TIGHT consumer spending, faster e-commerce growth and the need for fast and reliable delivery amid a coronavirus pandemic has forced Philippine retailers to adapt and innovate, according to consulting firm Bain & Company.
Philippine retailers should work on social commerce and digital marketing to take advantage of such radical changes or so-called digital disruptions, Derek Keswakaroon, a partner at Bain & Company Bangkok, said in an e-mailed reply to questions.
But while technology is critical, it is not the be-all and end-all, he said. “It is important to recognize that while digital and technology will be a key driving force toward the future of retail, technology in itself is insufficient.”
He said Filipino retailers should reinvent their value proposition to put customer needs at the center of their operations.
“That might involve putting ultra-convenience at the heart of their offering in response to denser urbanization and the rise of time-poor dual-income households,” Bain & Company said in a report discussing the future of retail in the Asia-Pacific region.
Mr. Keswakaroon said there would still be brick-and-mortar stores, but retailers should strengthen their assets and operations for the future.
“There is still a compelling role that physical stores can play,” he said. “The importance is taking a future back approach to optimally resize and respace the store network, and plan for the next generation of store formats, reflecting the changing role of stores,” he added.
In the report, Bain & Company said the Philippine retail industry barely experiences radical digital innovations and has a market that is less mature than in developed economies such as South Korea and Australia.
It joins Mexico, Russia and neighbors Malaysia and Thailand as “developing digitalizers” in a report.
These countries fall behind countries with so-called high digital disruption and maturity that expect only measured or slight digital growth.
In contrast, countries such as Vietnam and Indonesia both have low digital disruption and market maturity, and are expected to experience the strongest digital growth.
More than half of Filipinos live in cities with more than half-a-million people, according to the report. The country’s top three grocery retailers have a market share of about 42%.
Online users spent an average of 15 minutes a visit on e-commerce platform Lazada between March and May, well above the level during the pre-quarantine period, according to the Alibaba Group unit. Transactions on Lazada rose by almost a tenth, it said.
Lazada said the health crisis gives businesses, especially micro, small and medium enterprises, more reasons to take their businesses online.
The value of electronic payment transactions hit P53 billion at the height of a coronavirus lockdown in April, or an average of P6,130 per transaction, according to Philippine Payments Management, Inc., an industry partner of the Bangko Sentral ng Pilipinas.
On Lazada, customers are also finding entertainment in the form of LazLive, a so-called shopper-tainment feature, which draws about 70,000 views per show.
Lazada said shopping online is no longer just a buy-and-sell transaction. The customer journey is omnichannel, so it is important to drive brand engagement and touch base with customers, both on online and offline channels, it said.
One key online battleground during the lockdown was consumer essentials, which might have migrated decisively to online even beyond the pandemic, with shoppers remaining wary of safety issues associated with shopping on site.
At least four of 10 digital consumers in Southeast Asia were found to have spent more on packaged and fresh groceries online this year, with at least 80% of them indicating their intention to continue buying groceries online in the future, according to Facebook, citing a study by Bain & Company.
In March, ride-hailing company Grab launched GrabMart in the Philippines, partnering with more than 150 stores, from big supermarkets to small retailers, with a delivery area of 17 cities in and around Metro Manila. — Jenina P. Ibañez