‘Huge disruptions’ to change face of shopping by 2025


(Source: by Chris Schnabel | Rappler | June 10, 2015)

In a decade’s time, the retail sector will look nothing like it is now, says market research firm TNS

Massive disruptions in retail sector will change the face of shopping in the future, making it totally unrecognizable from its current form, according to global market research firm TNS and Kantar, a retail consultancy.

“In the next decade, people will still shop but it will look nothing like we know it as today. We’re going to see huge disruptions on account of technology, geopolitics, and increasing economic prosperity in various countries,” Tara Prabhakar, regional director for TNS Asia Pacific, said at a briefing on Tuesday, June 9.

The changing global retail patterns can already be seen in the rise of Asia’s brands, lead by China which is slowly moving from a “made in China” model “to a designed in China,” showing an increase in quality.

The impending regional integration will also play a part by giving Asian brands more access to Association of Southeast Asian Nations (ASEAN) member-countries traditionally catering to Western brands.

Technology though will be the biggest factor, Prabhakar said.

TNS holds that retailing has 3 key elements: shoppers, the activities involved in reaching and connecting with shoppers, and the actual transaction that takes place.

Prabhakar said while these elements will not change, they will evolve dramatically, which is why retail firms and brands would need to evolve with them or risk becoming obsolete.

“Retail in 2025 will look different from today as the digital ecosystem of today from that of 2005,” Prabhakar said.

Online retailing

The traditional model of selling a lot of products under one big space – build it and they will come, such as supermarkets – no longer stands, Prabhakar said.

With the rise of online retailing, people have fewer and fewer reasons to leave their homes. When they do venture out, they will try and multitask and get as much done as possible.

“We believe that the occasions to gather will consolidate. Retail will stop being just a point of transaction but rather just one component where gathering can take place,” she explained.

In the Philippine, this is already beginning to be seen in malls that celebrate religious masses (retail and worship) and ice rinks (retail plus entertainment).

Prabhakar also mentioned that the future would see the rise of mixed-use developments – complexes that blend work, life, and play as they exemplify the trend toward convergence.

The biggest retailer players of the future will be online players, firms like Amazon, Alibaba, WeChatand Google, she said, because they have the ability to gather the most people together online.

In the Philippines, Prabhakar added, traditional retail would not die out completely as it is ingrained in the culture, but e-commerce will gradually become a dominant force.

Targeted advertisements

Once it has gathered people together, retailers still need to develop an emotional engagement to get people to buy, Prabhakar explained.

The traditional strategy was to bombard consumers with ads, but technology has allowed retailers to tailor their content, through targeted advertisements.

Big data allows businesses to know more about shoppers, and technology allows them to deliver personal, location-based, real-time value, said Prabhakar.

Delivering to different ends

Delivery in the future will be challenging, due to infrastructure and the massive shopper polarizationin terms of gender and income level, as well sophistication across markets.

In all of the modern cities you will have two sets of shoppers, the “haves’ and the “have nots,” who have different delivery needs and willingness to pay for different delivery options, Prabhakar said.

She added that in the past, retailers would target specific segments but today, they cannot afford to do that due to the high cost of real estate, so the only way to make a profit is to target all of these polarized sections.

This necessitates adopting differentiated strategies since what the “haves” want is not what the “have-nots” want.

One way of differentiating between them is by offering customized delivery options for different sets of shoppers.

Purchases delivered same-day, at a preferred time, at a preferred place, could mean value to the “haves” who are willing to pay for the luxury, Prabhakar said.

The “have nots” may not have the additional funds for such a service, but do have the option of self-collection as local pick up points emerge in a variety of convenient places.

Convenience is also being aided by the proliferation of automated services.

Apps like TaskRabbit allow users to source services from a wide range of small suppliers and can also be used to outsource deliveries of different goods from retailers.

Convergence of distribution

In Asia, big and small retailers have been finding creative ways of outsourcing their network and delivery options that allow for efficient distribution. They can pass this to consumers in the form of lower prices.

In the Philippines, LBC360 has enabled small retailers to reach provinces by providing the logistics and infrastructure.

Zalora has tied up with 7-Eleven to enable consumers to pick up and pay for goods bought online through their convenience stores in Thailand, and will soon start a similar service in the Philippines.

Another possibility, Prabhakar said, is using sari-sari (small variety) stores, which are ubiquitous throughout the archipelago, to extend a retailers network as they have access to multitudes of consumers.

“Shoppers will soon expect to shop anywhere, anytime, and receive the product with minimum time lag. Winning in emerging markets is all about winning in distribution. And technology and crowd-sourced models allow businesses the ability to do this profitably,” Prabhakar said.