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Future of retail

Voon Tai

Channel Planning Director

Geometry Indonesia


Be ready for the future of retail

Vendors and brands need to evolve

A new generation of shoppers driven by the forces of digital innovation, e-commerce and other macro trends is changing the face of retail.

In Asia Pacific, e-commerce is growing at 31 percent a year, with 76 percent of that growth coming from m-commerce. Indonesia’s online retail sector is growing rapidly, and is the most promising in Southeast Asia due to its large and young population. The number of online shoppers here grew by about 50 percent last year, and we see the country continuing to embrace digital channels.

Chinese investors have put US$2.8 billion into Indonesia startups. Alibaba has made a $1.1 billion investment in Tokopedia, Tencent is backing Go-Jek, and JD.com is funding Traveloka. With these tech giants’ investments into the country, we will see e-payment and mobile wallet usage growing exponentially. Go-Jek has Go-Pay, and OVO is partnering with GrabPay in Indonesia, and tapping into small and medium-sized businesses with the quick response (QR) code payment method, an initiative to widen its user base through non-cash transactions.

Digital transformation has significantly changed Indonesian shoppers’ behavior. This new breed of shoppers is mobile-first, connected to data, more informed than ever before, and will continue to make purchases at both bricks-and-mortar stores and online marketplaces. The following new shopping behaviors are now common: (a) research online, purchase offline; (b) buy online, return in-store; (c) browse in-store on mobile, buy online.

The rapid shift to online shopping is putting pressure on bricks-and-mortar retailers. In Indonesia, several local and multinational retailers have closed some stores since last year, including Ramayana Department Stores, Matahari Department Stores, and Debenhams. Retailers must embrace technology and learn to react to the demands of shoppers if they are to survive.

Omnichannel retail is the new normal of shopping and it’s the gold standard for success, as shoppers no longer see the distinction between online and offline shopping. People are demanding a unified and outstanding shopping experience across touchpoints, regardless of whether that’s in-store, e-commerce, mobile, web or social. Innovative brands and retailers will work together for success. Here are the top three top factors we think are driving retail:

1. Immediate convenience

Living in a busy, highly connected shoppers are demanding convenience and speed. Go-Jek has revolutionized convenience from its initial ride-hailing service to the current range of on-demand offerings on our doorsteps. People expect faster delivery and are willing to pay for the ease of having their demands met.

Looking to the future: Voice commerce is beginning to take off. Amazon’s Alexa (virtual assistant) allows effortless ordering, driving purchase decisions on our behalf, and managing delivery. Delivery drones are being experimented with by Amazon, UPS and Google for faster and greener delivery in future.

2. Immersive experience

Consumers are seeking immersive experiences now more than ever; something they can touch and feel. This new experiential retail signals a new role for physical stores to use technological features to improve the overall shopping experience.

Looking to the future: Technologies like virtual reality (VR) and augmented reality (AR) are potentially going to revolutionize the way people shop. Although technology can transform experiences, the store still matters. Sephora’s largest global flagship, in New York, is using new innovations to make the store a more experiential and more shoppable place. Brands and retailers that allow shoppers to shift seamlessly between digital and physical stores will stay ahead of the curve.

3. Personalization

Shoppers want good-fit communication (from brands and retailers) that is relevant and useful to them, at the right moment. Most people are likely to purchase from retailers that knows them, remembers their purchases, or make recommendations based on previous baskets.

Looking to the future: Artificial intelligence (AI) is streamlining the shopping process. Chatbots are being used to connect with shoppers and help them make decisions. Data and advanced analytics can customize offerings to attract new shoppers, or engage with existing shoppers to maximize conversions and drive loyalty. Google and Coca-Cola have created a system that’s able to serve shoppers personalized messages on an in-store terminal by scanning data from their smartphone as they walk nearby.  

So, why is tech giant Alibaba moving into the offline world through their physical supermarket Hema, while bricks-and-mortar retailers are expanding into e-commerce? Because omnichannel retail, combining bricks and clicks, is the future of retail!

And it’s already here.