Retail Congress Asia Pacific 2017- Localize, Digitalize and … · 2017-10-16 · complementary...

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Source:Retailcongressasia.com

TheFGRTteamattendedRetailCongressAsiaPacific2017inHongKonglastweek.

Inthisreport,wehighlightourkeytakeawaysfromtheconference:

1) ThefutureofUSretailisoptimistic.

2) DigitalizationofretailiskeytotakingcareofconsumersinemergingAsianmarkets.

3) Localizeyourbrandstorytoinfiltratethemindsetsofthe4.5billionconsumersinAsiaPacific.

4) OnetactictowinningintheNewRetaileraisforretailerstomasqueradeasanentertainmentcompany,brandplatformanddataecosystemallinone.

5) TostayaheadofthecurveintheNewRetailera,oneneedstothinklikeaventurecapital(VC)firm,beagilelikeatechcompanyandlaunchnewbusinessmodels.

6) Cross-bordere-commerceenablesretailerstosellintonewmarkets.

Retail Congress Asia Pacific 2017:

Localize, Digitalize and Innovate to

Stay Competitive

Deborah Weinswig

Managing Director

FGRT

deborahweinswig@fung1937.com

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

RetailCongressAsiaPacific2017TheFGRTteamattendedRetailCongressAsiaPacific2017inHongKonglastweek.TheconferenceistheAsiaPacificversionofWorldRetailCongress,andfocusesontopicsinretailsuchasomnichannel,cross-bordere-commerce,consumertrends,retailtechnology,NewRetailandfulfilment.Theconferenceisattendedbyseniorleadersinretail,technology,startupsandventurecapital(VC)industries,andthisyear’seventfeaturedspeakersfromAlibaba,Macy’sChina,Lazada,FossilandBrooksBrothers,amongothers.

Below,wesummarizeourkeytakeawaysfromRetailCongressAsiaPacific2017.

1.TheFutureofUSRetailIsOptimisticTheoutlookforthefutureofUSretailispositive,drivenbythesequentialincreaseinUSretailsales,accordingtoMattShay,PresidentandCEOoftheNationalRetailFederation(NRF).StoreopeningsaregoingtobethenextpositivesignforUSretail.Shaybelievesnootherindustryisasexcitingandtransformativeasretail.

HehighlightedAmazon’sacquisitionofWholeFoodsandWalmart’sacquisitionofJet.comastwolandmarkexamplessymbolizingthecomplementaryrelationshipbetweenbrickandmortarande-commerce.InShay’sview,retailershavebeentryingtoreachcustomerswheretheyare,moresothantryingtobeateachother.HeobservedthatretailersarelookingincreasinglytoAsiaforexpansionopportunities.Nolongerseenmerelyasasourcingdestination,theregionisnowlookeduponasarisingconsumptionpowerhouse.

Seeourlatestweeklystoretrackerseriesreport:WeeklyStoreOpeningsandClosuresTracker#28:WalmarttoOpen280StoresNetinFY2018andFY2019;PerfumaniaExitsBankruptcy.

Source:FGRT

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

2.DigitalizationofRetailIsKeytoTakingCareofConsumersinEmergingAsianMarketsInhispresentation,Alibaba’sGlobalManagingDirector,GuruGowrappan,setoutthekeytrendsdrivingAsia’sfast-growingconsumermarkets,andshowedhowtobuildeffectiveandengagingrelationshipsthatbuildbusinessandloyaltyintheNewRetailera.

GowrappanpresentedthattheNewRetailconcept—theintegrationofonlineandofflineretailandlogisticsthroughdatatechnology—isthebestwayofreachingtheburgeoningconsumerclassinChina.HeidentifiedthetypicalfrequentChineseconsumerasfemaleandundertheageof35,whoshops4–5timesamonthandlargelyresidesintier-1andtier-2cities.AccordingtotradingdataonAlibaba’smarketplaces,theproductcategoriesthatarebestpositionedtobenefitinclude:

• Largestimportproductcategories:Fashion,beauty,health,maternity,personalcareandelectronics

• Fastest-growingproductcategories:Pet,homedécor,musicalinstruments,sportsequipment,kitchenandartsupplies

• Topsourcesofinternationalproducts:Japan,US,Korea,AustraliaandGermany

TocapturetheheartsandwalletsofChineseconsumers,GowrappanemphasizedhowcriticalitisforbrandstotailortheirbrandexperiencefortheChineseconsumers’shoppingjourney.ComparedtotheirUScounterparts,Chineseconsumersresearchbrandstwiceasmuchbybrowsingproductsandreviews—spendingatotalof3.4billionminutesadayresearchingproducts.Assuch,AlibabahasbeenhelpingbrandsbuildtheirpresenceonTmallandstrengtheningtheircross-bordere-commercesolutions.

Source:FGRT

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Withrespecttodigitalizingtheconsumerjourney,Alibabahasbeenspearheadingtheretailtransformationbydrivingexperimentationacrossdifferentretailformatsanddigitalizingthecorecomponentsofretailoperations,includingproductmerchandising,ordering,paymentsandloyalty.

GowrappanwrappeduphispresentationbyreiteratingAlibaba’svisionforthefuture—tobuildthefutureinfrastructureofretailtobecomeacompanythatlasts102years.

