Over the past few years, businesses and consumers have continued to adapt to a steady stream of challenges, from lingering supply-chain issues to soaring inflation and costs of living. This is particularly true of the retail space in Asia Pacific (APAC), one of the fastest-growing consumer markets in the world. With 2023 continuing to be marked by uncertainty, consumers across APAC have become cautious with their spending, more value-minded, and, in a crowded marketplace, want to be better rewarded for their loyalty.
In response, retailers from Singapore to Hong Kong are making it a priority to connect with shoppers via enhanced loyalty programs and personalized promotion efforts. But as our annual Retail Report shows, retailers’ ambitions are going beyond simply reacting to tough economic conditions. Instead, they’re going a step further, capturing growth opportunities by deepening their digital capabilities and embracing new markets.
Countering consumer caution with customization
Across APAC, customers have become more price-conscious in response to stubborn inflation, spending more time finding the best deals. Our research found that 36% of consumers in APAC have opted to wait for big-ticket sale events, such as Singles’ Day, Black Friday, or the year-end holiday shopping season. This is especially the case in Singapore, where two out of five shoppers are delaying purchases until they can get considerable discounts.
While inflation has dampened the urge to shop, changing perceptions of the ideal shopping experience are also having an impact on consumer behavior. Over half of APAC shoppers (57%) are prepared to leave a store or abandon their online shopping cart if they can’t check out using their preferred payment method. This is only slightly higher than the global average of 55% – meaning customer experience is now key to most shoppers everywhere – and reaches 66% in places like Hong Kong, where the government has distributed consumption vouchers to several payment platforms, meaning that customers also expect retailers to accommodate those options. In Australia, 59% of businesses reported an increase in customer expectations because of the cost-of-living squeeze.
It's no wonder then that nearly half of retailers are finding it harder to retain customers. This is partly because nearly half of APAC retailers don’t have a system in place to reward loyalty. And even in traditionally customer-oriented Japan, as many as 83% of retailers don’t use a customer relationship management (CRM) system to better understand and connect with their consumers (we explore Japan’s delayed adoption of tech for retail in more detail in our podcast series).
The tough economic environment arguably makes it difficult to launch new initiatives but it’s still a good time to make improvements to loyalty and customer relationship programs where possible. There is an opportunity for retailers to win over customers and generate loyalty by investing in data-driven relationship management solutions, which can facilitate a more personalized shopping experience – something that two-thirds of shoppers in APAC want from retailers they regularly shop with.
Research also shows that consumers are keen to engage more with the brands they buy from – especially when there’s a compelling offer on the table. More than in previous years, shoppers are now open to downloading a retailer’s app if it will give them access to more customized and relevant loyalty rewards. And this openness to interacting with companies through different channels opens yet another door for retailers to improve the customer experience, by enabling them to engage seamlessly with vendors both online and in person.
Merging online and offline experiences
Creating a truly unified shopping experience that helps customers toggle between offline and online modes is more important than ever before. Even as shoppers have flocked back to brick-and-mortar stores following the pandemic, online shopping has retained its appeal. Indeed, the majority of retailers globally expect a boost in revenue not only from physical stores, but also from online channels. While this is a promising sign for their bottom lines, retailers continuing to use separate platforms to facilitate online and offline shopping will increasingly notice frictions in the customer experience, as well as lost opportunities to collect, consolidate, and capitalize on valuable data.
Merging offline and online channels presents a compelling solution here. Especially when over 70% of retailers globally believe that physical stores play a key part in shoppers’ decision-making process, even if they end up making the purchase through a different channel. In fact, most retailers anticipate that physical stores will evolve into experience centers in the future. And shoppers agree – 39% of APAC consumers want the in-store shopping experience to be more interesting or exciting. And at 56%, it’s even higher in Malaysia, where more consumers enjoy using in-store technologies and are more loyal to retailers providing a seamless cross-channel shopping experience than in other surveyed APAC markets.
While Malaysia is a standout example, customers across the region agree that seamlessness matters. Over half of APAC shoppers are more loyal to retailers that enable them to shop across channels, such as by "showrooming" – browsing in store and completing the purchase online – or the reverse, known as "webrooming". At over 60% this is even more important to consumers in Hong Kong, Malaysia, and Singapore. Most shoppers would also be more loyal to retailers that let them buy out-of-stock items in store for home delivery later.
