Over the past two decades, Singapore has become the hub for everything – entrepreneurial, financial, retail, fashion, cultural… you name it and they have slayed it! In this blog, we will highlight how some of the latest ecommerce trends in the country has led to the dawn of a digitized hub.
Singapore was not new to ecommerce. Even before the pandemic era, there was a major disruption in the retail market with booming ecommerce and closure of traditional shops in 2017. In fact, a survey by Visa in 2014 showed that Singaporeans are the top online shoppers in South East Asia. While 26% of them were shopping online once a week, almost 50% of the shoppers said that they were likely to do all their purchases online.
This was primarily due to the level of internet penetration in Singapore. The digital infrastructure in the country enabled to achieve up to 88%, with a big chunk of the population comfortable with digital payment modes. It was also observed that high preference for online shopping was due to convenience, cheaper prices and direct delivery. While globally ecommerce retail jumped, online sales doubled in Singapore, demonstrating that consumers slid into the retail shift with ease. This also showed evidence that retailers that had an online presence before survived the economic crisis caused by Covid.
And therefore the trend was already set. Ecommerce in Singapore was flourishing, and marketers now have to match the pace of Ecommerce growth by learning the dynamic trends of the landscape. Let’s take a look at what’s trending in online shopping from this boom that retailers can draw cue from:
1) Store in their hands
The younger population of the country emphasize on the higher smartphone penetration. Therefore ecommerce players should lean towards giving mobile-first experiences to achieve a wider online reach. For instance, creating a mobile-friendly webpage can result in better search engine and organic traffic.
Shopee, one of the leading ecommerce platforms started in Singapore in 2015. They later spread in other parts of South East Asia. The platform sells products across different categories. One of the notable features of the platforms is its seasonal and non-seasonal offers, as well as livestreaming with popular social media influencers to gain attention from the youth of the country. Shopee grabbed the mobile-first trend and focused on optimizing user experience on the mobile app, reaching out directly to the younger users in Singapore.
2) Millenial customer experience
A 2020 study by market research consultancy Blackbox and survey firm Toluna said that almost 40% of consumers were not satisfied with their shopping experience. This shows that ecommerce platforms have a lot of scope for improvement which needs to be done by prioritizing the consumer’s needs. Introducing a chatbot to understand the customer’s concerns, also point out that shoppers would prefer an interactive medium to answer their queries. Retailers can consider using Whatsapp as a medium to get closer to the customer and understand their shopping behavior better.
Carousell, one of the world’s largest secondhand marketplace where customers can buy or sell electronics, apparels, used cars, cleaning and repairing services. To achieve empathetic and well-informed customer support, the company has implemented AI automation and data to anticipate customer needs. Carousell’s chatbot is able to find relevant solutions to consumers’ queries rapidly and accurately.
3) Omnichannel retail for stores’ revival
Even pre pandemic Singapore witnessed many traditional brick-and-mortar stores being closed. Covid had accelerated these closures. Omnichannel retail can thus play a role to bring these stores back to life. Stores can act as a pick-up point for ‘click and collect’ models where customers can buy the goods online and collect them at a convenient location of their choice.
RedMart, an online supermarket arm of the Lazada group is one of the top grocery shopping platforms in Singapore. RedMart has introduced many innovative strategies to ensure a seamless experience for consumer. For example, the platform records and automatically saves delivery preferences and commonly purchased items, leading to convenient shopping for the customer and higher conversion rates for the retailer.
4) Love for local
Post Covid, consumers’ interest in local brands is rising. This is a peculiar trend given that several international brands are found in the country. A news report by Strait Times explains that this is because Singaporeans want to support the regional brands to revive them from the Covid aftermath. This trend shows that a huge opportunity lies in partnering with such brands and attracting consumers for the right reasons.
Zalora, a fashion e-retailer that is taking over the street fashion space with its top international and local brands. Not only does Zalora partnered with several local brands through its marketplace where independent merchants can sell their products, the brand is also known for its blogs that contain guides and tips on fashion, beauty and lifestyle.
5) Go Experiential:
While consumers are engrossed in the online shopping world, retailers have come up with compelling reasons to bring customers back to stores through experiential retail. Experiential retail basically focusses on creating an immersive experiences for customers, prioritizing engagement over sales. Upcoming AI and tech solutions like augmented reality, interactive digital mirrors, do-it-yourself sections which allows customers to personalize their desired product would go a long way in building customer experience and eventually a long lasting brand relationship.
Bath & Body Works is an American bath shop brand that operates as part of the Valiram Group in Singapore. Last year, when self-care was gaining importance during the pandemic, Bath & Body Works swooped into the online space in 2020. Using the capabilities of Capillary’s Anywhere Commerce+ tool, the brand aced their ecommerce platform scalability and stability, managing a large jump in sales on the go live day of their website. Besides scalability, the brand also prioritized seamless consumer journey experience and enabled smart search merchandising on the website to resonate with their digital customers.
