How the industry can reimagine experiential retail in the APAC region

Consumer trends evolve rapidly. The pandemic triggered a seismic shift in behaviors, as many switched to eCommerce to navigate lockdown restrictions. In 2022, APAC eCommerce in Asia Pacific grew 12.5% to US$3.4 trillion in 2022, per data from the market research firm Research and Markets. With an expected CAGR of 10.2% from 2022 to 2027, the industry will touch US$4 trillion by 2028.

As we embrace the post pandemic world, there has been some interesting rebalancing in shopping behaviors, whereby consumers are reconnecting with brick-and-mortar stores for immersive experiences they previously missed. Online continues to be important for research, but shoppers are back to doing more buying in-store: 62% of Chinese consumers and more than half of those in India and Thailand find online shopping boring, a recent survey by Wunderman Thompson found.

Shoppers in APAC will drive a physical comeback in stores, with people craving sensory experiences: retailers must offer powerful counterpoints to digital fatigue.

Some brick-and-mortar retailers in APAC are already taking steps to revitalise the offline shopping experience. For example, the K11 Art Mall in Wuhan, China, proves that brick-and-mortar retail can thrive with a sense of fun and the right design and technology. In what’s envisioned as an art playground, customers experience products as masterpieces. Sci-fi-themed chambers, pop-up stores, and seasonal themes turn shopping into a series of exciting and surprising discoveries.

Traditionally, omnichannel meant offline retailers expanding to online and finding ways to connect the two. Given the opportunities for seamless connectivity between online and offline, and how it is supported by technology, distinguishing between online and offline now feels like a relic of the past.

To drive sustained business growth, omnichannel presence must transcend online and offline boundaries with a consolidated approach to retail. Technology-enabled innovations in physical stores are essential to supercharge the customer experience and counteract digital fatigue. Marketers and retailers must rethink their retail strategies accordingly.

The emergence of augmented and virtual reality addresses a key pitfall of online shopping – its inability to replicate the touch and feel of brick-and-mortar stores. Interactive displays and touch screens at stores elevate the experience of browsing products, viewing information, and making informed purchase decisions. According to a recent IDC report. APAC’s AR/VR industry will grow 47.7% in 2024 and will be worth US$28.8 billion.

The next wave of showrooming will be less about selling and more about storytelling, seeking to make the most of brick-and-mortar spaces. The Samsung Store in Seoul’s Gangnam district installed a massive version of its The Wall TV display that has a diagonal size of 600 inches, 180 microLED modules, and a resolution of 8,640 times 2,700 pixels.

Designed to be more like a brand experience center than a retail outlet, the store aims to be a playground for young users. It comes with a seminar and lecture space, a Galaxy Museum, a coffee shop, and Instagram-friendly photo zones filled with artworks.

As the physical and digital worlds become increasingly intertwined, retailers are adopting a “phygital” approach to merge the two and create a more-seamless shopping experience for customers.

Phygital shoppers can register online, browse products, search for promotions, and complete transactions using digital payment systems, giving them the best of both worlds. To keep pace with consumer preferences, technology provides a boost to retail transformation. Digital-first businesses such as Decathlon are sprinting with a “clicks-to-bricks” strategy in Southeast Asia, and Zara is embracing digital technologies in-store.

Moncler launched a pop-up space in Seoul that was tied to the launch of Swipe, its new eyewear collection. Items displayed in extraordinary installations blurred the lines between reality and the digital world. The black-and-concrete pop-up reimagined a minimalist and modern world for visitors to step into.

According to Juniper Research, an additional 67 million individuals across APAC will adopt mobile payments in 2024, as they will possess the necessary hardware to conduct NFC payments via their handsets. Singapore’s Pick & Go introduced the concept of unmanned retail stores with RF-identification, cashless payments and AI enabling shopping with no cashier, no queue, and no cash or credit cards. With the ability to pay through an app, customers got a frictionless experience saving time, offering convenience and security.

As consumer behavior responds to macroeconomic shifts, retailers are under pressure to retain customers. Loyalty programs are one of the most popular choices for APAC consumers and retailers alike when it comes to delivering value. A recent survey by Eagle Eye found that 54% of APAC shoppers seek out loyalty programs that can offer the most value and discounts.

A prime example comes from Woolworths’ Everyday Rewards program. The Australian supermarket chain’s Everyday Extra subscription program focuses on benefits and extra perks for in-store rather than online shoppers. Woolworths’ subscription model is a win with its superfans because they receive value that exceeds the amount paid.

India has a unique retail landscape, as small local grocers accounted for 49% of total retail sales in 2022. Responding to the fact that small merchants have limited financial capability to support loyalty programs, the Bharat Loyalty Program, which runs on a mobile app, solved this problem by helping retailers collect and analyse customer data to implement programs to reward customers for repeat visits. As soon as a customer pays using the QR code, the retailer gets cash back, helping save the merchant’s razor-thin margin.

Retail in APAC remains full of possibilities. With a shift in behavior to offline, marketers must embrace technology to enhance the shopping experience, offer frictionless checkouts, and reward customer loyalty.

This article was written by Aditya Kilpady, regional strategy director, UM APAC.