Retail’s new reality

The reality of retail is shifting. Retailers now operate in an environment of big data, new technologies, booming online marketplaces, hybrid consumption patterns and fragmented needs. Shoppers are more empowered and increasingly demanding when it comes to retail expectations.

At last month’s full-day Marketing conference, Retail Marketing Hong Kong 2016, marketers and delegates came together to explore how technologies could truly help drive their businesses forward and convert single transactions into loyal customers.

Online shopping is one obvious area - and big moves are underway. But the online world moves fast, and traditional Hong Kong retailers do not.

Simois Ng, head of marketing communications at Sony Corporation of Hong Kong, shared some insights into local online purchase patterns: only 13% of people buy electronics online, while 75% purchase air tickets.

She said in the electronics industry, there are so many dealers and physical stores in the city that it’s natural for customers to try out products before completing the transaction in-store.

She added that even when customers buy from Sony’s official online store, nearly 90% choose to pick up their order at a physical location.

E-commerce and new mobile payment solutions were virtually non-existent a decade ago. Innovation today is everywhere: new delivery methods, showrooming, connected retail, real-time customer data and purchase history. The retail market has become exciting.

With just a click or tap, shoppers can now buy almost anything online – from groceries to cars, and from travel insurance to air tickets.

At a panel discussion, PRIZM’s director Jeffrey Hau pointed out that while online payment might seem like a back-end issue, it’s a real pain point. Many stores are unable to process transactions from one in every three customers due to poorly designed payment gateways.

Edmund Wong, director of MyDress.com, echoed the point, saying many brands still treat e-commerce as a marketing project—just another sales channel to add to the mix.

Wong argued that e-shops deserve a seat at the table. Hau agreed, saying online shopping is an added-value activity for brands.

In addition to offering mobile and online services, many argue that experience must evolve alongside the digital world. Ensuring customers have the right experience is now critical.

In the past, HMV was simply a shop selling CDs and DVDs. But in the 21st century, CEO Robert Esser said the company has injected new ideas into the 100-year-old brand.

At its Central flagship store, the two-floor outlet has been revamped with a warmer interior, a modern F&B area, an expanded vinyl section, and a new lifestyle offering of headphones, figurines, books, magazines, stationery, backpacks and accessories to enhance the customer experience.

Earlier this year, the household name continued to evolve, opening another flagship in Causeway Bay. The new store ditched the “supermarket-style” CD racks for a more modern “place to dwell” concept, aimed at younger generations in Hong Kong.

While traditional marketing was once about pushing a brand’s message to consumers, in the era of the consumer, marketers must now add value to their relationships, said Dane Fisher, managing director at Infiniti Motor Asia and Oceania, during his keynote.

Fisher noted that auto shoppers are doing more research than ever before. On average, a potential customer visits 24 different touch-points when researching a car – from review sites to videos and third-party platforms.

“It’s a double-edged sword: the greater the number of touch-points, the harder it is to be useful and engaging at each interaction. The plus side is it gives us more opportunities to make a meaningful connection,” Fisher said.

That’s why the carmaker recently launched an accelerator programme for start-ups to add value to the customer ecosystem.

One of the finalists, Precision Services, created a smart electric bike that is light and foldable. It received backing from Infiniti and will now be released as an Infiniti-branded product.

Alongside these innovations, start-ups are injecting new energy into the space, forcing traditional retailers to innovate in ways they never imagined. And it’s not just innovation for innovation’s sake. Mobile is now a key resource for customers researching and making purchases. Some retailers are tapping into this, collecting user location data, accessing photo albums, or even analysing emails to gain deeper insights.

But Ayaz Akhtar, country manager of Survey Sampling International Hong Kong, warned that businesses must tread carefully. If shared data isn’t used responsibly, “a connected world can turn against you very quickly.”

He cited a study by SSI showing that 65% of Hong Kong respondents found it “extremely or very creepy” for companies to analyse their emails.

He explained there’s often no clear benefit to consumers when a company reads their emails - especially when those messages contain confidential or sensitive information. “People won’t feel comfortable sharing emails that have personal content,” he said.

However, if brands can clearly provide benefits to consumers’ daily lives, those same technologies are rated as less creepy.

As social media continues to disrupt the balance of power between brands and customers, more companies are reaching out to influencers to build awareness and drive sales.

Hong Kong Airlines, no stranger to social media, leveraged the popular black bear mascot Kumamon last year to promote its first flight to Kumamoto Prefecture in Japan.

Ming Chan, general manager of brand centre at Hong Kong Airlines, said a “meet and greet with Kumamon” street event attracted more than 6,000 participants and significantly enhanced the airline’s brand image.

Spontaneous endorsement

Chan added that at the end of the day, staff members are the best brand ambassadors and influencers “because they endorse your company spontaneously.”

The airline offers nine free ticket nominations per staff member for family and friends, encouraging word-of-mouth and influencing stronger business results.

In the past, a small point of differentiation could carry a brand far. But today’s brands must navigate a complex maze of information and touch-points, where the path to purchase is less linear and far more social.

Dennis Chung, assistant vice-president of product marketing and solutions consulting at HKT, said a successful digital marketing campaign depends on how well brands understand their audiences.

Looking at the growing complexity of retail and digital commerce, Daniel Hagos, client success director at Emarsys, said it’s time for retailers to move beyond the limits of human knowledge and adopt a more progressive view of customer intelligence.

He said customer data can drive actionable insights, enabling brands to deliver messages at the right time, on the right device, with the right offer.

Hagos added that automation - drawing from online and in-store data—can target first-time shoppers who are ready to make a second purchase. That window, he explained, is a crucial opportunity to build long-term loyalty and a positive customer experience.