Six future-proofing strategies for retailers by Bain & Company

25 November 2020 Consultancy.asia
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As Asia-Pacific’s (APAC) online retail market booms, Bain & Company has laid down six future-proofing strategies for retailers to make the most of future market conditions.

Around the world, online retail or ecommerce has been the sparkling growth story amid wider economic gloom during the pandemic. In Asia, the segment was already booming well before Covid-19 was a reality. According to Bain & Company, key markets such as China have been racing through growth stages that the US and Europe took years to navigate.

China is an exception, and is currently leading the way in APAC. Other mature markets such as South Korea, Singapore, Japan and Australia have reached high market penetration, and are unlikely to soar as high as China. At the same time, other markets such as Vietnam, Indonesia and India are labeled by Bain as “fast modernisers” – where digital disruption remains low and the market immature, but growth is imminent at unprecedented speeds.

Online retail development across APAC

At any rate, the APAC market as a whole is expected to be an online retail bright spot in years to come. As this scenario unfolds, here are six steps that all retailers should follow – as explained by Bain.

Six imperatives 

One is to “reinvent the value proposition.” Quality and marketing is no longer enough to win over customers. APAC consumers are young, tech savvy, busy and discerning, which means convenience, efficiency and speed also need to be key priorities for retailers, alongside traditional considerations.

Next up is to optimise digital offerings. Not only are APAC consumers shopping more online, they are increasingly relying on mobile for most stages of the consumption process – from finding a brand, to building interest in a purchase, to the actual transaction, and eventually to leave a review of the product. Mobile-based social media platforms offer a single portal for all of these functions – something for retailers to consider.

The path to purchase is digitalising

Third is to revamp the brick & mortar presence. No doubt, many retailers can survive without an actual store, and many in the APAC region do so. Immersive technology now even allows consumers to get a realistic feel of a product. That being said, Bain points out that a physical store still has value in a purchase – fancy displays, window-shopping, etc. Building omnichannel capabilities into these brick & mortar stores will be a key link in the future retail landscape.

Step number four is to optimise supply chains and “master the last mile.” Consumers are demanding more speed in delivery – in some cases within 30 minutes – although many cities in APAC face traffic and congestion issues that block deliveries. The boom in volumes in the wake of Covid-19 also caused delays in deliveries across APAC, exposing weak spots in the supply chain. Building resilient and hyperlocalised supply chains is crucial to keep customers interested.

Fifth, retailers need to align with an ecosystem. Be it Tencent, Alibaba, Flipkart, or even “super apps” such as WeChat, a strong ecosystem partner is key to positioning in the future retail landscape. A number of new ecosystems are set to emerge in response to this demand, giving retailers a range of options.

Last on the list of Bain’s imperatives is the ever-present need for digital transformation. Data analytics can deliver invaluable insights on consumer patterns and preferences. Retailers that don’t invest in data assets risk falling behind.

Many of these steps were already on the priority list before this year, although the crisis has intensified these needs considerably. Co-author of the report and Bain expert partner Kanaiya Parekh elaborated: “The current macro-economic conditions have caused intense and unwavering challenges for some retailers, while others have experienced a period of remarkable results.”

“It’s clear from this research that retailers must immediately focus on developing and implementing strategies which will future-proof their business, including reviewing the role of their stores as well pivoting their operating models to be more agile and data driven.”