Tag: KPMG

Against the backdrop of the post-pandemic recovery, consumers across the Asia Pacific region have been adapting to many challenges: inflation, a cost-of-living crisis, and supply-chain-related instability of product availability, to name a few.

The pandemic has disrupted traditional in-store shopping patterns for three long years, but a recent return to a more ‘normal’ shopping environment has put into focus how much consumers driven online over that time would return to stores.

Amid the current saturated e-commerce landscape, as well as the current climate of economic uncertainty, there is therefore an even greater need for retailers to know how to better engage consumers to gain market share, particularly as consumers recalibrate their spending.

KPMG and GS1’s latest research of 7,000 consumers across 14 markets in the region reflects multiple patterns and expectations among consumer groups, but one over-riding conclusion is clear: The era of seamless commerce has arrived and while both online and offline channels remain popular throughout the region, traditional retail business models are unlikely to meet the expectations of many consumers today. Retailers and brands will have to adapt or face potential consequences of not moving with the market.

From omnichannel to seamless retail

We’re witnessing a third wave of digital disruption in the ever-evolving retail landscape. Previously, multichannel approaches—such as online and brick-and-mortar stores—operated independently within the same retail umbrella. However, the omnichannel era, fuelled by data analytics and AI, has prompted retailers to build bridges across these silos, encouraging collaboration.

Now, with seamless commerce, we’re entering a new evolutionary phase. The seamless commerce approach recognises that consumer interactions span multiple channels, blurring the lines between online and offline. To deliver a truly seamless experience, retailers must adopt an end-to-end perspective, making decisions through a fundamentally different lens. If they don’t deliver a truly seamless experience and don’t adapt their businesses to meet the expectations of the next generation of consumers, they will struggle to survive.

Innovative retailers are striving towards seamless commerce – which recognises a brand’s customer journey across multiple platforms and services, encompassing social media, delivery innovations, apps, websites, automated messaging, and other digital interactions, all seamlessly integrated within traditional physical stores.

The concept of seamless retail was fuelled by the pandemic, where consumers across all generations were driven to shop online, unable to visit physical stores due to movement restrictions. Not only did they head online to purchase food, groceries, and other essential goods, but the migration from working in offices to working from home saw demand in categories such as apparel and home furnishing.

With this shift, seamless commerce – once a differentiator – is now a baseline expectation from consumers; retailers and brands will have to adapt or face potential consequences of not moving with the market.

It’s never a one-size-fits-all in Asia-Pacific

In recent decades, the Asia-Pacific region has been at the forefront of retail transformation, notably in its early and extensive adoption of online platforms which have played a much larger role compared to the rest of the world.

Although COVID has accelerated online shopping across the region, results tell us that consumer habits in terms of how, where, and when they shop remain highly varied. On average, 45% of respondents preferred the ‘omnichannel’ approach, while in a boost for physical-first retailers, relatively few respondents said they could live with only shopping online.

In fact, the e-commerce landscape in the region is marked by a lack of a dominant platform – although various solutions and marketplaces are prevalent in individual markets. There is intense competition among platforms to capture the consumer’s dollar, and these figures identify a wide variety of products and fast, reliable delivery as two of the top three priorities for consumers when choosing a platform.

In terms of desired improvements, competitive pricing ranked as the foremost expectation in Asia-Pacific, cited by 38% of respondents, while promotions and discounts ranked third at 25%, highlighting the need for retailers to implement price strategies that ensure they remain competitive in the market.

Despite these aggregated results, the study reveals that although online is now more important than ever as a retail shopping channel, others such as livestreaming and social shopping are growing at differing rates in many locations. Marketplaces, once at the vanguard of retail transformation, are now coming under attack from new players, including department stores and other multi-brand retailers developing sophisticated, personalised platforms to recover market share they may have lost online.

More notably, a one-size-fits-all retail strategy – if ever it made sense – is becoming less and less meaningful.

How AI is shaping customer experiences and driving sales

With consumer preferences in Asia-Pacific being ever-varied, retailers are embracing AI at an unprecedented speed, resulting in improved customer experiences and increased sales.

In fact, our interviews with senior executives suggest that the adoption of AI by retail enterprises is faster than any previous technology – both at customer-facing points and behind the scenes. Analysis from Stocklytics predicts the generative AI market will hit US$1 trillion in value by 2031, representing a cumulative annual growth rate of 48.05%.

Front-of-house, AI is being used to refine customer experiences in automated chat platforms by developing a better understanding of consumer experiences and behaviour to provide more accurate responses and information.

Responses to customer enquiries can be based on relevant help centre content – directly provided within the conversation, rather than just sharing relevant FAQ responses as is typically done.

Back-of-house, AI has become an indispensable tool in functions such as demand forecasting, supply chain management, and developing marketing content. We have seen how ChatGPT has taken the world by storm, with a user base of more than 180 million people in November 2023.