Digital dreams of a smart city
Thanks to the nudge from the pandemic, Singapore hopes to become a global ecommerce hub. In an interview with CNBC, Ben King (country director at Google Singapore) pointed out at the number of initiatives taken by the Singapore government to cultivate a conducive landscape for ecommerce and digital growth. While early in 2020 Enterprise Singapore announced an Ecommerce Booster Package, the government has now partnered with Google under the Skills Ignition SG initiative to train citizens who are looking for jobs in the digital industry. As Singapore is on the path to build a smart society, the country is gradually moving towards a progressive and increasingly digital economy.
Another bizarre possibility we might see in Singaporean ecommerce, is new found importance of the physical stores. For example, Singapore’s popular fashion e-retailer Love, Bonito has opened its third showroom in Singapore. In a Channel News Asia article, NUS Business School’s Associate Professor Tan Soo Jiuan says, “Brands are opening brick-and-mortar stores in the hopes that diversifying sales can bridge and enhance the consumer’s journey. But this approach will only work if the brand has already built up an online reputation and can drive traffic to their physical stores.”
With ample space for innovation in both online and offline channels, there are many ways in which players can differentiate with customer experience and business strategies. Marketers must not forget that this differentiation is the key to shine in the vast digital landscape of Singapore.
The sweeping and large-scale impact of pandemic has caused consumers to reduce their outlets for spending. While some of this scaling back is caused by limited financial flexibility, a lot of it is because customers don’t have many avenues to spend. Travel has taken a back seat and work-from-home culture has taken precedence further lowering down overall spending power. Given the current scenario, there is one thing that your customers do in abundance – spending time on the internet. In a time like this, marketers must leverage the fact that since consumers are hooked to their gadgets, their customer engagement strategy needs a total makeover.
In our last blog on emotional loyalty where we talked about how brands can emotionally engage with consumers, today we will look at behavioral loyalty and how it can delight consumers’ in-between transactions by closely observing customer behavior. Simply put, Behavioral loyalty is the ability of brands to retain loyal customers by adopting strategies to reward members’ non-transactional behavior.
Through behavioral loyalty, brands can (a) segment customers based on high or low engagement frequency, and (b) reward customers based on key elements like purchase behavior, occasional purchasing, engagement levels, user status, participation in customer feedback and more. As we move ahead, we will describe how behavioral loyalty has leveraged the shifting consumer behavior in UAE.
The current UAE consumer landscape
In 2019, the UAE’s retail market was valued at $55 billion, according to market reports site Report Linker. Before the Covid-19 pandemic, the country was witnessing rising per capita income and was gearing up with its growing tourism industry, increasing population of foreign workers, extravagant Dubai Expos and a large number of development projects.
But 2020 brought a major change to the economy due to the pandemic driven changes like closure of offline stores. And UAE was no exception. A study by Mckinsey showed that 95% of the consumers in UAE changed their shopping behavior. People were willing to explore different stores for their regular products and started experimenting with other brands. This forced a lot of brands to revisit their loyalty initiatives and strategies to remain relevant.
2021, however, started well for UAE market given there was an incredible pent up demand. The country is geared up to splurge again albeit, cautiously. The rapid vaccination drive (UAE being one of the most vaccinated country) will definitely help drive footfall back to retail stores. Retailers’ challenge however would be to retain their loyal customers and adopt strategies to ensure customers don’t churn or migrate to other competing brands. In such a situation, adopting behavioral loyalty elements can act as a lever to build a mutually rewarding relationship between the retailers and consumers.
How marketers can benefit using behavioral loyalty
1) The shift to online shopping: In the Consumer Pulse Survey conducted by Mckinsey, 54% UAE respondents have responded that they have tried a new digital shopping method during the Covid lockdown. Many UAE customers are therefore warming up to digital methods, and are realizing the ease behind getting what they want in just a few clicks.
Marketers’ perspective: Brands can get much closer to consumers by building an omnichannel loyalty program. This further gives the brand endless opportunities to delight their customers by rewarding desirable behaviors. For instance, customers can unlock bonus rewards when they link their loyalty accounts to their online purchases. Customers can be incentivized higher when they pick-up online orders against getting them delivered. Those who engage more by writing reviews or visiting specific pages or watching videos can be rewarded using a behavioral loyalty program.
2) Brick and mortar stores rule the roost: Thanks to the fast and vast vaccination drive in the country, UAE is one of the first countries to open up its malls post the lockdown. And consumer trends too point out that buyers regain the touch and feel experience of offline stores, especially for goods like clothes, footwear and electronics. With appropriate guidelines in place for restaurants, consumers are feeling more confident and safe to dine-out,
Marketers’ perspective: Customers visiting stores once they have reopened can be incentivized when they ‘check-in’ into the stores. Customers can be offered options to pre-order and pick up items during ‘lean’ hours. These socially desirable behaviors can be rewarded using the loyalty programs. Premium tier customers can be given options like assisted shopping or options to visit stores in specific slots with limited number of other customers in stores.
