ADVANCED digital technology is not only improving productivity, income levels and quality of life of the people in the newly-established Asean Economic Community (AEC) but is also having a positive and transformational impact on real estate and infrastructure with this being discernible in the retail industry, according to a new report by real estate consultancy JLL.
There are a lot of opportunities for savvy retailers because Southeast Asian economies are forecast to grow at 5% annually until 2020, exceeding global growth of 3.5%. The urban population in Southeast Asian cities is growing by around 2.2% annually and the middle income population is set to increase by 70 million to 194 million by 2020.
This detailed report, released ahead of the World Economic Forum on Asean being held in Kuala Lumpur during June 1-2, 2016, pointed out that pro-actively managed malls would gain market share by harnessing multi-channel retailing.
“According to Javelin Group, click-and-collect and research-online-purchase-offline are the channels that are likely to grow fastest over the next five to 10 years.”
Customers seem to enjoy integrating digital shopping experience to their shopping trips and retailers enabling this should succeed.
“For instance Zalora have free WiFi in-store to allow shoppers to access the Internet seamlessly and check-out their purchases. Shoppers can also scan QR codes tagged to merchandise with their mobile device, and add items to their virtual shopping bag.”
The physical store is useful to shoppers because they can collect their product right away. Therefore these physical stores could be used as a small warehouse for the company to stock popular items and ship them from the store for faster delivery as well as handling returns and exchanges.
“These proactive steps are important as a significant share of retail space (c.15-25%) in tier-1 cities is taken up by supermarkets, department stores and electronic equipment.
“We expect a 20-30% reduction in retail space by 2020 as more sales of these non-experiential goods go online.”
JLL’s report also mentions that in developed markets, out-of-town stores in experiential trades such as health-and-beauty, clothing and shoes and F&B seem to be outperforming as more shoppers browse online and complete their purchase in a store near their homes.
Outside of tier-1 cities in Southeast Asia, a significant proportion of the population is already using mobile phones to shop online. Also, unlike other markets, customers prefer cash on delivery over credit cards and picking up purchases rather than home delivery.
“This could provide even more reason for online retailers to expand into physical stores in suburban areas.”
By Thai Residents reporters
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