17 minute read
Retail ‘war’ starts even before
RETAIL WATCH Retail ‘war’ starts even before shoppers enter the store: Alfamart
At the front line is Alfamart's CRM platform that analyses consumer shopping behaviour.
because the promos given were targeted to members,” Ryan said.
Based on Alfamart’s financial reports as of 30 September 2021, the company posted a 12.10% increase in net revenue to IDR63.18t (US$4.4b) from IDR56.36t (US$3.9b) in the same period in 2020.
Alfamart invested to build knowledge and understanding of consumer shopping behaviour with its CRM platform (Photo: Ryan Alfons Kaloh)
In marketing jargon, the moment of truth or MOT is considered the time when the shopper finally gives an impression after interacting with a brand, product, or service. This theory, however, is considered less relevant in the midst of rapid digital developments, claimed Ryan Alfons Kaloh, marketing director of PT Sumber Alfaria Trijaya Tbk, the operator of Alfamart Group convenience store. He argued that the 'battle' starts before the shopper even goes to the store.
This is why Alfamart invested in building knowledge and understanding of consumer shopping behaviour with its Customer Relationship Management (CRM) platform. Through big data analysis, CRM provides relevant promotions offered through various online platforms based on the shopper shopping patterns gathered from the physical outlets. From the data
It’s like shoppers have been escorted before going to the store to make transactions
obtained, Alfamart is able to know the business prospects of each of its 16,500 outlets across Indonesia.
“It’s like shoppers have been escorted before going to the store to make transactions. In the midst of digital development, business owners need data so that they can process it into knowledge and be able to promote their business digitally, such as through mobile phones or Whatsapp,” Ryan said in an exclusive interview with Retail Asia.
Alfamart started to build the CRM platform in 2016 and has since seen positive results, Ryan disclosed. From 2019 to 2021, Alfamart has been seeing strong double-digit growth in sales. In 2021, sales from membership grow more than 30% and members contributed more than 35% of total Alfamart sales.
“Amidst the pandemic and challenging situation, we were saved by knowledge from our CRM,
Launch of Alfagift
The data gathered and analysed through the CRM platform were used by Alfamart to build and launch Alfagift in 2016. It is a loyalty program application that gives updates on promos and vouchers to Alfamart's members.
In 2019, Alfamart relaunched Alfagift with added features that support Alfamart’s goal to achieve an ideal Online to Offline (O2O) model. In the same year, it acquired PT Global Loyalty Indonesia (GLI) which developed a member point program for Alfamart.
“Since 2019, Alfagift is fully managed by GLI. [But in terms of management,] they are completely independent. It’s not just a sideline for one department. That makes Alfagift a digital membership platform that enables CRM activation, as well as transactional capabilities,” said Ryan, who also serves as the CEO of GLI.
This partnership launched a new version of Alfagift, an integration of both offline and online shopper knowledge capabilities into the transactional applications. Various features were also developed based on big data analysis on shopping behaviour, such as personal offers and personalised shopping lists with products offered based on both online and offline historical transactions, as well as cross-selling promotion supported by shopping affinity algorithm. It was also able to offer various payment options to COD options and free shipping.
Alfamart aimed to synergise between shopping at Alfamart’s physical outlets and online at Alfagift.
Shoppers switched to spritzing fragrances as quick luxury fixes to feel happier during downturns
Fragrances now wear the ‘lipstick effect’
Replacing lip products, scents topped ZALORA’s beauty category both in 2020 and 2021.
From long-lasting lipsticks, celebrity beauty brands, such as Rihanna’s Fenty Beauty, have pierced through the perfume industry. As it seems, this came about when shoppers switched to spritzing fragrances as quick luxury fixes to feel happier during downturns, which was once fulfilled by painting the lips.
ZALORA Corporate Communications Director Christopher Daguimol told Retail Asia that the better-than-expected sales can be attributed to fragrances, comparable to aromatherapy, are experiencing the “lipstick effect.”
In both 2020 and 2021, fragrances emerged as the top beauty product purchased by consumers in Southeast Asia, respectively accounting for 19.82% and 22.58% of its sales in the beauty category, based on its Southeast Asia TRENDER Report 2021.