3) New found love for local: In 2020, the global supply chains were affected and many international goods could not reach store shelves. This is when consumers shifted to local brands products. A report by NielsonIQ suggests that across the globe people are gravitating to home-grown heritage. This has especially been true for perishable goods like dairy products and meat.
Marketers’ perspective: Loyalty programs can be tweaked or enhanced to ensure that customers earn more when they add local brands to their cart. Customers are increasingly looking for relevance and would shop more with businesses that are committed to social causes like promoting local businesses.
4) Ease of payments: With the surge in ecommerce platforms, UAE consumers are also expecting top-notch digital payments services. Since 2020, there has been a spike in the use of cash on delivery, and over time buyers have drifted to using digital wallets like Apple Pay and Google Wallet.
Marketers’ perspective: Consumers in UAE are looking for flexible payment options. So, it is important that the ecommerce platforms of brands seamlessly integrate all of the commonly used payment options. To ensure that consumers get the extra benefit, retailers can provide special offers across the various payment options.
5) The coupon and discount hunt: UAE is the third-richest country with respect to GDP per capita. But the country’s economy did not escape from the effect of the pandemic, which affected household income and spending. The drop in income has resulted in UAE consumers becoming price conscious, and buyers are seeking ways to save through discounts and offers. Talkwalker claimed that many international brands are being associated with deals and discounts.
Marketers’ perspective: When consumers are looking for great deals and value, it’s a good idea to include personalized deals in loyalty programs. This makes the customer feel special and would stick around with the brand for a long time. The hunt for coupons can be packaged into a game to keep customers engaged ‘in-between’ transactions and to reward engagement with the brand on digital channels.
Implementing behavioral loyalty programs creatively
Behavioral loyalty programs can be shaped creatively depending on the products. In fact, Capillary’s loyalty program enabled one of the leading fashion retailers in UAE to get a boost in their overall average transaction value. Our loyalty program triggers bonus points to customers when they shop on specific days of the week, thereby encouraging more store check-ins. This program also incentivize customers with additional benefits for buying from multiple categories.
Our loyalty experts share some more ways where retailers from different sectors can adopt behavioral loyalty at the right time and reward customers:
- A customer who buys a pair of running shoes may not revisit the store for at least 6 months. However, retailers need not wait that long to engage with the customer. To encourage the customer to regularly use the product, customers can get access to content that help customer with their running basics, posture and nutrition. Customers who consume the content or are able to maintain a streak of consecutive workouts can unlock badges that they can share on their social media pages.
- In an apparel store, if the customer has purchased a shirt, the brand can delight customers with personalized offers on pants or other accessories to pair with the shirt, encouraging more store check-ins and purchases
- Loyal customers entering their regular aisles in a supermarket can find QR codes across their favourite products and can avail exclusive offers and discounts.
Consumer relationships with brands are likely to change and evolve post pandemic. Innovation will be the driving force. While agile marketing strategies will help brands thrive during changes, levers like behavioral loyalty programs can up the ante on customer engagement. To know more about how changing consumer behavior can be the gear for your loyalty program, get in touch with our experts and chart a new customer loyalty strategy for your brand today.
The story began in 2006 when the Indian retail sector was in the midst of a boom. Odds were stacked up against upcoming retail players as global sports brands had already swooped in and grabbed big chunks of the market share. Naysayers created a sense of doubt for upcoming brands as they believed “There is no space for a fourth brand after three other global brands have filled up the bases.”
But this did not deter PUMA, Abhishek Ganguly and his team. In a bootstrapping business journey, PUMA India had grown from a few stores to creating a wide gap from competition with 35% market share in 2019.
“There’s no proven formula for a global brand to establish afresh in a new market, or a recipe for success. However we have had a gradual growth and we made no decisions that we had to take back.”
In an engaging conversation in our recent fireside chat ‘Forever Faster in the Changing World’, Abhishek Ganguly (Managing Director, PUMA India & Southeast Asia) talks about PUMA’s journey in India, strategies behind building the brand, and the excitement of influencing the way people live through sports and lifestyle. Here are the top 5 takeaways from PUMA’s digital and agile journey.
1) Out and loud with an online strategy
All great retail brands need an evolving customer interaction, and PUMA’s focus was to become a favorite brand with compelling retail strategies. Not only did they become the first brand to bring loyalty in India, but also began a strong digital outreach in 2009, at a time when retailers thought of ecommerce as a threat to brick and mortar. PUMA began collaboration with Myntra and Flipkart fashion, before establishing their own website. Abhishek also emphasized that channel differentiation and pricing tools are very important parameters to be fine-tuned while balancing online and offline channels.
2) Agility is the word of the moment
Changes in the retail industry were happening even before Covid, and leaders should sense and learn these changes. The team at PUMA India constantly hopes to ‘fail fast’, accept the failure and be in a constant learning mindset, enabling the brand to stay relevant to the period.
