INTERNET businesses have reached new heights, according to Google, Temasek and Bain & Company's recent report for 2019. The study analysed the current and future potential of the South-east Asian Internet economy across its six largest markets – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – and showed that the region's Internet economy has hit a new milestone, reaching US$100 billion for the first time this year.
The figure is a 39 per cent increase from US$72 billion last year; and the Internet economies in Malaysia, the Philippines, Singapore and Thailand are growing between 20 and 30 per cent annually; while Indonesia and Vietnam had growth rates in excess of 40 per cent a year.
According to the report, this surge across SEA can be attributed to the influx of new online users in the region – about 100 million more compared to four years ago – and by 2025, the regional Internet economy is tipped to triple to US$300 billion as a new generation comes of age and people outside big cities come online.
The biggest and fastest-growing sector is e-commerce – valued at US$38 billion today compared with just US$5.5 billion in 2015 – and on track to hit US$150 billion by 2025 as more than 150 million South-east Asians are now buying what they need online.
Here, the Singapore Department of Statistics said e-commerce made up 5.6 per cent of all shopping in Singapore in July 2019. A tech-savvy population and the government's goal of becoming a Smart Nation will only fast track that growth. Brick-and-mortar business owners are more than aware of the change of tide, as evident by the way that retail is currently evolving in much the same way that radio adapted when the television arrived.
With changing consumer demands, experiential retail has become the new buzzword. The term at its core means that on top of purchasing products, customers are able to have a personalised and unique experience that is consistent with the store's branding.
As a possible preview of how the mall of the future might look like, CapitaLand's cutting edge Funan Mall has a "Tree of Life" in the centre of the mall, which provides spaces for brands to showcase their products and crafts, or even conduct classes and workshops. Mahota Commune, which sells organic food, also dabbles in experiential retail at its Jalan Besar premises, holding workshops, events and activities such as meditation classes and farmers' markets.
In research conducted by European trade event RetailEXPO, seven in 10 shoppers interviewed said that they would shop elsewhere if a store did not provide an exciting and engaging environment. This is further supported by the findings from
The Future of Retail 2017 study conducted by digital marketing agency Walker Sands. Eighteen per cent of respondents said that a more personalised and unique experience would cause them to shop more in physical stores.
"The role of the store has evolved into a destination, into a community hub and how customers can come together and bond," notes Elaine Heng, FairPrice's deputy CEO, at a recent seminar on the business-to-consumer (B2C) landscape.
Chris Chong, managing director of CapitaLand Retail, adds: "We have to recognise that consumers today do not just want to go out because they need to buy something. They go out because they want to see different things, they want to experience, they want to learn. As part of that, then (they) will shop more."
Talking about the benefits that experiential retail brings, Manish Kumar, managing director of marketing technology firm Stratacache, explains: "Experiential retail offers brands an opportunity to find ancillary ways to support their community of customers, reach out to their target audience and establish themselves as more than just a product." He adds: "By creating a desirable environment and inviting customers to touch and test products, experiential retail creates a symbolic connection between people and products, which intensifies their desire to possess the product. It drives a feeling of ownership, which intensifies the need to make a purchasing decision."
Headquartered near Philadelphia in the US state of Pennsylvania, Stratacache is in the digital signage industry where it creates audience engagement solutions. It has been involved in a number of experiential retail concepts, including one called Lift and Learn, which displays relevant information on a screen whenever a product is lifted from its spot on the store shelf. Customers are also able to lift multiple items to compare them.
As the popularity of experiential retail increases, Mr Kumar notes, "retailers and landlords recognise the need to offer hands- on, authentic experiences that will draw shoppers into their stores or shopping centres with the aim of creating a personalised and appealing shopping experience to increase footfall and drive sales".
In Singapore, companies such as maternity goods retailer Mothercare, homegrown fast fashion brand Love, Bonito and French sporting goods retailer Decathlon are leading the charge towards "new retail". Decathlon allows customers to try out the equipment that it sells, creating special "product test zones" around its Singapore Lab store that simulate actual play conditions.
Mothercare incorporates what it calls "real life elements" – such as stroller test tracks, baby dolls and airplane overhead cabins – that allow shoppers to test out products before purchasing them as well as "inspirational nursery room sets" which let parents envision how the new additions to their nests may look like.
Love, Bonito's store at Funan Mall has, among other notable features, an augmented reality (AR) walkway where customers can pose against a backdrop of virtual flowers.
With Decathlon's ambition to make sports accessible to more people, coupled with the fact that sports is an intrinsically physical experience, it comes as not much of a surprise that the store allows customers to try out its products. What is intriguing is the sheer variety of sports that is covered by "product test zones". These range from four tracks simulating the different types of surfaces that runners will face, to a small area for skating and even a mini pool for customers to try out the stand-up paddling equipment.
Nathaniel Gregory, Decathlon Singapore lab store leader, believes in the concept of "retailtainment", which was something introduced by American sociologist George Ritzer in 1999.
Mr Ritzer defined it as "the use of sound, ambience, emotion and activity to get customers interested in the merchandise and in the mood to buy".
Giving his own take on this, Mr Gregory says: "I think each brand needs to identify retail as a lifestyle and the usage of products as a lifestyle. For example, for us, sports is part of a healthy lifestyle. So what we need to do is: on top of just selling items, we need to provide spaces where you can try and test the products. We need to provide events for our customers to practise their sports with us. We need to provide showers, a nice cafe for them to eat healthily and nutritiously."