In-store shopping is also evolving to become more efficient and convenient than having to queue at a till, with options like self-checkout kiosks, roving staff members carrying an in-person payment device, and the ability to pay by app. And providing a variety of in-store payment channels has a high satisfaction rate across APAC, with less than 5% of shoppers reporting a negative experience. These innovations can especially benefit markets grappling with labor shortages, like Singapore. There, 55% of consumers have used self-checkout kiosks in the past year – one of the highest rates compared to other surveyed markets – showing that Singaporeans are open to trying out new purchasing channels.
As retailers focus on enhancing the customer experience and introduce new payment methods, one element that shouldn’t be overlooked is fraud. One in five shoppers in APAC experienced payments fraud last year and, as a result, two-thirds feel that online shopping is becoming less attractive due to the increased risk of fraud. To be sure, retailers are working to address this concern, with around half the surveyed APAC retailers investing in technologies such as artificial intelligence (AI) to help prevent fraud and protect their customers.
As retailers incorporate technology into different parts of their business, from fraud prevention programs to data tools that analyze customer preferences, it’s increasingly important that these systems work together without introducing new vulnerabilities or points of failure. The good news is that seamless connections across different front-end and back-end systems are possible with unified commerce.
Taking a unified approach to commerce
By bringing together multiple sales channels and systems via a single payments platform, retailers can streamline different parts of their operations – from omnichannel sales and in-store technologies to inventory and supply chain management. Furthermore, access to real-time data from these various sources means more holistic, quality insights, which can help create more personalized experiences for customers, and loyalty programs and promotions tailored to the needs of each individual shopper.
Unified commerce also helps break down silos within an organization – an issue faced by about one-third of businesses in APAC. Hong Kong retailers in particular, the data shows, struggle with this and are moving to address the problem with over 80% of respondents either beginning to invest or considering investing in unified commerce.
Indeed, APAC retailers who used unified commerce reported earning 9% more revenue than those who did not. Impressively, some retailers in Japan were able to more than double their revenue. Yet over 90% of Japanese retailers still haven’t invested sufficiently in unified commerce, suggesting that barriers to adoption remain. In contrast, unified commerce is gaining traction in Singapore and Australia, with double the number of retailers planning to invest in related technologies compared to 2022.
Traversing new territories
As cross-border commerce makes a comeback following the pandemic, APAC retailers are successfully tapping into nearby markets for growth. Over half of businesses surveyed say they are already doing better thanks to their international expansions, while a third of retailers are looking to follow suit by selling their products online or in physical stores in other countries.
But for these investments to pay off, the customer journey must be as seamless and cost-effective as possible. For instance, 34% of consumers in APAC will only buy from overseas retailers if the delivery costs are reasonable – so businesses should make sure they are not missing out on these potential purchases. Providing common or international payment methods is also important to many shoppers, but less than a third of APAC retailers do so – Singapore is the most accommodating, with 40% of retailers offering these payment options.
There is clearly significant room for improvement on these fronts and the data shows that there is a market to capitalize on for those who make the effort. One in five consumers in APAC have shopped from an overseas retailer in the past six months, and are especially motivated to do so when there is a product they cannot find in their home market. Retailers in places like China especially stand to benefit given the relatively low prices and variety of products manufactured there.
Nonetheless, doing business in other countries means dealing with complexities like local payment methods, currency conversions, new taxation and banking requirements, and unfamiliar business environments. Working with an experienced global payments partner can streamline their expansion across multiple markets. From adding popular local payment methods to leveraging data to uncover new cross-border opportunities, leading retailers are using unified commerce as a strategic growth enabler to streamline expansion.
Onwards and upwards
Overall, the future looks promising for retailers in APAC, thanks to the opportunities afforded by rapid advances in payment technologies, and access to international markets. Those who act fast to personalize their services and merge fragmented systems to offer a better customer experience will find themselves in a strong position to make the most of the emerging global growth opportunities, and stay ahead of the curve.