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The Future of Shopping: A Geographical Perspective - IRM50, January 2015

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Katie Paterson, of Flipit.com takes us on a tour of what omnichannel means around the world.



A decade ago, you could have been forgiven for thinking the future of brick-and-mortar stores was bleak – apocalyptic, even. The internet brought global change to the world of shopping that implied the future was entirely digital. However, the concept of constant connectivity to the web – via smartphones, tablets, PCs and more – has become so thoroughly normalized across the globe that the online and offline worlds are merging to produce an omnichannel shopping experience for the modern consumer. Businesses now seek to combine the wide variety of choice and competitive prices available online, with the pleasure of a more traditional, personalized one-to-one shopping experience available in stores, in the hope of producing the ideal shopping environment for their consumers.



So, what does the future of contemporary culture’s favourite pastime look like exactly? And is shopping taking a different direction from one geographical region to the next, or are we seeing a more general trend occurring worldwide?



SINGAPORE: EMBRACING DIGITAL



Singapore may be geographically small, but with one of the world’s most advanced free-market economies, Singaporeans are big consumers. The island has even been described as ‘one big shopping centre’ thanks to the huge number of shopping malls which carve out the landscape. These malls function as the perfect shelter from the tropical elements, whilst providing a comfortably air-conditioned space for residents to partake in the two daily activities they love best: shopping and eating.



Over the last five years, Singapore has experienced a dramatic increase in online shopping, as the rate of smartphone penetration has soared to 90% in this digi-savvy region: since 2009, online spending figures have more than tripled. But what effect has this influx of ecommerce had on the Singaporean landscape?



Interestingly, despite wholeheartedly embracing online shopping due to their national penchant for all things tech, Singaporeans haven’t neglected brick-and-mortar stores. Instead, shoppers have sought out omnichannel services in order to make room for their beloved shopping mall experiences.



Lachlan Gyde of EC Harris Retail observes that Singapore boasts the sort of environment which will never be negatively affected by rising ecommerce, as “provided people still seek social interaction and engagement then malls will remain as a key shopping and socializing platform”. Singapore’s shopping malls are therefore sure to remain safe, as despite becoming more and more immersed in ecommerce, residents continue to embrace malls as a sacred space for eating, socializing and, of course, escaping the weather.



As Singaporeans appear to have embraced both online and mall shopping, the future is set to involve a high level of cross-channel adaptation on the part of retailers. Shingo Okamoto, head of E-Commerce at retail giant Rakuten states that “to thrive retailers must develop a cross-division collaboration culture, one which sees online and offline sales as complementary and intrinsically linked and develops a shopping experience based on these multi-channel findings.” A great example of this already occurring is the interactive ‘magic mirror’ option available at Jurong Point shopping centre, which allows you to virtually try on items and combinations on a life-sized screen.



AUSTRALIA: GOING LOCAL



With an estimated growth rate of 12.6% per year, Australia’s ecommerce is growing fast – online spending has now reached $15.9bn, putting Australia comfortably within the top positions worldwide. However, much of Australia’s success in this area can be attributed to their unusual internet taxing system, which sees GST wavered on international imports under $1,000 AUD, whereas a 10% tax is imposed on all online transactions within Australia.



This is all set to change within the year, however, as plans have been put in place to begin taxing international transactions as well as those made within Australia. Despite the inevitable dissatisfaction this new taxation has provoked in consumers, retailers are confident that Australians will only benefit from these changes. They predict that giving online shopping a more local focus will boost jobs, increase revenue (estimated net $1bn each year) and create a space in which more time and money can be spent on creating more innovative omnichannel shopping experiences that will improve local brick-and-mortar stores. Local retailers are hoping that as a result of the new taxation, shoppers will be discouraged from buying so frequently from overseas via the internet, and begin contributing more to Australia’s ecommerce market on a national level.



Paul Greenberg of the National Online Retailer Association predicts that omnichannel services are the next step in Australia’s e-retail evolution, as the nation is predicted to make the most of being forced to ‘go local.’ “There’s a real sense that the new honeypot of Australian retail is an intersection between physical and digital,” Greenberg observes. “Any retailer in Australia that has responded to customer needs in offering them multiple platforms will do very well.”



An indication that plans for new omnichannel services are already underway can be seen at the AOPEN Gen 2 Retail Evolution Lab in Melbourne, where a variety of interesting new innovations that are set to hit Aussie stores soon are on display. For example, electronic labelling, digital mirrors with virtual dressing options (as seen in Singapore) and interactive, touch-screen window displays. Stephen Borg, CEO of AOPEN predicts that this is the start of a new chapter for retail. “Stores as we know them will not disappear in the future” he states, “instead, they will integrate technology to add value to the in-store experience, as consumers now expect to be engaged in an interactive way.”





