Technological innovations have turned the world of retail upside down. More and more consumers are using their mobile devices to shop instead of going to the malls, and to have their purchases delivered straight to their homes. Big box retailers are closing down branches, while e-commerce retailers are mushrooming. With big data, retail companies can now gain greater insights into the behavior of their customers and deliver a seamless omnichannel experience.
At the recently concluded BusinessWorld Economic Forum 2019, held at Grand Hyatt Manila in Taguig City, four speakers helped hundreds of participants make sense of the impact of digital commerce, big data and mobile technologies on the retail industry, and how they will shape it in the coming years.
These personalities were Shiv Choudhury, partner and managing director of Boston Consulting Group in Singapore, a management consulting firm; Peter Maquera, senior vice-president of the enterprise group at Globe Telecom, one of the largest mobile phone companies in the country; Ray Alimurung, chief executive officer of Lazada Philippines, a leading online shopping company; and Constantin Robertz, president of Entrego, a logistics solutions provider.
In his talk, Mr. Choudhury stressed that disruption is not a question of if but when and that retailers have two options: adapt or die. Two examples that failed to do the former — and almost suffered the latter fate — were the American department store chain Sears, which filed for bankruptcy late last year, and Blockbuster, a provider of video rental services in the US, which used to operate thousands of stores but now has one left.
Mr. Choudhury suggested a “TEAPOT” strategy for adapting to a changing retail landscape. “T” stands for technology, and he noted that there must be a radical change in the kind of tech investments retailers make. If five years ago they were after “large, enterprise-wide” technologies like warehouse management systems and enterprise resource planning software, in the next five years, they may do well to invest in “specific, small and agile” technologies such as business intelligence and analytics and social listening tools. “E” stands for e-commerce, and Mr. Choudhury noted that it’s too large to ignore. The “A” in the “TEAPOT” strategy is analytics.
Mr. Choudhury emphasized that it must become a retailer’s core advantage. The “P,” meanwhile, is personalization, which he noted will be “base expectation” and involves offering the right experience through the right channel at the right time for everyone. “O,” which is omnichannel, is now how consumers behave. And “T” stands for team. Mr. Choudhury noted that change will come from the top and suggested “weeding out the few people who oppose.”
In his presentation, Mr. Maquera called attention to how big data is changing retail. It allows retailers to “collect transaction, interaction and external data” to understand who is likely to buy their products and to create unique offers. It also helps optimize pricing, conduct intelligent inventory management, and make accurate sales forecasts. He also showed several findings of the 2019 report published by We Are Social and Hootsuite about the digital behaviors of the Filipino consumers. Among the striking findings: 90% of Internet users in the country searched online for a product or service to buy; 70% of them actually purchased a product or service online; and 57% made an online purchase via a mobile device.
Mr. Maquera also discussed one of his company’s innovative products, GCash, a mobile money service regulated by the Bangko Sentral ng Pilipinas that lets users send and receive money and pay bills, among many other things. The service has around 20 million customers and 65,000 partner merchants. He also mentioned RUSH, their customer engagement program.
E-commerce in Southeast Asia, which has more than 600 million people, is growing, Mr. Alimurung emphasized. Citing data from Google and Temasek, a global investment company, he noted that the region’s Internet economy will reach $240 billion by 2025, while the e-commerce market in the Philippines will be worth $10 billion by the same year.
Lazada is a giant in the e-commerce market of Southeast Asia. Its Web site enjoys tens of millions of monthly Web visits. According to App Annie, a provider of mobile market data, Lazada’s app was the top shopping app in the region in 2018. In the Philippines, the e-commerce company has a seller base of about 50,000 offering around 80 million products. The company also has three fulfillment centers, a “sort center,” and 50 logistics hubs. According to Mr. Alimurung, their mission is to accelerate progress in Southeast Asia through commerce and technology. He also noted that they “fire up” the growth of the so-called “super e-businesses” in the region.
In addition to his company, Mr. Alimurung discussed the emergence of the “new retail,” which is consumer-centric and characterized by the seamless integration of the offline and the online. Among the “new retail” features of Lazada’s app include live streaming, which allows brands and sellers to engage directly with customers, and games (Lazgames), through which shoppers can win and collect vouchers.
The growth of e-commerce means a “parcel explosion,” according to Mr. Robertz. He noted that digital transformation is changing the requirements of traditional business supply chains and that logistics is getting more complex. He also noted that in the country logistics is a “big” and “unresolved” challenge that “touches everyone.” According to a report released late last year by the Department of Trade and Industry and the World Bank, manufacturing companies in the Philippines face higher logistics costs than those in the neighboring countries of Indonesia, Vietnam and Thailand.
Entrego is a relatively new player in the local logistics industry, having started in 2017. It offers express parcel delivery, freight forwarding and fulfillment and contract logistics services. Mr. Robertz said their company has already built a nationwide delivery network with 54 distribution hubs and has become a trusted partner for a diverse set of clients. Entrego has more than 200 full-time employees and over 2,000 delivery representatives.