to retention rates — historically recommendations yield 14 per cent cashier-less stores, mobile payments considered success indicators for sales higher average order values. and digital wallet services. and services teams — have reached However, as data protection laws The result is mounting pressure the top tier of marketing KPIs, like GDPR expand universally, for retailers to deliver hyper- underscoring the evolution of cross- retailers are understandably personalised, concierge-like shopping department collaboration to enhance concerned with how to move experiences with efficient handoffs the customer journey. forward. Many have invested time between departments and channels and money into curating consumer before, during, and after a purchase. While 88 per cent of retail marketers share integrated tech 2 Building trust in AI-powered personalisation In an era when opaque data-use data and building systems to offer personalised experiences. On top of that, another rising privacy concern stacks with advertising teams, this policies have jeopardised customer revolves around how retailers are alignment alone is not enough. trust, retailers are increasingly obtaining and using location data A unified front has to span the cognisant of balancing AI-powered from customer’s smartphones to entire customer journey. However, personalisation with privacy. direct advertising strategies. collaboration between retail In retail, AI use cases range Retailers must delicately navigate marketers and their commerce and from personalised product the flow of personal information, service counterparts is less common, recommendations to chatbots that with 89 per cent of consumers 44 | ASIAN RETAIL OUTLOOK 2021 www.insideretail.asia
Most common tech used for customer identity purposes 1. Customer relationship management (CRM) syste, 2. Marketing database 3. Customer data platform (CDP) 4. Data management platform (DMP) 5. Email service provider (ESP) (DMPs) are gaining traction, however, broadening the use of this technology beyond its traditional use case of media buying and optimisation. Fifty-five per cent of marketers currently use DMPs with an additional 35 per cent planning to use them within the next two years. This is unsurprising given the number of high-traffic systems that retail companies must manage, such as loyalty, point-of-sale, and valuing transparency in how their data is used as a trust factor. 4 Driving real-time omnichannel engagement To win sales and increase loyalty, commerce infrastructure. To understand who customers are and what actions to take based 3 Revolutionising loyalty programs In the past year, existing loyalty retail and consumer goods marketers are engaging consumers in the real- time, omnichannel manner that they on their unique needs, retailers are increasingly using second-party data — that which is shared between programs were put to the test by novel expect. consenting parties like brands and customer behaviours and expectations The gold standard is dynamic, publishers — to extend audiences brought by the pandemic. While two-way conversations between and refine growth targeting. online shopping skyrocketed global customers and brands, where As we enter the post-Covid world, digital revenues — by 71 per cent in messages evolve across channels retailers are responding with agility Q2 2020 compared to the previous year based on the customer’s actions. and resilience to navigate dramatic — consumers are now more willing This gives consumers a consistent shifts in consumer preferences, to change brands based on value, experience regardless of their channels and behaviours. By availability and convenience. point of communication when adapting to these predominant Loyalty programs have interacting with a brand. Successful trends with customer- and digital- traditionally been transaction- omnichannel engagement is easier first strategies, retailers can focused and impersonal; customers said than done, however, as average overcome challenges and build trust earn points, redeem rewards, and consumers use 10 different channels in the new normal of retail. the cycle repeats. Customer loyalty to communicate with brands. Want even more valuable, today, however, is extremely granular To this end, retail marketers are actionable insights? Download across all touchpoints. Generally, turning to established channels, such the latest State of Sales Report on customers and brands engage in a as websites, email and social media, how sales teams around the world value exchange, whereby the former and dynamically coordinating them are adapting to recover and grow agrees to share their information for with emerging channels, such as during a pivotal time — and how personalised incentives catered to virtual assistants, augmented reality, you can too. their preferences. and connected devices. In this regard, retailers are With 68 per cent of consumers re-evaluating and revolutionising saying cross-channel consistency is Salesforce is the world’s number one their value propositions for higher vital to win their business, the ability customer relationship management customer retention. Loyalty initiatives to engage shoppers where they platform, bringing customers and are being embedded across the entire are — no matter the channel — is companies together and AI to everyone. supply chain, from the frontline staff increasingly critical. As one integrated CRM, Salesforce who bring loyalty programs forward gives all your departments a single, to the merchandising teams that select products as part of a promotion. In this digital age, customised 5 Unifying customer data Today, retailers have more data at their disposal than ever before. shared view of every customer. Visit: salesforce.com. All data cited in this article was experiences — from free shipping However, they are challenged with generated by Salesforce surveys and and sneak-peek product previews unifying that data from an average of market research of recognised industry to personalised promotions and 16 sources, a 60 per cent increase in professionals. This information is publicly individualised incentives — all boost just two years. available on our website and in our customer loyalty. Data management platforms Most various market and industry reports. www.insideretail.asia 2021 ASIAN RETAIL OUTLOOK | 45
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