Agility goes hand in hand with innovation according to Abhishek. “By agility, I don’t mean mindless speed, but quick thinking, acting, and spreading that action throughout the organization.”
3) A people-first culture
What do you do to make Monday morning interesting for your team? That’s an important question every leader should ask themselves. Abhishek believes that employees work better if they are in the best frame of mind which directly impacts productivity and therefore it is vital for a business to ensure that their employees are positively influenced.
4) Finding the core in the startup ecosystem
How can the store interact with customers hyper-locally and bring in a personalized touch to the store? Abhishek has always been interested in technology-driven startups. He looks for innovative solutions in the angel ecosystem from the offline retail’s inventory and customer engagement point of view.
5) Sports inspires you to be a better leader
The global sportswear brand has always been passionate about cricket and has been associated with other sports like football. Abhishek wanted to keep the brand locally relevant to India by signing up with legends like Virat Kohli, KL Rahul and many IPL players. The brand has especially hit the jackpot with Virat Kohli as the cricket sensation has a huge social media following.
When drawing parallels between leadership and sports, Abhishek admires the ‘never give up’ attitude and inherent team spirit culture in sports. He said that leaders must develop an athlete’s mindset to face the uncertainties. To know more about their retail strategies, personalized engagement, agile management; watch the entire fireside chat discussion here.
The race between competitor brands in the Middle East has recently become very intense. Almost 70% of the population is less than 30 years of age with a dynamic purchase behavior. Unless brands build a robust feedback system to understand customers’ needs, buyers could easily jump to another brand to find their desired product. Therefore, brands must focus on constantly improving shopping experience, review feedback regularly and set up omnichannel interaction to attract the digitally savvy youth.
A quick poll during our fireside chat on ‘The CX Revolution: Growth Strategies and Future Outlook’ pointed out that most retailers hope to delight customers and gain their trust through their customer experience strategies. In fact, that is the holistic and big picture that 15-year-old fashion and lifestyle brand REDTAG is looking at. With over 200+ stores across GCC, REDTAG has been beating competition by its winning CX strategy. If your brand is looking at making inroads in the Middle Eastern market, here are 5 differentiating ways to build a next-gen customer experience.
#1. A loyalty program isn’t enough. Personalized loyalty program is the key
What’s in it for me? This is a common question in the consumer mind when they first choose brands. And implementing a personalized loyalty program that involves listening to your customers and delighting them beyond the transactional aspect of brand interactions could be the differentiating feature between you and your competitor.
#2. Addressing feedback timely and wisely
Quick response to customer feedback goes a long way in delighting customers, and in turn results in higher repeat sales. REDTAG gives huge importance to customer requests and as a policy, the brand ensures that customers get the exact products they were looking for. The brand enables store managers themselves to source the products and deliver it to the customer, resulting in satisfied testimonials from buyers.
#3. Retail is Detail: Data-driven engagement, from start till forever
Once the initial contact has been established with customers through loyalty program enrollment, brands must remember not to stop there and find ways to keep triggering excitement elements. Data-enriched personalized communication can keep customers engaged with the brand. The data can help predict the store visiting pattern and push customers to buy more by issuing instant vouchers.
#4. Omnichannel campaigns, keeping up with the trend
Earlier, retailers would focus on horizontal marketing campaigns and post ads in generic channels. With the advent of big data, brands have tons of data to help them segment customers and engage with them in the platforms that they are present in. For example, Snapchat is a popular platform in Saudi Arabia and it would not make sense to campaign on another platform which is barely used. The covid pandemic has further pushed the need to opt for digital channels.
#5. Domain Specialization
The most obvious differentiator from your competitors that buyers are looking for is – what are customers looking for in your brand? It’s important to provide the best from the domain you are in, and the hint to understand that again comes from what the customer is looking for. REDTAG achieves this swiftly by nominating personal stylists that answers customers’ queries on fashion and helps them to quickly find products that they are looking for.
#6. Aim for x+1 and never an x-1
The beauty of customer experience is that it is constantly evolving, and retailers can constantly learn and adapt to new customer behavior and emerging retail technologies. For more insights on CX strategies, Middle Eastern retail, and how you can emerge a winner amid competitors, check out our exclusive discussion with Mr. Shehbaz Shaikh (Chief Retail Officer, REDTAG).
Two customers A and B walk into a grocery store. Customer A visits the store every first week of the month, and shops with an organized list. They stick to previously used brands or opts for a product with the most discounted price. Meanwhile, Customer B is a frequent visitor and chooses products based on desires and facts that they learnt about a particular brand. Psychology categorizes Customer A as a rational consumer and Customer B as an emotional consumer, and marketers need to take note that these days, consumers are increasingly shopping like Customer B.
When the pandemic began, the immediate customer trends showed a major dip in consumption. However, in the second half of 2020, a part of the overall spending bounced back, and studies showed that this uptick can be explained by consumers’ motivation to seek an external stimuli’. This helped them to feel better during lockdown restrictions. Another report by the Zeno group shows how Malaysians, amongst other Asians, did a lot of emotional consumption during the pandemic year. Consumption was driven by how much the customer agreed with a brand’s values. The survey also found that almost 91% of Malaysian consumers stopped buying from brands they disagree with.