There is a huge opportunity for AI to help companies understand purchasing trends – sudden spikes or drops in volume, for example – to maintain optimum inventory levels. It can contribute to significant efficiencies in sourcing, shipping, and inventory optimisation by predicting product demand, thereby mitigating issues like out-of-stock inventory or overordering. Currently, such decision-making processes may be delayed or predominantly manual, but the leverage and scalability that AI brings can greatly amplify the output traditionally managed solely by human personnel.

Incorporating seamless commerce strategies for sustainable business growth

Across Asia-Pacific, retailers who limit themselves to one channel face significant risks. Online-only retailers may lack the personal touch and might encounter difficulties in establishing reliable delivery systems, while traditional brick-and-mortar stores are not only missing out on reaching a broader audience but also on leveraging their physical presence for innovative solutions like ‘click and collect’ services or using their locations as local distribution hubs.

To meaningfully address these dynamics, focusing on a frictionless customer experience as the ultimate benchmark for measuring success is crucial. Insight-driven retailers need to utilise data and analytics to predict, strategise, and tailor their product offerings and service delivery, backed by a deeper understanding of their customers’ needs.
Technologies such as AI and Gen AI are increasingly helping retailers to yield actionable insights and interventions that improve customer experiences – from enhanced demand forecasting and customer service to optimising product availability and fine-tuning pricing and promotions.

Indeed, a seamless online-offline customer experience has now become a baseline expectation. Only by excelling in this domain can retailers expect to lead the market.

This thought leadership is written by Anson Bailey, Head of Consumer & Retail, for KPMG in Asia Pacific

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Singapore – The emergence of seamless retail, with digital transformation propelling remarkable advancements in the sector, has put the customer squarely at the centre of attention, marking a new era.

With this, concepts such as multichannel and omnichannel, have lost their relevance, with a highly customer-centric approach taking the lead, according to a report by KPMG Asia Pacific and GS1 which examined how businesses and consumers in the Asia Pacific are embracing these seamless commerce strategies across diverse markets and geographies.

The report notes that once a differentiator, seamless retail – encompassing a brand’s ability to recognize and integrate the customer journey across multiple platforms and services – is now a baseline expectation in a majority of the markets surveyed, making it the new benchmark for tomorrow’s sellers.

The expectation is that social media, delivery innovations, apps, websites, automated messaging, and other digital interactions – all seamlessly integrate with traditional brick- and-mortar stores.

Highlights of the report include six key trends transforming retail, with retailers progressively expected to deliver on seamless retail, through integrated, connected capabilities to meet consumers on their terms.

Firstly, the report highlighted key priorities that consumers are looking for when choosing a platform, which are a wide variety of products and fast, reliable delivery amidst an e-commerce landscape in the region marked by a lack of a dominant platform. This comes alongside the prevalent application of AI in enhancing the relevance and accuracy of product recommendations, though there are concerns among consumers around privacy and lack of human interaction.

The report also highlighted trends such as social commerce gaining popularity among Gen Z, with fast-paced platforms such as TikTok, the consistent prominence of digital payment platforms as digital e-wallets gain traction in APAC, the recognition of loyalty programs for data collection, and sustainability placing itself forward as the baseline of marketing.

Notably, the report also stated that consumer expenditure is likely to start slowing down in APAC this year. With consumers feeling the impacts of rising costs, some markets are seeing muted growth while others are experiencing downtrends. Therefore there is a greater need for retailers to know how to better engage consumers in the current climate and beyond to gain market share, particularly as consumers recalibrate their spending.

Talking about the findings, Anson Bailey, head of consumer & retail, for KPMG in Asia Pacific, said, “PuttIng consumers first by adopting seamless, connected capabilities across the en4re organisation is no longer just a competitive edge, but a necessity for those who want to lead the market. ‘Navigating the Future of Seamless Commerce’ seeks to play a key role for the industry to identify opportunities, spurring innovation to better develop more successful customer experiences and journey maps.”

Meanwhile, Patrik Jonasson, senior director of global retail at GS1, commented, “Product sustainability, supply chain transparency, and circularity are becoming central to overall business operations. Soon, ESG reporting will be indistinguishable from the need for a seamless exchange of trusted product data. Companies will need to exchange information that is trusted and can be understood by all of the actors across today’s complex global supply chains, including the consumer.”

Hong Kong – With 2022 already past its first month, banking institutions in Hong Kong, both the traditional and virtual ones, are optimistic about their venture into this year as they expect to implement higher interest rates to improve margins, according to the latest insights from consulting firm KPMG China.

According to the insights, banks highlighted the attraction and retention of talent as a key concern, where global demand across all roles, including digital transformation and ESG has been strong. Meanwhile, mainland banks, which have been a growing force in the sector for the last few years, have been focusing on stabilising their operations in Hong Kong. 

