Central Food Retail is showcasing its Tops Daily outlet in the Singha Complex as the most innovative mini-supermarket in Thailand.
Central Food Retail is showcasing its Tops Daily outlet in the Singha Complex as the most innovative mini-supermarket in Thailand.

Tech defines the challenge for retailers

Economy December 27, 2018 01:00

By KWANCHAI RUNGFAPAISARN
THE NATION

10,018 Viewed

THE coming year will be another challenging one for retailers with a number of trends set to characterise the retail landscape, especially the emergence of digital technology and changes in shoppers’ behaviour that see them wanting more than just good products at attractive prices.



Larry Chao, managing director of Chao Group Ltd, an organisational change consultancy based in New York and Bangkok, said that 2019 is going to be a profitable year for retailers in Thailand that are willing to embrace digital technologies, capitalise on consumer trends and follow responsible business practices.

Through artificial intelligence (AI), such as voice technology, retailers can have real-time conversations with consumers using so-called chatbots while they shop in-store. These chatbots can learn what consumers want, then target products and promotions to suit their needs. Voice technology, along with instant messaging, promises to deliver more personalised experiences to consumers, answering questions faster and more completely, as well as stimulating impulse purchasing.

“Although it’s not as advanced as in China, where nearly half of all online sales are made via mobile phones, online purchasing is poised to make a bigger splash in Thailand as more and more retailers and banks partner to ensure secure transactions,” said Chao.

“Already Siam Commercial Bank has the capability to allow consumers to scan QR codes and pay bills digitally. This will only grow as consumers gain more trust in retailers in paying for purchases digitally.

“While digital technologies will encourage businesses and consumers to migrate to digital platforms or at least use both bricks and mortar digital alternatives, shopping centres here in Thailand are not likely to experience a ‘downfall of the mall’ as they have in the West. Thais still enjoy visiting shopping malls for social reasons and they appreciate the tangible and sensory experiences offered by physical retail outlets.”

Chao said that to attract and encourage foot traffic and purchases, retailers will need to differentiate themselves with exciting experiences that are relevant to their target shoppers. According to KPMG’s annual report on retailing trends, “experience per square foot” will be the new retail metric to measure success. “Moreover, these experiences need to tell a story that reflects the brand messages of the products they are trying to sell, rather than just trying to attract attention by loud noises and lots of colour,” he said.

“Consumers want to enjoy their shopping experience, and retailers who can provide something new and different will win.”

He added: “Another trend that will affect successful retailers is how effectively they incorporate health and wellness into their business. Thailand has one of the fastest ageing populations in Asia and now more than ever, consumers are concerned about eating and living well. For example, in a recent survey by Inside Retail, over 85 per cent of shoppers say they are actively trying to improve their diet. Supporting how consumers look and feel should be a key priority for how retailers position themselves and products and services they offer.”

Driven by millennials

He said that, in the back of their minds, consumers prefer to deal with retailers that are responsible, good corporate citizens. 

“Driven primarily by millennials, consumers are informed and concerned about the practices of retailers and the brands they carry. With so many choices, consumers prefer to do business and be associated with a retailer who is responsible with an untarnished reputation,” Chao said.

“Whether the cause is preserving the environment, abstaining from selling products that use drug testing on animals or child labour, more and more retailers need to be aware that these issues matter to consumers.”

Kiatanantha Lounkaew, a lecturer in the Faculty of Economics at Thammasat University, said that the transformation of modern retailers in Thailand lags three to five years behind that other developed countries, such as in the US, Europe, Australia and New Zealand.

 “Tesco in the UK started to reduce its number of people about five to six years ago and now it is happening in Thailand as well,” he said, adding that the major forces behind such reductions in the number of employees are the higher cost of workers, the emergence of new technology, which is now cheaper and able to replace human capital, and the readiness of people to deal with new technology.

 “The Thai retail sector is now running into what is called internationalisation, especially the new working organisation, which relies on fewer people, but smarter technology,” said Kiatanantha.

He added that many retailers are trying to encourage individual shoppers to act like their staff. “Self-cashiering” by barcode scanning is a vital example of an initiative launched by major retailers, who want their shoppers to act like cashier staff in a move aimed at reducing costs.

Kiatanantha said that the power of information search is coming back into the hands of the customers.

He said that customers are divided into two major groups. The first one is the “niche” shoppers, who buy products determined by an emotional drive.

“In the past, retailers defined a customer target for their products. But in the new retail era, both online and off-line retailers need to exist in the online world that individual shoppers can find easily. They (retailers) need to focus on finding insights of particular shoppers, and drive them into actual selling activities,” said Kiatanantha.

 The second group of shoppers comprises those who buy products on price and promotions. To serve this group of customers, retailers still need to sell a massive amount of products at cheap prices and with hard-selling activities. Lazada is a good example of an online retailer with special-price promotions and hard-selling campaigns. 

Kiatanantha said that the next trend for 2019 is that individual shoppers will have many dimensions of their own. They will be more complicated with diversified characters and demands.

“Retailers then need to do data-intensive activities to find out their insights and cater to the different dimensions of shoppers. The launch of massive advertising campaigns may not work anymore, but on-timing advertising will be more proper way of communication that reaches different groups of shoppers,” he said.

“Integrated online marketing will be used to effectively reach individual customers, who have shifted themselves from one to another of the online sites, such as Facebook and Instagram.”