On that last point, Decathlon has revealed that it is currently working towards opening a cafe in its Singapore Lab store towards the end of the year. This will fit into its overall desire to promote a healthy lifestyle by offering nutritious food to its customers.
While Mr Gregory believes that customer loyalty is something which is harder to come by today, he notes: "We believe that experience is the thing that creates loyalty, it is not discounts, not deals, but it is experience. When kids come here, it is like a playground for them, and they will always remember Decathlon 10-15 years from now; and they can try a new sport, thanks to Decathlon."
On top of the 30 sporting events available every week at Decathlon Singapore Lab, customers can also go for onboarding classes, participate in interest groups, talks and sharings while gaining expert advice on topics such as nutrition, sleep, day-to-day exercise and more, as part of the services provided by ActiveHealth, an initiative by Sport Singapore.
Mr Gregory emphasises: "No more are we a one-way transaction, we are multidimensional in the manner in which you can come here – it is a hangout. Decathlon Singapore Lab is open 24 hours. You have free Wi-Fi, you can participate in free sports events, you can purchase a product, you can understand and get advice from ActiveHealth. These are the kind of partnerships we want to create, with one simple purpose, to make sports more accessible."
PERSONALISING THE RETAIL EXPERIENCE
Another retailer striving to be more accessible is Mothercare, which recently rolled out its Nursery Advisors programme. These advisers are said to "be a first touch point for parents to help them make better purchase decisions", says Mothercare managing director Pang Fu Wei.
Mr Pang likes to think of them as akin to relationship managers at a bank, helping soon-to-be parents sift through the mountain of information available online and from friends and family.
He found that the overwhelming amount of information available and conflicting opinions can be problematic. For instance, he points out, the most top-rated strollers online are heavy strollers that are more suitable for the Western market rather than the Asian parent, who typically prefers lightweight strollers.
Mothercare's Nursery Advisors start by asking parents key questions, rather than immediately trying to promote certain products. They are also able to curate products based on the needs and budgets of the parents while educating them on the different categories of items, fleshing out key details.
Mothercare also has a play area, a plane cabin to simulate how its strollers can fit in an airplane, a stroller test track and a baby gear cleaning service. The stroller test track is something that
Mr Pang feels strongly about, saying: "The current service process is that customers will come in, store staff will introduce the stroller, show you how to open it, how to fold it, the parents carry the stroller and see how heavy it is – and that's the end of the entire demonstration. They don't even get the opportunity to test the stroller, which is ridiculous. It is almost like saying you go to the car showroom and you never test drive the car."
The stroller test track not only comes with different surfaces but also with a weighted baby doll, so that parents will know exactly how a stroller will feel with their child in it. This is necessary, as Mr Pang points out that when a stroller has a load in it, it reacts and moves completely differently. All these innovations are currently available at Mothercare's newly opened flagship store at HarbourFront Centre.
Coupled with all these innovations is Mr Pang's belief that retail in Singapore is still "alive and well". He adds: "The bulk of sales still goes through brick-and-mortar. For the Singapore market, physical stores will still be the main channel of revenue for the majority of established retailers. If you take a look at the split, 90 per cent of the market are still physical stores. Even if you look at mature economies in China and the US, where geography plays a part as to why consumers are shopping online, (e-commerce) still has not tipped the scales to (be) the majority. I still think physical stores play a very sticky role in the whole retail experience."
A BRAND AS A LIFESTYLE
That same concept may invoke a different response from Love, Bonito, a brand which was birthed in the online realm and broke into the offline retail space only in 2017, with its first brick-and- mortar store at 313@Somerset.
Love, Bonito's chief commercial officer Dione Song thinks that the current retail landscape is a little dry and dull. "You see a lot of brands and companies not innovating and moving as quickly with the times and the changing preferences of the consumer. Malls are getting a little homogenous, a little boring, everyone is sort of doing the same thing," she says.
Love, Bonito is putting its own spin on retail, and Ms Song stresses the need to provide something different and refreshing. This is especially so as she believes millennial consumers are looking for more community and connection, especially in the current transactional and unemotional digital age that we live in. "Millennials are not just subscribing to a product, they are subscribing to an identity, to a lifestyle," she notes.
In that respect, Love, Bonito is well equipped, especially with its new store at Funan Mall. The space has a large community area, with spots such as an infinity mirror room for shoppers to take that instagrammable photo, an Augmented Reality (AR) walkway where shoppers can take a photo against a backdrop of virtual flowers, as well as personal stylists on demand.
Love, Bonito also brought over its fitting room queue system from its flagship store, which allows shoppers to take a queue number and get an estimated wait time, so that they can free up their time to do even more shopping or go get a cup of coffee. Its fitting rooms are modular as it took note of the communal nature of shopping and designed the rooms so that shoppers can try out clothes in groups.
Even with all these neat tricks, Ms Song is quick to point out that experiential retail is more than gimmicks and specific one- off features, saying: "It is about how everything comes together: thinking about the audience and serving them through all the different means in a very 360-degree integrated way and the most traditional sense – awesome good service."
Correction Note: A previous version of this article referred to Dione Song as Love, Bonito’s chief operating officer. She is instead Love, Bonito’s chief commercial officer.