Death of Physical Retail? Not Quite

Death of Physical Retail? Not Quite

By: Jonathan Low, Ex-Co-Founder & Chief Technology Officer, honestbee

Jonathan Low, Ex-Co-Founder & Chief Technology Officer, honestbee

E-commerce has been cited as the “most dynamic sector” of Southeast Asia’s online economy. That’s because, for many countries in Southeast Asia, our foray with the internet has been through the smartphone. But what does this mean for retailers?

The rapid take-up of mobile phones in this part of the world isn’t newly reported. They spend more time online. More time than their Western counterparts. Reportedly the Thais and Filipinos spend more than four and a half hours on the mobile internet. But what makes this interesting is what these internet users in Southeast Asia do via the mobile phone. Whatever was previously unimaginable has now become possible. From mobile banking, ride-hailing, instant messaging, virtually anything you need is now literally at your fingertips.

There’s an App for That

Technology and its rapid adoption in Southeast Asia have meant that customers can have access to goods at a faster speed than previously possible. As a result, almost every serious retail brand has made an e-commerce play. Even traditional brick-and-mortar stores have made the move online. Consumers want increased convenience, and they want it instantly. This need for convenience has given way to a wave of on-demand apps that have sprouted in droves. Consumers in Southeast Asian cities are looking for apps that deliver groceries, essential services and other daily essentials. Meanwhile, physical retail seems to be struggling. We’ve seen bankruptcies at major chains, retail storefronts reducing locations and empty malls. So it begs the question, Do we really need physical storefronts anymore? Are brick-and-mortar stores obsolete?

The Disruption of Brick-and-Mortar

Brick-and-mortar isn’t really quite obsolete. It’s just changing. Despite the perception that physical stores are now dead and buried, brands born on the internet are now opening storefronts. Even pure e-commerce retailers are seeing the value of physical stores.

However, these are not the brick-and-mortar stores that we once grew up with. They have the same convenience and variety that online stores offer, but with a level of experience that can only be met offline. For many pure e-commerce players, this online to offline (020) experience is considered to be the next step in their development. Using what they’ve learned from being online, they manage to offer a more customer-centric experience at a level that was never done before.

Click-and-brick retail strategy

These retailers use a click-and-brick strategy - a combination of interdependent and integrated online and offline storefronts. This means that customer data and preferences can allow physical stores to provide an increasingly personalized experience. Further integrating their apps, customers can easily click and collect, or self-checkout, all of which are designed to offer the same convenience online stores offer. Technology can also prompt customers at a point where they are ready to repurchase. This data can then be utilised to improve inventories at physical stores. A challenge that many retailers struggle with. This is the tip of the iceberg. Alongside retail technology trends, retailers are also investing in artificial intelligence such as facial recognition in auto-checkouts and incorporating augmented reality technologies such as smart mirrors to create a more engaging customer journey.

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