Retail Industry in Southeast Asia, the Future, and How to Succeed
The retail industry in Southeast Asia is experiencing a remarkable transformation, driven by rapid technological advancements and the impact of the Covid-19 pandemic. With a compounded annual growth rate (CAGR) of 19.30%1, the region is poised for continued success in the years to come.
The Rise of eCommerce and Digital Payments
A study by Google, Temasek, and Bain & Company, revealed Southeast Asian eCommerce sector is on track to reach a value of US$172 billion by 20252.
Contactless solutions, such as eWallets like GrabPay and Dana, and QR code payments, facilitate payment, streamlining the checkout process and prioritising consumer and delivery personnel safety without the need to bring a physical wallet.
Embracing Omnichannel Strategies
The rise of omnichannel retail has seen the retail industry in Southeast Asia seamlessly integrate its online and offline channels. This approach enables customers to conveniently browse products on digital platforms, reserve items for in-store pickup, and even utilise contactless checkout options, providing a smooth and convenient shopping experience across all touchpoints.
The rise of e-commerce is undeniable in the retail industry in Southeast Asia. In Thailand, giants like Central Retail see online platforms contributing a significant 18% to their sales. This trend is echoed by CP ALL, with online channels accounting for 10% of their in-store sales. Similarly, Indonesia’s Mitra Adiperkasa reports a healthy 9.5% contribution from online revenue.
The Rise of Social Commerce and Shoppertainment
The future of the retail industry in Southeast Asia is characterised by the intersection of traditional and modern commerce, propelled by the region’s resilient and digitally savvy population.
Retailers are embracing new trends like shoppertainment and social commerce to create a more engaging and interactive shopping experience for customers. This shift underscores the importance of robust data capabilities and personalized loyalty programs to cater to individual preferences.
Investing in Technology and Analytics
Early adopters in the retail industry in Southeast Asia are reaping significant rewards from their investments in technology and analytics, particularly artificial intelligence (AI).
Companies allocating an additional 15% of their operational budget to these technologies are experiencing total shareholder returns 1.5 to 2.5 times higher.
This data paints a clear picture: AI is not just a future trend, it’s a powerful tool for gaining a competitive edge today.
The Transformation in Singapore
Fuelled by technological advancements and a shift in consumer behaviour, Singapore’s retail landscape is undergoing a significant transformation. Omnichannel shopping, seamlessly integrating online and offline experiences, is at the forefront of this change.
This trend caters to the evolving preferences of Singaporean shoppers. By 2026, an estimated 62% of retail spending is predicted to occur through omnichannel channels3.
The rise of “e-window shopping” reflects this shift, as consumers increasingly leverage online platforms for product research and price comparisons before making informed purchases – both online and in-store.
The Rise of Social Commerce in Indonesia
Indonesia’s retail landscape is witnessing a unique phenomenon – the rise of social commerce. Unlike other Southeast Asian countries, Indonesians are increasingly turning to social media platforms for their shopping needs, bypassing established e-commerce channels. A recent survey by Rakuten Insight revealed that a staggering 90% of respondents have made purchases via social media in the past year, with nearly 40% doing so frequently (six or more times)4.
This social commerce surge can be attributed to several factors. Indonesia boasts a massive young population, with over 40% under 25. This tech-savvy generation is armed with smartphones and digital wallets, making social media shopping a convenient and familiar experience. Furthermore, Indonesia’s digital commerce boom has fostered a vibrant online marketplace, seamlessly integrated with social media platforms.
The Role of Cloud ERP Systems
Cloud ERP systems play a crucial role in helping businesses stay ahead. By leveraging data analytics, artificial intelligence, and automation, retailers in Southeast Asia have been able to optimise inventory management, reduce delivery times, and improve overall operational efficiency.
This has resulted in a more streamlined and cost-effective retail ecosystem, allowing businesses to pass on the benefits to consumers, in the form of competitive prices and enhanced service quality.
In a Nutshell
In conclusion, the retail industry in Southeast Asia is poised for continued growth, driven by the adoption of cutting-edge technologies and changing consumer preferences.
By embracing omnichannel strategies, investing in AI and analytics, and leveraging cloud ERP systems, retailers can stay ahead of the curve and deliver exceptional experiences to their customers.
As the region continues to evolve, the future of retail looks bright, with endless opportunities for innovation and success.