In addition, banks in Hong Kong have continued to increase their focus on digital transformation in all aspects, as technology is being used to improve operational efficiency and reduce costs, including in areas such as know-your-customer (KYC) and anti-money laundering (AML). 

On the customer side, demand has risen for more seamless digital experiences and banks are being pushed to improve their offerings. Digital transformation, which is critical for Hong Kong to retain its position as a leading international financial centre, is expected to remain a key pillar of growth.

Meanwhile, virtual banks in Hong Kong have completed their first full year of operation. While a few have performed well, most are struggling to find a clear path to growth and looking for ways of customer acquisition at lower costs. These banks are also facing stiffer competition from traditional banks that have strengthened their own digital offerings in response to the arrival of the virtual banks.

Terence Fong, head of Chinese banks for Hong Kong at KPMG China, said, “Mainland Chinese banks in Hong Kong are looking forward to increased fee and commission income in 2022, particularly since they have a large retail customer base. While risk appetite has decreased over the last year, mainland banks will be looking to develop new income streams and increase the level of digitalisation and collaboration between their mainland and Hong Kong operations.”

Hong Kong – As more and more consumers are embracing an online-to-offline (O2O) approach to the retail industry, a greater majority of retailers across Hong Kong and nine key cities in Mainland China, known as the ‘Greater Bay Area’ (GBA), are keeping in mind the importance of digital strategies to their business, specifically in the local setting, a new report from consulting firm KPMG, in partnership with the Hong Kong arm of business communication non-profit GS1, and financial institution HSBC shows.

In its latest report, they note that 73% of GBA retailers are implementing localized forms of their retail digital strategies, keeping in mind that they are increasing their use of both direct-to-consumer e-commerce and third-party e-commerce platforms.

The most common business functions for which 43% of surveyed retailers are implementing a GBA strategy are sales and marketing and communications, as companies look to attract customers in the mainland China market. Thirty percent of those retailers polled are developing a GBA programme for fulfilment, logistics, operations or supply chain management.

Consumer-wise, one in two (50%) of Hong Kong consumers said they felt more comfortable about shopping online since the start of the pandemic, not far behind the 59% of respondents from the nine mainland China GBA cities surveyed. Tellingly, 24% of Hong Kong consumers and 23% of those in the mainland GBA cities say they could live without physical retail stores.

The greater force that the report notes as game-changer for the modern retailer is the choice of Gen Z consumers towards online shopping, as 73% of Gen Z consumers in Hong Kong and 86% in mainland GBA cities expecting a swift response to product enquiries logged on online chat, and expecting brands to use tech including AI to help shortlist new products. 

They also expect augmented reality (AR) functions to help them make better purchases online, with 61% in Hong Kong, and 82% in mainland GBA cities. The research also shows Gen Z consumers prefer contactless shopping (60% in Hong Kong and 77% in mainland GBA cities). Around 76% of retailers surveyed are adopting at least one type of Gen Z-specific strategy.

In the mid of the rising population of shoppers moving towards online, GBA retailers need to act fast to respond to the consumers’ O2O needs. The research shows a vast gap between customer expectations and what retailers are delivering, with 77% of Hong Kong and 85% of mainland respondents in the GBA indicating that retailers need to have a better connection between channels and create a seamless customer journey. Among retail executives that were surveyed on their actions to enhance customer experience, only 39% of businesses were currently focusing on the integration between physical stores and online, suggesting a significant gap in retailers’ O2O propositions.

Alice Yip, partner at head of consumer and industrial markets for Hong Kong at KPMG China, notes that these results cement the fact that more consumers are buying more online than ever before, and the retail brands who have best survived this rapid transition are those who have proven agile in their response to the growing demand for digital engagement.

“Hong Kong and mainland China GBA retailers are already implementing strategies for regional growth across the region while also looking to expand into Southeast Asia, with industry leaders emphasising the need for adequate localisation of products, services and marketing approaches to attract the growing pool of digital-savvy consumers,” Yip stated.

For Anna Lin, CEO at GS1, she explains that consumers expect a seamless transition from an in-store experience to an online experience. She added that consumers also want to engage with brands across social media and other digital media and they expect brands to use technology to improve customer service, ease of payments, flexible delivery options and convenient returns.

This is also agreed by Lewis Sun, head of product management for global liquidity and cash management for Asia Pacific at HSBC, who commented, “In order to deliver a seamless customer journey, more retailers in the Greater Bay Area are looking for a single platform that can take payments from multiple channels – from credit cards, bank transfers to e-wallets.”

As retailers and brands develop more complex digital channels and deploy new technologies, sourcing, upskilling and reskilling talent to build a future-ready workforce will be a key priority for retailers in navigating the new normal and capturing growth opportunities. With technical areas such as IT and systems support (38%), data analytics (35%), and research & development (31%) identified as top areas demanding more workforce, professional development programs as well as talent exchange within the GBA will provide opportunities to fill the gaps.