Over the course of the past decade, the retail sector has been facing plenty of challenges, from supply chain bottlenecks to surging inflation. Besides, as living costs rise, consumers become more cost-conscious, demand more value for money, and seek to be rewarded for their loyalty to brands. This situation is true for many locations across the globe, including the Asia-Pacific (APAC).
This guide is here to provide you with insights into how this vibrant region is coping with such turbulent times and unlocking new opportunities for growth. From Australia and Hong Kong to Singapore and Japan, local retailers sure do have some valuable lessons and trends to uncover to the global retail scene.
Inflation has had a major impact on the retail landscape. Based on the latest research, 36% of APAC consumers nowadays choose to wait for major sales, such as Singles’ Day, Black Friday, or the winter holidays to shop. This trend is particularly evident in Singapore, where 2 out of 5 shoppers delay their purchases until substantial discounts are available.
At the same time, the demands and preferences of consumers in the Asia-Pacific are also gradually evolving. For instance, in Australia, 59% of stores have reported increased customer expectations due to the rising cost of living. Besides, 57% of modern APAC shoppers are ready to abandon an online or offline purchase if their preferred payment method is not available.
Notably, this figure is in line with the global average of 55%, which highlights the growing importance of smooth customer experience worldwide. What’s more, in Hong Kong, where the government has distributed consumption vouchers through various payment platforms, this figure even reaches a whopping 66%.
Not all businesses are able to adapt to such drastic changes, with nearly half of retailers struggling to retain customers. This challenge is partly due to the fact that around 50% of APAC retailers lack a customer loyalty reward program. For example, in Japan, as many as 83% of retailers do not utilize customer relationship management (CRM) systems to gain better consumer understanding.
On the other hand, retailers who analyze the latest tendencies among shoppers and make efforts to adjust their operations accordingly are likely to see drastic sales improvements and future-proof their business. But which strategies are effective in such turbulent conditions? Keep reading to find out!
The rapid shifts experienced by APAC retailers are urging them to revolutionize their approaches. Here are some of the trending tactics local businesses have been adopting:
Using Customization to Overpower Consumer Doubts
Investing in a state-of-the-art CRM system is one effective way for retailers to attract new customers and boost loyalty among their existing clientele. Such data-driven solutions enable a more personalized shopping experience for consumers, which is what at least two-thirds of APAC shoppers wish for.
Moreover, consumers are eager to engage with the brands they buy from, especially if they get special offers in return. For instance, most modern-day shoppers are open to downloading a retailer’s app if it provides access to tailored loyalty rewards.
This readiness to interact with companies through various channels opens up plenty of online and offline opportunities for retailers to collect valuable data and enhance the customer experience.
Unifying Online & Offline Shopping Experiences
Even though people are going back to offline stores after the pandemic, it does not drive online sales down. As a result, retailers worldwide, and in APAC in particular, are expected to make money from both revenue streams.
Due to this, as mentioned earlier, creating a smooth shopping experience is quickly becoming one of the top priorities for retailers nowadays. While this aspect can entail many elements, one of the key considerations is the synchronized operation of physical and online shopping experiences.
Over half of APAC consumers already prefer stores that let them switch between channels, like checking things out in-store and buying online (showrooming) or vice versa (webrooming).
Besides, people across the region tend to enjoy having self-checkout and smartphone payment options at physical stores, with less than 5% saying they had bad experiences. Besides, these upgrades are beneficial not only for customers but also for retailers in countries with staff shortages, like Singapore. There, 55% of consumers reportedly used self-checkout kiosks in 2022 alone.
Expanding Business to New Territories
Another sphere of commerce that is experiencing a resurgence after the COVID-19 pandemic is cross-border trade. As the number of international purchases increases, retailers in the Asia-Pacific region are actively expanding into nearby markets.
More than 50% of businesses report improved performance due to their international expansions, while 1/3 of retailers are looking into online or offline commerce opportunities in foreign countries.
However, for these investments to yield desired profits, it is crucial to ensure a seamless and cost-effective customer journey. In fact, 34% of APAC consumers will only purchase from international retailers that offer reasonable shipping rates.
Additionally, providing commonly accepted international payment methods is essential to cater to the preferences of wider audiences. Surprisingly, less than 33% of APAC retailers currently do so, with Singapore leading in this regard.
Adopting a Holistic Approach to Commerce
Another great step that retailers in the APAC region and other countries across the globe can take to optimize their operations is to consolidate their processes on a single platform. This may include such online and offline elements as:
The list goes on! A good software solution will be able to logically display these elements, access real-time data from diverse sources, and provide high-quality insights.
This approach not only optimizes the creation of personalized shopping experiences but also serves as a solution to break down organizational silos, a challenge encountered by approximately one-third of APAC businesses. Notably, in Hong Kong, more than 80% of retailers have either initiated or are contemplating investing in unified commerce to address this challenge.
Those APAC retailers that have already adopted the unified commerce approach, have reported a 9% increase in revenue compared to those who have not embraced it yet. Impressively, some Japanese retailers have reportedly more than doubled their revenue by implementing this strategy. Yet, over 90% of Japanese retailers have yet to make sufficient investments in it, which clearly indicates the existence of adoption barriers.
In contrast, unified commerce is gaining momentum in Singapore and Australia, with twice as many retailers planning to invest in related technologies compared to last year.
However, as retailers modernize the shopping experience, it is also crucial not to forget about fraud. 1 out of 5 shoppers in Asia-Pacific had problems with payment fraud in 2022. And, due to this, 2/3 of them will be more cautious with online shopping in the future. Thus, we can expect more and more APAC retailers to implement advanced AI-based solutions to prevent fraud and protect their clients.
Overall, the retail landscape in APAC is a dynamic environment that is rapidly evolving to cater to the changing consumer needs and preferences. As a result, the untapped market potential for local businesses willing to make the necessary data-driven adjustments is immense. However, those who are not flexible enough to adjust their operations risk being left lagging behind.
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