With evidence of ‘cancel culture’ (practice of withdrawing support to a brand) and comfort buying during pandemic, it certainly seems like this is a crucial time for brands to appeal to customers through emotional loyalty.
Elements of emotional loyalty
Emotional loyalty aims to bring consumers closer to the brand by creating trust and belief in the brand’s vision. It involves understanding what the customer feels to create a personalized interaction with them – right from advertising up to the purchase of the product. Research by Forrester suggests that making customers feel appreciated that encourages them to spend more with a brand and recommend it to friends and family. This clearly shows that emotional loyalty is the easiest way to foster loyalty and retain customers through thick and thin. The Data and Marketing Association describes the ‘3Ps’ approach to achieve the best of emotional loyalty.
Partnerships: Brands must seek to create a partnership with the customer, to exchange valuable information with them. Examples of a good partnership includes rewarding certain behavior such as advocating for the brand, sharing feedback and product reviews.
Purpose: Loyalty programs must be connected to issues that resonate with the customers values. In recent pandemic times, health and sustainability have been important topics that concern a majority of the population. Initiatives related to these topics would play a role in capturing consumer attention.
Personalization: All loyalty programs would be incomplete without the element of personalization and emotional loyalty is no exception. Personalized communication and offers can make the customer feel special and included, and can lead to more repeat sales.
Why Malaysians are rooting for emotional loyalty
Let’s take a look at recent customer trends in Malaysia, which demonstrates how buyers warm up to brands that understand and share similar views with them. What does an average Malaysian consumer look for in their brands, apart from the product or service itself?
In Malaysia, there has been a year-on-year increase in Google searches like ’metal straw’, ’eco shop’ and ’hybrid car’, proving that consumers are very conscious about the environmental issues faced across the world and they want to do their part by choosing products that are sustainable and don’t harm the environment. Experts say that incorporating sustainable business strategies is an inevitable step towards the future, and it is best that retailers start planning for this as soon as possible. Brands can create an incredible journey towards sustainability and get customers to follow them along the way, and therefore building the buyer’s confidence in the products.
Halal versions of products
With 60% of its population practicing Islam, Malaysia is a major producer of halal goods in Asia. Halal is an Arabic word that means permitted by the Islamic law and it is commonly applied to food, pharmaceuticals and cosmetics. Therefore it is not a surprise that there was a 550% year-on-year growth for searches like ‘Toblerone halal and ‘Ovaltine halal‘. There is also major demand for halal cosmetics. This is a clear indicator that brands must respect religious beliefs, making consumers feel understood.
Much like all other countries, Malaysia has seen a lot of suffering during the pandemic, and people are looking for experiences that spark joy. In a non-pandemic scenario as well, positive experiences created by brands inspire trust and advocacy among customers. Buyers remember the brand for positive and optimistic marketing messages and they’re more likely to recommend products friends and family.
For example, KFC Malaysia launched the #KepciKitchen campaign in early 2020 to creatively engage customers. The brand encouraged customers to share photos of how they eat KFC chicken by giving them a chance to win delivery vouchers.
Expert views also suggest that familiar things make customers feel better, at a time of crisis. Therefore, making personalized recommendations and introducing localized goods can be favorable strategies to boost sales.
Adding on to the positive brand messaging, brands need to create meaningful contributions to causes that customers are involved in. The pandemic situation has brought the entire community together, and it’s an essential time for the brand to show up for the cause.
During the pandemic, popular home improvement store MR.DIY ran a donation campaign called ‘You Share, We Donate’. In this campaign, the brand aimed to encourage customers to share the company’s social media posts for a good cause – for every Facebook share of their short film, the company donated RM1 to the Malaysian Relief Agency.
There are many such examples from various brands, ranging from small stores to large conglomerates who have managed to build an optimistic brand image during tough times.
People buy emotions, not things
In the book ‘How Customers Think: Essential Insights into the Mind of the Market‘, author Gerald Zaltman demonstrates that 95% of purchasing decisions are made through unconscious urges. Therefore, all evidence is pointing to emotional loyalty being the fastest way to carve a niche in the consumer’s heart. As customer priorities in Malaysia shift, it is more important than ever for brands to leverage emotions in their rewards program. Find out how you can include emotional loyalty in your campaigns / brand emotional connection and loyalty campaigns by talking to an expert.
The pre-Covid levels of retail revenue in India seem farther away now. While many retailers hoped that 2021 would be the year of recovery, the second wave of infections have dampened their pace. Even the financial services company Nomura has revised its growth expectations for India from 13.5% to 12.6% in the new fiscal year.
