According to the Singapore Business Review, sales within the brick and mortar retail industry experienced a drop of 1.1 per cent to six per cent during the month of November 2016. Affected sectors included watches and jewellery, fashion brands, furnishing and décor stores, supermarkets, department stores, and even petrol services.
Meanwhile, OCBC Investment Research recently predicted that Singapore’s e-commerce market will grow to USUSD 5.4 billion by 2025. With the aid of technology and shifting customer behaviour, the game for retail brands and marketers is transforming in Southeast Asia – through the rise of e-commerce and mobile e-commerce, the distinction between online and offline retail is blurring rapidly.
Traditional retailers are definitely feeling the heat, and thus need to adapt to the changing retail landscape. Robinsons, a traditional retail company which has department stores in Singapore and Malaysia, struggles to revamp its business model and start its online store to capture the digital consumers.
Most notably was the recent closure of John Little – Singapore’s oldest department store of 174 years – owned by the Al-Futtaim Group and managed by the Robinsons Group. Despite serving Singaporean consumers for nearly two centuries, John Little’s biggest downfall was failing to foresee the rapid digital tide that has inevitably shaped shopping expectations of today.
As consumers become more digitally savvy, they want access to services quickly, at all hours and across multiple devices. What’s more, they are demanding relevant, personalised content. This demand has triggered retail brands to move their business online, not only to reach their target audience at all times, but to also allow consumers to be actively engaged with the brand via personalised service. This deepens bonds and increases brand loyalty.
In fact, there is a direct correlation between increasing customer retention by providing personalised services and increasing revenue. Bain & Company reported that a mere five per cent increase in customer retention could result in more than a 25 per cent increase in business and sales profit.
Despite that, according to research Sitecore did in conjunction with Vanson Bourne, a majority of brands in Singapore were only spending 14 per cent of their online commerce budget into creating and managing their digital user experience. Furthermore, it was found that 93 per cent of consumers said that they would take action as a result of unmet expectations such as brand switching, requesting compensation or, in the worst of case, become a lost customer. More than half of the survey respondents (68 per cent) recognised the fact that consumer loyalty was lost without a focused brand experience.
A retail brand’s journey into the online sphere is not an easy one – what should retail brands and marketers do then, to stand out from their competitors, and keep their consumers shopping with them?
Well, there are two things:
1. Brands need to know which phase the customer is in
This would allow the retailer to automatically add value to the relationship by offering personalised content instead of bombarding them with irrelevant and annoying content. Begin by using integrated content and commerce in order to create a unique value proposition that delivers on top consumer demands—fast access to services, 24/7 connectivity, multi-platform access, personalized customer experiences, and more.
2. The purchase journey begins earlier than you think
Retail brands must understand that building revenue no longer begins and ends in the shopping cart – rather, it is how they communicate with their customers before, during and after their shopping transaction that drives brand loyalty and customer retention. Brands need to practice customisation before consumers are even aware they want the product. By seeding relevant references and information in appropriate degrees, retailers give the impression that they’re not only well aware of customer needs, but also more than capable to provide the correct product service.
Get that right and you will get your customer retention rate headed in the right direction.
The rising importance of technology in retail brands
A growing group of forward-looking retail brands are starting to marry advanced technologies with their businesses, as consumers expect an enhanced shopping service and experience at all times and at any place. This has resulted in the rising popularity of Chatbots, who are slowly evolving into the digital retail assistant we have all dreamed of – the ability to push out recommendations shoppers want before they realise it themselves.
This growth trend was reported by IBM who predicted that the AI marketplace would spike over the next few years, from being worth USD 8 billion in 2016 to USD 47 billion by 2020. After all, more and more consumers now have the option to shop without leaving the comfort of their home and yet still engage with the brand the same way they would if they were there in person. This trend isn’t only affecting physical retail stores though; Booking.com recently revealed a new chat tool allowing travellers to communicate directly with hotel staff. They found that 75 per cent of their consumers favour this self-service option where they can put in straightforward requests.
What’s next for the retail industry?
The shifting retail industry means that it is no longer enough for retail marketers to depend on traditional marketing tactics. To stand out from their competitors and remain relevant to their target shoppers, they not only have to be at the forefront of technology, but also strategically leverage on it to complement the offline shopping experience. More and more consumers no longer seek a one-size-fits all purchase experience, nor do they want to have to navigate around complex webpages when they can simply direct their questions straight to a Chatbot.
By placing the consumers and their needs at the heart of the company’s efforts, it will be much easier to decide on the appropriate approach. AI technology can be a great asset in helping to identify consumers’ shopping habits and also preferences. Companies can build brand loyalty, engage customers and most importantly, increase revenue, by delivering highly-relevant content to their customers. Personalisation is the way forward, and it’s time for brands and companies to start addressing this.