The future of retail after COVID-19
The retail sector has been one of the worst affected by COVID-19 restrictions. But as the pandemic progressed, buyers flocked online to buy everything from food to fitness equipment, leading to a surge in e-commerce. Money Mind takes a look at what the future of retail could look like.
SINGAPORE: The retail sector has been one of the worst affected by the COVID-19 pandemic.
With most businesses shuttered and people asked to stay home during an almost two-month long "circuit breaker" period earlier this year to stem the spread of the outbreak, retail sales plunged by a record 52.1 per cent year-on-year in May.
Even after some restrictions were eased in Phase 2 of Singapore's reopening, June's retail sales were still weak and down nearly 28 per cent from the same period last year.
As the pandemic progressed, however, buyers flocked online to buy everything from food staples to fitness equipment, toys to entertain their children and electronics to work from home.
This has led to a surge in e-commerce sales, with the most traditional of sectors such as wet markets jumping on the online bandwagon.
Online sales in June jumped 151.2 per cent year-on-year, said UOB economist Barnabas Gan.
During the circuit breaker, Lazada’s grocery platform Redmart said it saw a more than 50 per cent rise in overall buyers. The number of brands, sellers and suppliers on its online shopping platform also spiked in the past months – driving higher traffic on the Lazada app.
Customer behaviour has also changed over the years, said Lazada Singapore CEO James Chang.
He said that in the past, customers used to search only for the items they wanted. Now, they are more engaged, and are browsing more.
And with experiences such as live streaming, the user engagement is much deeper.
With people spending more time at home, livestreaming helped boost Lazada’s Southeast Asia sales by more than 40 per cent in April, it said.
To take the combinination of shopping and entertainment astep further, Lazada partnered with Mediacorp to engage shoppers through radio and TV for its National Day mega sale campaign.
This content-commerce collaboration promised consumers engaging shopping experiences combined with special promotions, and the National Day Sale witnessed 66 per cent more cart activity even before the campaign began, indicating shoppers were preparing their carts early.
For electronics retailer Audio House, ramping up online engagement remains a priority, even as sales at its showroom begin to normalise in Phase 2.
Audio House deployed staff to do Facebook live sessions and digital messaging during the circuit breaker. This entailed fast-track training in presenting product features via the web, but it eventually paid off.
Marketing director Joanne Ho said that even though all buying activity had to go online, once consumers had the information they needed on hand, they proceeded with purchases of even high-value items.
But industry watchers say that despite the digital rush, purchasing decisions are still highly variable. Consumers might start the buying journey online, then end up purchasing offline, or vice versa.
And while the ways of buying might have changed, consumer expectations are still similar, said Olivier Gergele, EY Asean Consumer Products & Retail Leader.
They still want to be able to quickly find and buy the product that they want, at the right price and at the right time.
To survive, said EY, retailers need to adopt a sound multi-channel strategy, consistent online engagement, relevant product mix, focus on online marketing and pro-actively invest in back-end operations.
READ: Great Singapore Sale to go online this year with ‘new norm’ shopping experience amid COVID-19 pandemic
Fashion retail platform Zalora said data analytics can also help retailers better understand consumer buying patterns.
“We can't control the environment. Therefore, what we can control is making sure that we are able to react very, very fast. From a brand perspective it's going to be very important to have agile supply chains and agile manufacturing networks," said Zalora CEO Gunjan Soni.
In the last quarter alone, Zalora saw nearly 2 million downloads of its app. Amid rising demand, the retailer was quick to add essentials such as masks and sanitisers to its product offerings.
Certain categories such as sports, health, personal care, beauty and kids have been Zalora’s recent biggest sellers.
“These categories are growing anywhere from 70 per cent to even triple digit growth. The share of new customers in the revenue has also increased depending upon the market, anywhere from 7 per cent to 15 per cent. So definitely we see a momentum towards new customer acquisition,” said Ms Soni.
As the COVID-19 crisis makes health and environment important issues for consumers, Zalora has also seen growing interest for pre-loved items on its platform.
In the past months, both Zalora and Lazada have been helping small businesses build their web presence. While firms get support in content creation, marketing and training, Lazada said there is no short cut to winning in online retailing.
“When you open up a shop offline, it takes a bit of time for people to get to know you. We ran the data of what happened in the last few months, and one of the findings that we have is, those brands and retailers who joined much earlier on, long before the COVID-19 pandemic, were the ones who benefited the most," said Lazada's Mr Chang.
But even though e-commerce is now a core pillar for retailers, experts say physical stores still play a role and will evolve from just being a traditional sales channel.
EY's Mr Gergele said that customers still want elements of a traditional retail experience, such as physical interaction with the products in a brick-and-mortar shop. As such, retailers need to make sure that the overall offering in the store complements what is sold online.
Additionally, tech-savvy customers on e-commerce platforms will bring such digital expectations when they visit physical stores. To that end, retailers will have to recognise and respond to such new expectations, said Mr Gergele.