Should retail industry too fall for the second-wave and revise its revenue chart? At a time like this, Indian retailers can avoid panic and instead make some wise and proactive measures. A popular Harvard Business Review article called ‘Roaring out of recession‘ talks about how “post-recession winners” came out flourishing from the 2008 financial crisis. It describes how the winning companies reexamined every aspect of their business which will help them reduce their operating cost. When the slowdown turns around, the companies’ efficiency would not be impacted as their operating cost has been lowered before. It is this progressive mindset that can help retailers during the Covid slowdown seen across the Indian subcontinent today. One way to reinvent customer experience is by introducing a new marketing strategy that compliments the current retail scenario – a phygital strategy.
Dimensions of phygital retail world
Phygital elements transforming the retail industry
Customers today have grown to love shopping online and show comfort in their own digital spaces for most retail experiences. That said, the touch and feel of traditional retail as well as live demos for product services are irreplaceable. Retailers thus would need a combination of online and offline experiences to build retail customer engagement. This is where the concept of Phygital enters the current retail landscape today. An amalgamation of the words physical and digital, it was coined by the Australian advertising agency Momentum in 2013 as they introduced the word in their motto. In the retail sense, the term has gained prominence recently, referring to the blending of best online and offline features of the shopping experience. An everyday example of phygital retail would be a typical consumer who always shops with a smartphone in hand, often checking product details to help them choose.
An effective phygital retail strategy ideally focuses on three I’s – immediacy, immersion, and interaction. While immediacy and immersion comes from the digital realm, Interaction is from the physical world.
3Is of Phygital Retail Strategy
- Immediacy: Making the customer experience as fast and as seamless as possible
- Immersion: Making the consumer feel connected to the brand experience
- Interaction: All possible communication needed during the purchasing process.
The three I’s can be applied in various permutations and combinations in a retail business ranging from the catalogues and the products till the sales and customer service. For example, robotic digital signage and demand sensing in catalogues can help customers find product and immediately check stocks for the particular item. Similarly, chat bots and AI algorithms can speed up the selling process, while targeted marketing campaigns can encourage cross-selling and upselling.
How Phygital is reinventing Indian retail customer trends
Technologically India has been a fast growing country with a big stake in the AI revolution. However, digitization may be a work in progress in the retail industry, as AI solutions are yet to be fully translated in stores across India. Let’s take a look at some customer engagement trends which show that phygital retail needs to be an essential part in every brand strategy in India.
- AI will rule the future: Artificial intelligence will make marketing more human-centric. Marketers now have access to advance tools of AI to speedily collect user data and set up a shopping experience relevant to the customer.
- Traffic in offline stores will stay low: Even as the second wave of the pandemic has caused customers to order from home, this trend will continue post the pandemic. Some of them will make fewer trips to the store, so each experience should count.
- Self-service: Nobody likes the long queues in check-out counters. Definitely not in the time of social distancing. Customers are looking for the quickest ways to find the products they want and one-click checkouts.
- Providing personalized experience everywhere: Whether the shopper is online or at the offline store, the experience at both locations should be personalized.
- Value-consciousness: Increasingly, customers are going to constantly evaluate the quality, price, and discounts on all the products they choose.
While many retailers in India in the current scenario are trying to compete in the ecommerce space with large players like Amazon and Flipkart, phygital could be a better way to go, as this strategy remains largely unexplored by many brands.
Indian brands that embraced phygital strategy
While some brands in India have already begun applying phygital retail strategies, some are in the exploratory stages. In fact, apparel brands including Asics, Fabindia and United Colors of Benetton have used Capillary’s ‘StoreMax’ solution which allows store managers or staff to engage with customers on WhatsApp. Through this solution, offline stores can send personalized recommendations to customers and accept the orders placed by customers through phone calls, on WhatsApp or online portal. The offline stores then become fulfillment centers where they help in providing minimal delivery timeline.
Phygital retail is not restricted to just apparel sector. Grocery retail and supermarkets are known to be benefitted largely. Brands like Spar and Namdhari in India, have taken up phygital strategies to ensure quick deliveries by recommending products based on their previous purchases and creating a seamless option of same-day delivery of orders.
Predictions on the retail industry’s future scenario shows that offline stores are not dead yet. People like seeking solace by visiting stores and we could see consumers coming back to shopping malls and markets when Covid restrictions would ease. However, contactless retail will be of high importance till the pandemic is over. This emphasizes the need of creating a phygital experience for a brand for its customers. It’s time to go phygital!
Did you know that there is a better way to make your new customers behave like they have been buying your product for 10 years?
Yes, you read it right! Your brand can attain this from refining customer experiences through an accessible rewards program. A good reward’s program can become the reason for consumers to pick you over your competition. Even for smaller businesses, studies have shown that customer retention is a more effective way to grow business. And this can be achieved by building customer loyalty. Now, let’s study how brands can build this experience for the Indonesian market.
Building rewards program in the Indonesian market
Step 1: Understanding how rewards program can help Indonesian retailers
Several trends say that the Indonesian retail market will see an inferior growth in the next 4 years due to the pandemic. Research by Technavio shows that the market could progress with a CAGR of 4%, whereas pre-covid research had predicted a CAGR of 6%. In this market outlook, customer loyalty plays a major role in establishing a brand’s foothold in the industry.
