Why retailers in Asia need to get smart about digital design

By Keynes Yeo

I admit it, I love shopping. For me retail really is therapy and Asian cities are little slices of retail heaven. With so many brands competing for the money in my pocket there’s never been a better time to be a shopper. Retailers have to work hard to stand out from the crowd and the ones that are doing it right are the ones that are getting smart about design.

When I say design, I mean design in the larger sense of the word. The design of the customer experience. Every touch point, every customer interaction, every detail. The really great retailers are the ones that are designing the shopping experience around me. The one’s that realise they need to design a shopping experience that gives me choice.

They know they need to make it easy for me to shop in the way that I want, when I want and where I want. They understand their store may just be a showroom for their products and not necessarily the place I’ll make a purchase. They know winning me over on my mobile is just as important as winning me over in the mall. Today, digital and physical need to be elegantly and seamlessly interwoven to deliver the shopping experience Asian consumers like me expect.

Getting good at design and getting smart about digital poses big challenges, but the rewards are there for the retailers that get it right.

Firstly there’s the opportunity to cut costs by increasing the proportion of digital sales in a climate of rapidly rising rents and soaring staff wages. Keeping these costs low through good digital channels allows retailers to keep their product pricing competitive.

While pricing is important everywhere, it’s worth noting that price comparison is particularly important in Asia given the percentage of a shopper’s total income committed to even relatively small ticket items.

This is highlighted in a recent IPOS study that showed Thai shoppers are willing to spend 27.6% of their monthly wage on a pair of Nike training shoes versus a New Yorker willing to spend a mere 2.91%. When the relative investment is so high for the Asian consumer, they want to make sure they’re getting the very best deal on the market. We even have a Singlish way of describing this, as being ‘Kiasu’ (the psychology of not losing out when there’s a better deal).

Added to this is the burgeoning market of increasingly affluent and tech savvy shoppers across the region who are simply in love with their smartphones.

Across South East Asia, smartphone use is exploding with emerging markets such as Indonesia, Vietnam and Mynamar showing double-digit growth in usage each year. In China, 45.8% of its population uses mobile devices to access the internet at some stage during shopping. While this is still lower than in the US or Japan, (at around 49%) the potential for growth is huge in the next five to ten years.

While shoppers like me still prefer trusted and familiar brands, younger groups of Asian shoppers may be more willing to try out the new and the novel. These are the groups that the new breed of e-tailers in the region is targeting. Established brands may have competitive advantage now, but if they want to win these shoppers they will need to stay ahead in the digital game.

There’re two retailers that I think are getting it right. Singapore-based retailer Charles & Keith is doing well at positioning itself digitally as a fashion brand using strong creative digital content and campaigns with broad regional appeal to win over shoppers across Asia and globally.

Another example of great digital innovation is Homeplus in Korea (part of the UK based retailer Tesco). They recognised the opportunities to be had in taking the pain out of grocery shopping for the notoriously hard working and time poor Koreans by creating virtual stores, which brings the grocery shopping experience into places like train stations, changing shoppers otherwise dead time into shopping time.The introduction of this service saw Homeplus’ online revenue increase130% making them the number 1 in the online grocery market in the country.

Successes on the scale of Homeplus’s virtual stores should serve as an inspiration for retailers everywhere. Innovating in a way that is meaningful in consumers’ lives pays real dividends. Getting smart about digital and designing the retail experience around the everyday lives of customers is the road to retail success.

To get it right, retailers need to think about their customer experience strategically, use customer insights to fuel meaningful innovation and apply design thinking across their business operations. A good start would be bringing shoppers into the design process, giving them a voice in the strategy, planning and innovation. Customers know what they want and how they want it and importantly they know what they don’t like. Retailers can’t afford to ignore their opinions or second guess their preferences.

 

What do you think?