The retail space in Singapore and Malaysia is highly competitive with new malls emerging every year. But coupled with the high cost of rents and dwindling footfall, the Singapore market specifically has seen the exit of many global brands.
Meanwhile, across Southeast Asia the growing phenomenon of online shopping has done nothing to attract consumers back to the malls. To counter this growing issue, more retailers and mall owners are taking it in their stride to embrace technological innovation to adapt and survive. In 2015, for example, CapitaLand Mall Trust Management announced it would be redeveloping one of the oldest malls in Singapore, the Funan DigitaLife Mall, into an integrated development.
This new development was touted to be an “experiential creative hub” and the space in the revamped mall would be used to engage the community to incubate new ideas and enable shoppers to “enjoy retail in a technology-enabled environment”. The revamped mall is expected to showcase a smart interactive directory, with the help of facial recognition technology. This helps to categorise the mall’s shoppers into demographic groups using factors such as gender and age. In addition, there will be sensors throughout the mall, allowing retailers to position their offerings catered to a specific shopper segment.
On the brand side, retailers such as Decathlon have blended both physical and digital experiences for shoppers. In 2019, Decathlon unveiled its new lab that comes with connected fitting rooms, mobile payment solutions and a conveyor belt that manages online orders in the store. Through this, the global sports brand aims to deliver a range of products in a matter of hours. Alternatively, users are also able to order on the online site and collect their products in their preferred store within two hours for free. Globally, adidas also tapped into the augmented reality scene when it introduced its limited-edition kicks. Shoppers could view the shoes by pointing their phones at the AR powered signs placed in the retail store.
Commenting on the use of AR in retail, Justin Teo, VP of retail marketing at Geometry China, explained that for brands that use AR in retail, hardware costs are now less of an issue than they once were. He highlighted that using AR technology also allows brands to collect data instead of focusing on only creating a “wow” factor, which can later be used as consumer insights, supporting further planning.
Especially in markets such as China, many technology vendors have now lowered the rates of production. Meanwhile, content cost is also lower compared with years ago as there are many boutique agencies specializing in creating AR content setting up shop in China, and bringing overseas capabilities into the growing market.
AR tech adoption
Given the high penetration rate of mobile phones in markets such as Singapore and Malaysia, it would seem like a no-brainer that marketers would look to incorporate AR executions as part of their marketing mix. In fact, for the past couple of years, one of the buzzwords surrounding mobile marketing was AR where the real world is further “enhanced” through digital content with the smartphone and an app being the link between the two “worlds”.
In a previous conversation, Dominic Twyford, former country director at Landor Malaysia and currently business director at FITCH India, said given the fact the retail environment is the ultimate moment of truth for brands, it is not surprising AR is a hot topic for FMCG and packaged food brands. With competitor brands just centimetres apart, competition for the consumer’s attention is fierce, and AR offers a new dimension in winning the war for the hearts and minds in the aisles as brands begin to dream of new digital engagement opportunities.
Yet, in Singapore, the use of AR technology has not yet been widely adopted. According to Teo, while it is possible to monetise the AR experience and retailers can link the AR systems put in place to online eCommerce stores, which then creates a secondary revenue stream, there is a lack in understanding of the appropriate technology usage. This holds companies back from diving into these new retail ideas.He added:
So instead of hopping into the novelty of usage, some companies would adopt a wait and see mentality.
David Heijkoop, senior director of retail, sales and shopper at Kantar, said some companies may deem the process as a complicated one, despite technology being available and capable agencies which can develop it for brands. Measuring the ROI for this technology is often difficult, so it’s not always easy for brands to justify the investment upfront, he explains. “The true challenge is to find a solid use case for AR and VR, one that fits the overall strategy to increase the competitiveness of a brand or store, and delivers a meaningful experience to consumers.”
Rohan Lightfoot, chief growth officer at Mindshare, said neither AR nor VR has been incorporated at scale in retail locally. In Singapore, a relatively small number of brands use their retail space to create a deeper brand experience beyond purchase. “For the vast majority of brands the retail calculation is about sales per square metre and anything that gets in the way of maximising that figure is a distraction,” he said. While a certain amount of dwell time in a store is desirable, the most attractive business outcome for many retailers remains the maximum purchase value in the shortest amount of time.
Having people milling around playing with an AR experience may be the opposite of good business.
The struggle with VR
Given that VR execution is a much more elaborate one than AR (which most of the time requires just a phone and a pair of eyes), it is not surprising to see the lack of incorporation in most malls across the country today. Lightfoot said the scalability of technology and risk often stops brands from embracing these new technologies. Cost, of course, is another factor.
“If someone is running a portfolio of stores in a country or across countries they need a minimum standard of retail display that can be reproduced at the lowest possible cost and be installed quickly everywhere,” he said. That results in the creation of posters, not a VR experience.
Posters don’t need to be rebooted and they don’t need to be supported.
Organisational design is also another issue, he highlighted. In small organisations, it may only require one or two people to agree in order to test something new. But multi-store retailers are typically not small organisations, and it is a real challenge for a large organisation to commit to creating new experiences of any sort in retail, let alone new experiences that also embrace emerging technologies.
“Many factors need to change the situation. But it’s not difficult to see how circumstances could change quickly. The rise in eCommerce is already putting pressure on retail footfall across the region. For certain brands, the store is becoming less about selling (because sales will happen online) and more about the experience and preference.”
Kantar’s Heijkoop added that at the end of the day, it boils down to what a retailer is offering consumers – the products it sells, cost of the product, where it is sold, the shopping experience and the convenience factor.
Offline stores are often forced to step up their game and they often turn to technology such as VR and AR to enhance the shopping experience. The struggle, however, has been to make the deployment of AR and VR truly meaningful, for the consumer as well as the retailer. He said while there have been decent executions of AR and VR, it ends up being “no more than a gimmick”. He saud:
Consumers will be happy to try it once, and might even enjoy the experience. But it will not have a long-term meaningful impact.
As a result, the technology only plays a role in supporting promotions. According to Heijkoop, finding truly relevant long-term opportunities remains a challenge.
“However, there are many potential areas – connecting the online and the offline realities through these kind of technologies is a fertile opportunity for brands. Retailers should view the implementation as part of a broader investment strategy rather than just a one-off trial case.”
This article has been adapted from the May print edition of Marketing magazine.