Step 2: Studying Indonesian Customer Demographics
The next step in building a strong rewards program is to understand the consumer. Before we detail out the demographics of the Indonesian market, it is imperative to consider two factors – (a) what consumers think and (b) what factors determine their consumption. Let’s take a look at some interesting consumer trends in the last year that Indonesian brands can take advantage of:
Post-Covid consumer demographics in the Indonesian market
- Post-Covid household income: Due to covid, many Indonesian households have been affected with pay cuts and job losses. The pandemic has given consumers a reason to be frugal with their spending. A McKinsey report showed that almost 60% of consumers have experienced reduction in savings in 2020.
- Hope for a better economy: Despite money woes, there is optimism in the air. PwC’s Consumer Insights Survey claims that 64% of Indonesian consumers feel confident that they would be able to spend more in the near future.
- Increase in online shopping: Buyers jumping on to online platforms has been the trend across the globe during the pandemic, and this effect has been very prominent in Indonesia. Before the pandemic, shopping through online channels was almost a non-existent option as people preferred shopping at traditional marketplaces.
- Memberships and Discounts: Membership programs have been successful in generating customer loyalty in western countries. And it is a feasible plan for Indonesian retail as well. Buyers from the country also prefer lucrative discounts.
- Health conscious youth: 85% of Indonesia’s population is under the age of 55. Among these are the young consumers who are also increasingly conscious about health and wellbeing.
- More women use multichannel: In a survey by Snapcart global, it was concluded that women between the 25 to 35 age group are more likely to compare best deals across channels before buying. Men over the 35 years age group are likely to be loyal to a brand, as they want to be efficient while shopping.
Understanding that all customers are not equal and have different consumption behavior is the first step in realizing the benefits of loyalty. Knowing these nuances will help in creating an efficient rewards program that addresses the needs of customers.
Step 3: How to build an effective rewards program in Indonesia
Now that we have discussed what choices Indonesian consumers make while making purchases, we can use these pointers to design a suitable rewards program. While building the framework of the program, it is important to keep in mind the brand’s business objectives and aim to provide value to customers. Here are some features that may help Indonesian brands create impactful customer loyalty:
Marketer’s guide for enhancing rewards program in Indonesia- An overview
- Choose a system of coupons and deals: Owing to pandemic effects, Indonesian consumers are always looking to save more money and therefore want more discounts and deals. So a rewards program involving coupons, discounts and points would be of direct help to consumers. Indonesian consumers are also confident that the country’s economy would get better soon, and this system may slowly push them to spend more.
- Boosting online channels: Covid has certainly pushed consumers to online channels, and it is important for brands to consider providing rewards on digital platforms apart from the offline stores. Most Indonesians have moved to online shopping only in the past year, and are gradually warming up to the platform. Therefore, the rewards program must be seamless and easy to use.
- Keep the rewards simple: Easy to earn and easy to redeem – this must be the policy of the rewards programs in Indonesia. Customers cannot be inconvenienced and shouldn’t be made to wait too long for their reward. The deals, discounts or points must be immediately available to them. They should also be able to quickly redeem them. One useful idea can be to print the coupon along with the bill so that it is quickly usable. At Capillary, many brands opt for this feature, also known as Dynamic Voucher System (DVS).
- Gamification: Gamifying rewards programs is a lucrative idea to boost more sales especially in Indonesia, as people are using the online platforms more often. Spin the wheel, scratch and win, and pick and win linked to discounts and deals would encourage more purchases among Indonesian buyers. This would also help increase the brand’s app usage and website visits.
Step 4: Learning from loyalty frontrunners who achieved enhanced shopping experience
A study of other top programs in Indonesia can also be a good hygiene check while developing the right rewards programs. Here are success stories from two brands who have emerged as leaders in enhancing their brand experience with their rewards programs.
The Erajaya group has an interesting rewards program called the Eraclub program to personalize interaction with customers, understand customer behavior patterns, and reward the customers with the right offers. Their program is a tiered membership, with points and discounts provided on selected products, which is an integrated loyalty for offline and online platforms. They also give personalized instant offers based on customer preferences. This well-developed program helped the company get more than one million new member registrations in 2020, 75% loyalty sales contributed by members.
A look at Erajaya’s rewards program features
Kanmo Retail group, on the other hand, launched their Kanmo Circle program, which also provided tiered memberships. The company focused on special birthday discounts and points redemptions. Kanmo ran campaigns with personalized offers based on customers’ historical purchase data. The group achieved 94% loyalty sales contributed by members with 140,000 new members in 2020.
At Capillary, we have helped 100+ create robust loyalty programs with the consumer needs in mind. Our products can directly help increase sales and conversion with its AI-powered CRM software and rewards programs.