Plans have been put in place to begin taxing international transactions as well as those made within Australia





INDIA: CRAVING OMNICHANNEL



Despite not making it into the top 30 of last year’s Global Retail E-commerce Index, India is currently experiencing huge changes that suggest ecommerce is in the process of taking off. Online shopping has been slow catching on for a variety of reasons: internet access is limited, connectivity is slow, and credit card penetration is low. The experience of shopping online hasn’t been too positive in general for Indians due to insecure payment options and logistical issues involving delivery. Roads can be rough, and India doesn’t have a standardized address system, so finding the location for delivery relies heavily on the local knowledge of the courier and the presence of notable landmarks for orientation.



Last year, Debashish Mukherjee, a partner at AT Kearney warned that a more mature approach towards providing a multichannel retail experience was needed among Indian online retailers in order to nurture the vast potential for ecommerce growth: Enter, Flipkart and Amazon. These two retail giants have been battling it out to become the first to innovate and find new ways to overcome the obstacles that India’s consumers are continually met with, in the hope of improving ecommerce sales. Now, options such as cash payment on delivery, swipe on delivery, and a variety of different delivery address options are available. Perhaps the next step for India could even involve a geo-location delivery feature, rendering address systems obsolete – who knows!





Flipkart and Amazon have been battling it out to overcome obstacles met by India’s consumers online





Internet penetration is currently growing in India at an annual rate of 43%. 900 million people have mobile phone subscriptions, but currently only around 10% of those use smartphones. This suggests that ecommerce is set to experience a whole new level of growth when the Indian population begins shopping on their phones. In fact, the rate of mobile internet users in India is set to grow by 84% within the year, as affordable smartphones such as Google’s Android one and the Xiaomi Remni 1S have just entered the market.



BRAZIL: SOCIAL DICTATES



Online retail has tripled in the last four years in Brazil - boasting an estimated worth of $31bn in 2013. According to AT Kearney, Brazil hosts the perfect environment for retail development due to its growing middle class, controlled inflation, sustained economic growth, and continued economic and political stability, which has encouraged consumer and investor confidence.



Brazil currently occupies the top position of the AT Kearney 2013 Global Retail Development Index. More than half of the 195-million-strong Brazilian population now have internet access, with around 40% of those making online purchases, meaning ecommerce growth rates are predictably high. As Latin America’s largest online retail market by a long way, Brazil’s ecommerce is expected to reach $35bn in 2018.



But what is Brazil doing differently? Like we have seen in the US, Brazil’s main innovation is the overwhelming contribution of consumers in dictating the success of businesses. Social media is huge there: 87% of Brazil’s internet users are active on social media (world average is 70%) and Brazil is a close 2nd after the United States for having the largest national network of Facebook users in the world. 30% of those active on social media follow brands and businesses on social networking sites, making this the optimum platform for brands to represent themselves and their products.



The result of this utilization of social media to drive ecommerce sales is that consumers become active collaborators in the promotion of businesses and their goods - a positive social media presence is crucial to brand credibility. This is reflected in the huge prices that businesses will pay independent bloggers to write about their sites. Blogging is big business in Brazil, with agencies invoicing merchants around R$1,800 ($740) per advertorial, R$650 per tweet and R$500 per Facebook post.



As it is with any instance of evolution, it’s clear that the future of shopping is a case of survival of the fittest. Keeping up with trends is always top of the agenda where consumerism is concerned, and in a digital environment where knowledge is literally at your fingertips 24 hours a day, it’s inevitable that consumers are innovating faster than businesses. Businesses need, therefore, to communicate with and most importantly learn from their customers to stay ahead of the game. As Google’s SVP of commerce Sridhar Ramaswamy observes, the survival of certain stores relies heavily on their willingness to interact with customers, adding that “retailers who aren’t there to supply the right information when people raise their virtual hand will lose out”.



The blurring of online and offline worlds; of the digital and in-store experience, is opening up a whole new space for retailers worldwide which should be taken advantage of in order to push the evolution of shopping into its next phase. Regardless of geographical location, it’s clear that shopping is moving in a similar direction: the future is omnichannel.

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Featured In
InternetRetailing Magazine - January 2015 - Issue 50 (IRM50)

InternetRetailing Magazine - January 2015 - Issue 50 (IRM50)

Featured In
InternetRetailing Magazine - January 2015 - Issue 50 (IRM50)

InternetRetailing Magazine - January 2015 - Issue 50 (IRM50)

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