Fragrances also grew by 455.66% year-on-year (YoY) in 2020 and by 77.54% YoY in 2021. It also stood second in terms of the top luxury products consumers buy with an 8.03% share, closely following wallets and purses with 8.79%.
This trend is not exclusive to women as fragrances also topped the men’s beauty category. Data from TRENDER showed that fragrances made up 42.9% of the sales in the beauty category. It overtook face serums and treatments (16.28%) and bath and body (10.12%).
It is expected that the increased investment in self-care, growth of the male beauty market, as well as the confidence to purchase luxury goods will likely continue and further contribute to the demand for fragrances.
Beauty category runners-up
After fragrances, face serums and treatments, which accounted for
Fragrances could have been a way for consumers to feel more ‘dressed up’ and presentable on Zoom calls
20.88% of the beauty category sales in 2021, followed. This improved from 15.21% in the previous year. Placing third amongst the top beauty products is bath and body with 9.79% in 2021, surpassing makeup products.
Daguimol linked this to health measures, such as mask-wearing, that rendered it less important for consumers to wear make-up. The prolonged stay at home with lockdowns, forcing offices and schools to operate under a hybrid setup also led to an “opportunity” for consumers to start and stick to skincare regimens.
“Having stayed home for long periods of time, consumers have become more adjusted indoors, resulting in a shift towards embracing natural beauty,” Daguimol said.
ZALORA also expects demand
ZALORA noted that demand is also driven by the younger demographics in Southeast Asia
for men’s beauty products to sustain its rise as the industry is projected to grow by an average of 8.4% annually between 2020 and 2026 in Southeast Asia. Demand for beauty products amongst male consumers soared 247% in 2020 from the previous year; and continued to grow in 2021 when it jumped 45%.
Daguimol noted this comes as men are also seen to be increasingly invested in self-care and skincare with face serum and treatments, and bath and body products, which likewise, followed fragrances.
“This rise can be attributed to the increasing awareness of the benefits that skincare entails, along with the convenience of purchasing beauty products online,” he said.
In addition ZALORA noted this demand is also driven by the younger demographics in Southeast Asia, which make up the majority of ZALORA’s consumers as the use of beauty and skincare products amongst men is normalised.
Outside the beauty category, casualwear, particularly sports apparel, filled the carts of online shoppers in Southeast Asia as lockdown periods were prolonged, driving consumers to prioritise their health more.
This trend even spilled over footwear as ZALORA found a demand uptick in sneakers and running shoes, outweighing heels. Citing TRENDER data, Daguimol said that in shoes, casual footwear made up 95.89% of demand, whilst formal footwear only made up 4.11% in 2021.
This demand for casualwear is expected to continue this year with consumers preferring a work-from-home setup, or hybrid working arrangement; but whilst that is the case, ZALORA noted that occasionwear will likely make a comeback in 2022.
Daguimol shared this trend was first seen in winter wear, when search terms for “winter wear” have increased by 275% on ZALORA after Singapore announced its pilot Vaccinated Travel Lane with Germany in October.
The year ahead
In the year ahead, ZALORA still sees comfort and sustainability will remain as a major factor for purchasing decisions. This comes as shoppers continue to cling longer to more comfortable options.
Its TRENDER report found that consumers will likely look for healthier options that are backed by science and research as digital acceleration led to social activism amongst beauty and fashion consumers. This arose from interactions in online communities that paved the way for exchanges in values regarding sustainability and ethical moral codes.
“Thus we may be seeing more consumers getting involved and considering factors, such as ingredient or material sourcing, and eco-friendly packaging before making a purchase decision,” he said, noting that behavioural shifts have already been seen in the resale industry, where consumers increasingly lean towards thrifted and upcycled materials.
More consumers also got into the secondhand clothing market as shoppers want to buy pieces that have quality at a more affordable prices, instead of buying cheap yet disposable attires.
Apart from a projected comeback of dressier pieces and sustained demand for casual wear and personal care products, ZALORA also sees demand for children’s wear to surge as children quickly outgrow their clothes.