Indonesian Rewards Program: The Road Ahead…
Developing a loyalty program is hard in a country where consumers are actively searching for new brands, experiences and promotions. But the landscape is expected to change. With a slow but sure growth in the Indonesian retail market, demand for various goods is also expected to rise. To create suitable rewards programs in Indonesia, it is important to have a deep understanding of consumer behavior in the country and prioritize customer engagement. So, the time is ripe for investment in a loyalty program that can put your brand ahead of competitors.
The megatrend of ecommerce proliferation is visible across the world, and over the past year it has been booming in Middle East.
A 2016 study by Gartner suggests that only 15% of Middle Eastern businesses had an online presence. Online commerce contributes to only 2% of the total retail sales in the region. 10% of these online transactions are from the Gulf region and the rest are purchases that require international shipping. This can be attributed to a sense of reluctance and the inability to trust online transactions.
Even though the Middle Eastern trend highlights ample scope for growth in ecommerce retail, Saudi Arabia was known to have the second highest levels of internet, smartphone and social media penetration after UAE in the region. So Saudi was still ahead in the game. But much like all other global trends, the Saudi Arabian retail landscape changed in 2020. News reports from July 2020 suggested that ecommerce in the Kingdom posted a record growth of 74% during March and April 2020.
Changing Consumer Behaviour in Saudi Arabia
The stark change was not only how ecommerce sales shot up but also what was being bought. Saudi Arabians, who were using online platforms to buy fashion, beauty, and electronic products, took to the internet to buy groceries and home goods.
With the hesitancy towards online payment, Saudi Arabians were stuck with the cash on delivery option until 2020 came. Due to Covid-19 and the social distancing norms, consumers were forced to finally end the decade-long streak of cash on delivery usage and choose a cashless payment option. This shows a new-born confidence in the medium as many Saudi Arabians shopped online more than ever before.
The Kingdom has also seen the most digital Ramadan celebrations of all time. Ramadan 2020 caused more use of gadgets for both festive shopping and connecting with family, leading to a big leap in online sales in May 2020.This jump in online shopping is expected to stay. In a recent survey by the global consultancy firm Kearney Middle East, 69% of the respondents from Saudi Arabia confirmed that they would maintain their current shopping behaviour after the pandemic. On the other hand only 48% of UAE respondents answered yes to the same question. Could that mean that one day Saudi Arabia might surpass UAE in the ecommerce growth?
Opportunities: What Retailers Should Keep in Mind
Retailers must not miss out at a time when the consumer optimism is growing. The huge potential of ecommerce was already unlocked in 2019, when the Saudi government introduced a new ecommerce law that aimed to boost ecommerce activities and transactions. While we have understood the growth prospects of the region, let’s take a look at some areas of focus for ecommerce players – what should they keep in mind before starting up in Saudi’s online shopping world?
- Improving online transactions: Saudi Arabians are still warming up to the various payment methods available online. So retailers need to create an approachable space through phone call or Whatsapp support. Ability to track orders, a generous return policy and free return shipping will reduce anxiety and boost customer loyalty.
- Longer purchase duration: Istizada claims that 44% online shoppers in Saudi Arabia took more than a day to make a decision on their purchase. So with this in mind, brands need to have a remarketing strategy in place so that consumers do not bounce off to another seller. Online players can also focus on displaying popular products on their websites to help customers find what they are looking for.
- Localized websites: Even though English is prevalent in Saudi Arabia, a majority of the users prefer writing and reading Arabic on the internet. Arabic is also the 4th most used language in the world. So it is important to have an Arabic version which is well-translated. Poor translation could lead to a higher bounce rate.
- Social media promotion: Retailers can utilize the incredible opportunity of promoting their online stores on popular social media. Brands can run clever marketing campaigns directly where the target audience spend their time – Youtube, Instagram, Facebook and Twitter. Apart from this, brands can also include social media commerce in their selling strategy, where the entire shopping experience happens without the customer leaving the social media site.
- ‘Giving Back’ during Ramadan: Generosity is one of the principles in the month of Ramadan, and ecommerce consumers are curious about how the brand will follow this value of giving back to the community. A survey by the US Saudi Business Council shows that 57% of the respondents were more interested in a brand after finding out about its donation campaign. The right kind of campaigning during Ramadan could help player gain more repeat customers.
- Omnichannel loyalty: Retailers can opt for omnichannel loyalty to drive purchases in their online platforms. A suitable loyalty program can address challenges such as high bounce rate and cart abandonment, and brands can also introduce interesting schemes like gamification and free delivery for members.
Kingdom of Ecommerce: A Promising Future
Saudi Arabia is the most attractive market in the Middle East to for an ecommerce retailer to venture. Thanks to the young population that is eager to their gadgets for mobile shopping. The previous challenges of reluctance towards online payments has now dissolved due to the covid-19 situation, pushing many consumers to permanently use ecommerce platforms. With the ecommerce revenue projected to $8,697m by 2025, don’t miss this treasure hunt in the flourishing Kingdom of Saudi Arabia!