Click-and-mortar is the way ahead


June 17, 2019 | By Rupkatha B

Physical retail isn’t going away! The future of retail will be driven by a convergence between brick-and-mortar and digital, observed Wilson Tan, CEO of CapitaLand Retail – one of Asia’s leading mall operators.

He cited an example, “I went shopping at Alibaba’s supermarket brand Hema. After buying some lovely shellfish, I walked over to the counter and tried to pay using my credit card. I realised that they accept payment via their online payment solution, AliPay. Alternatively, I had to become a member. I wasn’t keen on either option, so the store staff suggested I use the next customer’s membership and pay the person visa card or cash. At that moment, they tried to convert a digital dinosaur to a digital native.”

“I realised physical retail isn’t going away,” he emphasised. “That’s why Alibaba is investing in the physical space, smartly converging digital into it.”

“Two paradigm shifts are happening in the industry, driven by technology and the millennials – who will form the core and base of humankind for the next three decades. This group of consumers came not on a diet of milk and powder but a digital diet. They are truly digital natives. In Europe, around 20% of the population belongs to this group. By 2020, around 60% of the Asian population will belong to the millennial category. Millennials will be the widest workforce in the US by 2020. It is a group of people that values peer-to-peer conversation, while also spending a significant amount of time on digital equipment,” Tan stated.

“Technology, on the other hand, is ubiquitous, pervasive and upon us. The technological singularity is crucial and will impact the way we live. And technology has two fundamental impacts in the area of retail – enhance productivity and bridge the gap between the physical and virtual spaces. Technology will facilitate the virtual space to interact with not only the shopping malls but also consumers. This transformation will bring traffic into the brick-and-mortar space, leveraging new businesses and opportunities. Think Google, Facebook and Instagram and you will realise that we can reach tribes that we never touched before,” he added.

Today’s marketplaces are no longer only for transactions, Tan observed. “We are looking to get information from these marketplaces and close the loop with transactions. This transformation started 2010 onwards, which led to what we call ‘omnichannel’ – leading to the seamless merging of online and offline. Gone are the days of online versus offline.”

The challenge is many businesses in the physical space are not making a deliberate attempt to leverage the power of online, he lamented. “Whereas, studies prove that many online pure players can make a better transition to offline. The challenge on the part of pure play offline players stems from legacy. They attempt to map digital technology to their existing space, which is something that online players don’t have to do.”

Alibaba undertook the physical transformation of their business, he cited. “They recognised that in China alone they could reach only 16-17% of the overall consumer base via their online channel. China has one of the largest and engaged e-commerce space, and Alibaba could only reach 17%, the remaining 83% was untouched. In 2016, Alibaba decided to create a new retail format to reach the physical space with two brands – Hema and Home Times. Hema started with a couple of supermarkets, which has surpassed 100 now, while furniture concept Home Times that started a year ago is growing rapidly.”

Within 24 hours on Single’s Day this year Alibaba’s sales were worth $30.8 billion, up from last year’s $25.3 billion. Last year, Black Friday and Cyber Monday in the US together clocked slightly over $10.6 billion of business. China clocked that figure thrice in 24 hours. “That’s because the channels interacted with each other,” Tan stressed.

“According to a Harvard study, the conversion rate of someone shopping in a physical store is between 20-and-40%, while that of website or mobile app is only 4%. Thus, staying in the physical space becomes more and more important. Almost 90% of beauty brand Sephora’s business is skewed offline and 10% online. PricewaterhouseCoopers talks about the use of channels to generate sales, wherein the store plays a pivotal role in customer engagement, while people visit websites to get more information. Worldwide, the number of people walking into a store to purchase on a weekly basis has consistently remained at 40%. At the same time, digital is also being widely leveraged,” Tan concluded.

Previous Article Next Article

SHARE

YOU MAY ALSO LIKE /


Jean-Luc Graziato, Chief Commercial Officer of Majid Al Futtaim – Retail and Alia Al Harmoodi, Acting CEO of the Environment, Health and Safety Agency

Majid Al Futtaim – Retail, which holds the exclusive franchise to operate 

Continue Reading

February 20, 2024 | By RetailME Bureau
Krishna Dhanak, Managing Director, Alpen Capital

In an exclusive interview Krishna Dhanak, Managing Director, Alpen Capital shared insights 

Continue Reading

February 19, 2024 | By Rupkatha B
Majed M. Al-Tahan, Co-founder & Managing Director, Danube Online

As digital transformation across the retail industry continues to accelerate, the expectations 

Continue Reading

December 19, 2023 | By RetailME Bureau
Frederic Levy-Perrault, CEO, Al Raya Supermarket

Saudi Arabia-based grocery retail chain Al Raya Supermarket serves over 100,000 customers 

Continue Reading

December 15, 2023 | By RetailME Bureau
Ahmad AR. BinDawood, Chief Executive Officer, BinDawood Holding

BinDawood Holding has a rich Saudi heritage, spanning over 50 years, 38 

Continue Reading

December 13, 2023 | By RetailME Bureau
Majid Al Futtaim Retail commits to Collaborative Impact Goals at COP28

Majid Al Futtaim Retail, which owns the exclusive rights to operate Carrefour 

Continue Reading

December 8, 2023 | By Rupkatha B
BinDawood Holding Company earns Honorary Shield for Compliance Excellence

BinDawood Holding Company has earned an Honorary Shield, a distinguished recognition by 

Continue Reading

December 6, 2023 | By RetailME Bureau
First Movers Coalition for Food to create up to $20-bn value chain for sustainable farming

The World Economic Forum, with support from the Government of the United 

Continue Reading

December 5, 2023 | By RetailME Bureau
Food consumption in the GCC to grow at a steady pace

Food consumption in the GCC is set to grow at a CAGR 

Continue Reading

November 29, 2023 | By RetailME Bureau
Carrefour urges customers to ‘Choose Better’

Carrefour, operated by Majid Al Futtaim in the UAE, has set up 

Continue Reading

November 28, 2023 | By RetailME Bureau
GMG opens Monoprix outlet in Abu Dhabi

GMG’s Everyday Goods – Retail division is now expanding into the country’s 

Continue Reading

November 27, 2023 | By RetailME Bureau
Spinneys to open second store in Riyadh’s KAFD in partnership with Al-Hokair Group

Following a partnership deal between food and grocery retailer Spinneys Dubai and 

Continue Reading

November 22, 2023 | By RetailME Bureau




Download Images RetailME Magazine