Daguimol said that demand will likely be sustained as consumers begin to return to normalcy and as cross-border travel resumes with more countries easing restrictions. He noted, however, that this demand could be tempered particularly in Singapore amidst a new tax policy hike, coupled with the continued financial impact of the crisis and the rising inflation rate in the region.
Christopher Daguimol
The increased investment in self-care and growth of the male beauty market will further contribute to the demand for fragrances
Fragrances also topped the men’s beauty category
INTERVIEW Lazada builds an e-commerce giant from a ‘blank slate’
Switching from buy-and-sell to marketplace, now to the right mix in e-commerce model.
Online shopping has easily become a top-of-mind option amongst consumers, but this did not just happen overnight. Lazada Singapore, now in its 10th year, said the company had to build trust from scratch amongst buyers who would have been skeptical of the online shopping experience.
“We started with a blank slate and what we learned helped us innovate and constantly rebuild new capabilities to fit into this Southeast Asian market,” Lazada Singapore CEO Wee Lee Loh told Retail Asia.
In this exclusive interview, Loh shared the company’s journey over the last decade as well as how consumer behaviour has changed over time as revealed by their recent Regional E-commerce Consumer Study.
You celebrated your 10th year anniversary in March of this year, could you share with us how the journey had been and what were the key lessons for Lazada?
When we started a decade ago, e-commerce was very nascent in Southeast Asia. Back in that time, one of the key challenges we faced was trust.
People didn't trust the shopping experience, so we had to do some credentialisation. In the early beginnings, e-commerce was creating threads to list products on more familiar local platforms at the time, such as the HardwareZone and Locanto. The buyer and seller would arrange to meet in person to make the transaction. E-commerce as we know today has changed all that, providing a 24/7 platform for sellers to list their products and bridging payments via a variety of payment options from credit cards to e-wallet, whilst retaining cash on delivery (for all markets except Singapore). This is also one of the distinctive capabilities Lazada has built, together with our logistics. Over time, this trust has been fostered by having reliable logistics, having a good range of assortment, and also partnering with leading brands and SMEs. I think all that helped us to accelerate the progress of e-commerce in Southeast Asia.
Ultimately, for Lazada, the goal is not just to be a platform to buy, but also to have an ecosystem so that we can help to grow the local businesses and consumers alike. We have also put in place very strong analytics for merchants and for users. On the merchant side, it is how we use technology to allow them to accelerate and choose and recommend to them what items they should list. On the consumer aside, our search engine will then provide suggestions on perhaps interesting assortment that the consumer should view. I think all that is helping to change the face of e-commerce.
What mistakes, did you commit when you started your operations and what would you have done differently?
We started with a retail model where Lazada would buy the
Wee Lee Loh, CEO, Lazada Singapore
When we started a decade ago, e-commerce was nascent in Southeast Asia. Back then, one of the key challenges we faced was trust
stock, and then sell it to consumers on our platform. But this had some challenges in terms of providing the range of assortment that suited customers' appetites. This was very much similar to the Amazon retail model.
We then later shifted our strategy from this retail model to a marketplace-based model. And today, what we are more established in doing is the e-commerce retail market. For example, last year in 2021, we partnered with the Great Singapore Sale, a major shopping festival. For the offline merchants along the Orchard Road, the famous shopping belt, we partnered with them to accelerate the growth of both online-offline sales together. And then for the 11.11, and 12.12 festivals, we gave out very interesting prizes, like the million-dollar condominium. These help create a lot more excitement and interest in driving these shopping events.
Third, we continue to build upon the needs of the brands to accelerate their online presence. We have launched the LazMall, as well as the LazMall Prestige, where we are not just able to provide a solution for brands, but even luxury brands with the likes of the Mont Blanc and the Ferragamo. Some of these luxury brands are then able to find a way to engage with users and also to continue their journey online. This is what we continuously innovate.
How has digital commerce changed the shopping behaviour of consumers in the last 10 years?
We started with the mobile-first, where we engage users through the mobile app. This helped accelerate digital commerce. Digital commerce today is an ingrained habit of Southeast Asia consumers with seven in 10, considering online shopping to be part of their everyday life; and eight in 10, indicating the ability to purchase items online.
