With e-commerce being fitted into their arsenals, retailers are now aiming to provide new experiences and greater convenience for shoppers. And while bricks-and-mortar stores will continue to exist, they are no longer places exclusively for shopping, but also must function as showrooms and fitting rooms.
Many modern shoppers now pick what they want online, search for the best price, find a time slot, choose how they want to pay, and wait for the item to be delivered to their home. However, many consumers still prefer the experience of physical stores, which are developing new attractions to keep customers coming back.
“Today’s consumer no longer goes shopping, but is shopping, all the time and everywhere,” said Willy Kruh, global chair of consumer markets at KPMG International.
“Nevertheless, despite the rise of online shopping, e-commerce still makes up a relatively small percentage of total retail spending.”
According to a report by eMarketer, worldwide retail sales totalled US$22 trillion in 2016, of which only 8.6% or $1.9 trillion was retail e-commerce. By 2020, total retail sales are expected to reach $27 trillion, with e-commerce accounting for 14.8% or $4 trillion.
Among those adapting to the new reality is Central Group, Thailand’s largest operator of department stores and shopping malls. Its new “Store as a Theatre” concept combines innovation and technology to offer customers more fun while shopping at Central department stores.
“Consumers nowadays no longer want only the products but they also want new experiences that are current or ahead of the trend. They also want convenience, promptness, support and responsiveness to personalised needs,” said Piyawan Leelasompop, vice-president of marketing at Central Group.
Retailers in Asia are keeping a close watch on their peers in North America, where e-commerce has eaten into the revenues of many big chains, to the point where some household names have started to close stores by the dozen. The “hollowing out” of shopping malls is another trend being observed in the United States.
“This is not a cyclical issue,” said Jason Mudrick, whose $1.6-billion Mudrick Capital Management specialises in distressed investments. “It is secular issue, a forever trend. This is the Amazon effect and it is here forever.”
In 2015 alone, about 6,400 shopping malls closed in the United States. American Apparel, which had $633 million in sales and more than 200 stores in 20 countries in 2013, is now bankrupt and was sold to Gildan, a Canadian apparel company, for $103 million in January this year. Rue21, an American retailer to young men and women with 1,194 locations in 48 states, this month announced plans to close 400 stores. Also struggling are American Eagle, Abercrombie & Fitch and Aeropostale.
JC Penney, Macy’s and Sears are also turning off the lights in malls across the US as they adjust to changing tastes and the shift to online spending. Macy’s plans to close 68 stores, resulting in 10,000 job losses. JC Penney shrank from 1,104 stores in 2012 to 1,013 at the end of 2016. It plans to close another 138 locations this year.
Retailers in the US cut 30,000 jobs in February alone, industry figures showed.
A similar level of technological disruption is on its way to Southeast Asia but some of the region’s retailers are still unaware of the looming threat, says Anson Bailey, leader of consumer markets in Asia Pacific at KPMG in Hong Kong.
“Everyone has a plan until they are punched in the face,” he said, quoting Mike Tyson, “and you are about to get punched in the face if you don’t do anything.
“There is a chance that we will see the fall of…