Almost half of the shoppers indicate that they do make online purchases at least once a week or more, whereas close to six in 10 indicate that they only made shopping a part of their lives in the past one to two years. This shift was also accelerated by the pandemic and digital adoption in the Southeast Asian region.
We also realised that mega campaigns play a role in the behaviour of shoppers as seven in 10 looks to purchase something during such mega-events. It has evolved to become a place where consumers are adopting window shopping with close to three in 10, exploring websites and applications to window shop. Lastly, we also note the brands continue to adopt live streaming and shopper attainment to further help boost sales. In the study, we saw that six in 10 of the shoppers indicate that the Lazada helped make shopping more entertaining.
How do you see online shopping evolving in the next year as economies continue to reopen?
Our understanding is that even as the countries reopen their economies, we will expect that digital commerce remains a relevant and big part of shoppers' purchase journey.
Fundamentally, we see the e-commerce penetration to be a lot more significant and higher, even in the other markets around the world, which illustrates the continued growth of that e-commerce penetration amongst users. We also found people shoppers prefer online shopping because prices are lower. It's convenient as the items are delivered straight to them, and they can browse online reviews.
Your report also found that consumers are actively choosing to purchase items through digital channels. What will this mean for brick-and-mortar retailers?
Offline and online commerce work hand-in-hand to complete the modern-day retail experience. In that sense, we continue to see the online shopping journey as part of the total buying experience. This continues to be relevant for the brands, as well. The brand says sellers find that e-commerce platforms are a convenient and easy way to onboard and instead of just their own “.com” shop, many brands from international to local ones have their online stores in Lazada as a means to quickly and easily have a nationwide reach without the need to invest in some of these online shop infrastructure and logistics. This has also been a key reason retailers flocked to Lazada and have increasingly become part of their overall business strategy.
We are keeping our offline retailers to have a digital presence with several of our recent initiatives, such as the partnership with one of the constituencies in Singapore, Randin Mas. Lazada also looks to educate sellers on the variety of tools available for their online business, such as live streaming functions, data analytics for business, and so forth.
How about in terms of trends, what are the current ones that have emerged in digital commerce?
For the Singapore side, we mentioned that about half said online shopping has become important to them in the last
Digital commerce today is an ingrained habit of Southeast Asia consumers
two years and 85% said they are now spending more online than in stores. This is a very significant number, which means that of the total 10-dollar basket spent, more than $5 is spent online. Shoppers continue to look for a marketplace guided by trust, experience, and products that provide a convenient and worry-free transaction.
This is shown by their preference for reviews about 60% of them; authentic products, 54%, and secure payment options, which is 53%. Singapore shoppers also increasingly value peer ratings and reviews (61%) along with secure payment options when it comes to platform features. This suggests that trust remains one of the most important considerations when choosing a platform to complete a purchase.
Regionally, consumers value wide product availability, and focus on authentic product reviews has also been a very important aspect of online shopping. One in two shoppers said reviews make the shopping experience positive and holistic. And 50% of them also say they actually contribute to the reviews on the products that they post online.
What challenges will likely emerge and how should brands prepare for these?
One is the competition in digital commerce. With a range of products readily available, brands need to work on differentiating themselves through avenues that consumers recognise and regard highly. To stay relevant, brands can continue to look out for innovative ways to further enhance their engagement with the consumers, such as live streaming or gamification. Another challenge that the studies show is that for certain categories of products, consumers prefer to purchase them offline. These include grocery and pets, 55%, and health and beauty, 35%. For brands, this would mean that they will need to find a way to marry offline with online to bridge the shopping experience for consumers.
What more can we expect from Lazada?
In Singapore, we continue to want to have a localised strategy to build stickiness and also the top of mind share from our local consumers. That fundamentally shifts our strategy to have a very user-centric targeted offering, not just in terms of the marketing, but also in terms of the go-to-market assortment available for them.
As we become an increasingly localised e-commerce player, we will continue to serve our communities living in Singapore, the top three largest local communities, the Chinese, the Malays, and the Indians. And, the top 10 largest international communities living in Singapore all constitute the local users that we want to serve.
Offline and online commerce work hand-in-hand to complete the modern-day retail experience