3.LocalizeYourBrandStorytoInfiltratetheMindsetsofthe4.5BillionConsumersinAsiaPacificDigitalandmobilehavebeenshapingthemindsetsandexpectationsofconsumersinAsiaPacific,and,asdiscussedbyapanelofretailleaders,itisimperativeforbrandstoactaccordingly.EdithChen,AsiaPacificCEOofBrooksBrothers,believesthatitisincorrecttoviewAsiaconsumersasonehomogenousclass.Forexample,BrooksBrothershasninephysicalstoresinHongKongalone,whereasinIndia,ithasalimitedphysicalretailpresence,andsoitisessentialforthebrandtousesocialmedia.ToletIndianconsumerstouchandfeeltheproducts,BrooksBrotherssendsstylistsandstoreassociatestoconsumers’homestoprovideadviceandtakemeasurements.

Source:FGRT

DespitethehighdegreeofdigitalsavvinessofconsumersinAsia,thelevelofonlinesatisfactionintheregionwasonly57%,comparedto85%intheUS,accordingtoIngridSidiadinoto,ManagingDirectoroftheCustomerSolutionsGroupatUPSAsiaPacific,whoquoteda2017UPSsurvey“PulseoftheOnlineShopper.”Toimprovetheonlineshoppingexperience,brandsshouldstreamlinetheirreverselogisticsandreturnprocesses,andincreasetheirmulti-deviceandomnichannelcapabilities.

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Inadditiontoomnichannelstrategies,itisimportantforbrandstotailorandlocalizetheirbrandexperienceforthediverseAsianconsumerclass.

SaeminAhn,ManagingPartnerofRakutenVentures,offeredUniqloasanexampleofacompanytailoringproductlinesforeachSoutheastAsiancountry.Uniqloalsolooksatweatherpatternstomoreefficientlydistributeinventoryrisk.

4.OneTactictoWinningintheNewRetailEraIsforRetailerstoMasqueradeasanEntertainmentCompany,BrandPlatformandDataEcosystemAllinOneInthefirstpartofhispresentation,DustinJones,ExecutiveVicePresidentandManagingDirectorofMacy’sChina,sharedhisjourneyinbringinga150-year-olddepartmentstoreintotheeraofNewRetail.HethenwentontodiscusstheinitiativesthatMacy’sChinaplanstoundertakeinthefourthquarterof2017.

• Withthesuccessfullaunchofmacys.cninOctober,theretailerhasmanagedtoreducethecostofcross-bordere-commerceby40%throughinnovationssuchasChinacustomsregistration.

• Fortherestoffourthquarter2017,Macy’sChinawillbepresentonfourdigitalplatformstoinitiateconsumerjourneyshappeningonmobiledevices:macys.cn,Macy’sinTmall,Macy’sappandMacy’sofficialWeChataccount.

• Macy’sChinawillalsoopenpopupstoresinShanghai,BeijingandHangzhouthatwillbebyinviteonlyandprovideadigitalexperiencethatencompassesdatacollection,virtualreality(VR)/actualreality(AR),foodtrucksandayogaroom.ThefirstpopupwasopenedonSeptember29inHangzhou.Macy’sChinahostedseveralkeyopinionleaders(KOLs)tolivestreamfromthepopupatoneofIntime’sdepartmentstores.

• Alsoinfourthquarter2017,Macy’sChinawillhostSingles’DayandBlackFridayshoppingfestivals.

Source:FGRT

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

5.ToStayAheadoftheCurveintheNewRetailEra,OneNeedstoThinkLikeaVC,BeAgileLikeaTechCompanyandLaunchNewBusinessModelsUnlessinnovativeinitiativesareundertaken,retailers’profitswilldeclinegoingforward,predictedVoravudhVarikarn,SeniorVicePresidentofOnlineBusinessatBigCSupercenter.Thisdeclineinretailers’profitsisprimarilydrivenbyfallingsalesresultingfrome-commercecompetitionandhighercostsfrominvestmentsinretailtechnology.

Thekeymessageistoputcustomersatthecenter,andoneexampleVarikarngavewastouseretailtechnologytocaptureconsumerdatasuchastrackingwhichshelvesconsumersstoptheirtrolleyat.Sixkeyinitiativesthatretailerscantakeare:

1. Reimaginingthestore

2. Deliveringauthenticexperiences

3. Usingtechnologyanddataasaweapon,notjustasanenabler

4. PersonalizingwithI-to-Irelationships

5. Takingontheagilityofatechcompany

6. ThinkinglikeaVCandlaunchingnewbusinessmodels

6.Cross-BorderE-CommerceEnablesRetailerstoSellintoNewMarketsDonZhao,CofounderandExecutiveDirectorofAzoya,andJoëlPalix,CEOofFeelunique,sharedtheirperspectivesonpenetratingtheChinesemarketthroughe-commerce.Thetwobusinesspartnersrecentlycelebratedtheirtwo-yearcooperationanniversary.

Source:FGRT

ThesessionbeganwithacasestudyofFeelunique,apremiumonlinebeautyretailer;thevideodemonstratedhowFeeluniquesetupitssaleschannel,builtbrandawarenessandimprovedcustomers’experiences.PalixsharedhisviewonhowtheChinesemarketisdiverseandchangingrapidly,makingitcriticalforFeeluniquetohaveareliablelocalpartnertohelpdevelopandexecuteitsChinastrategy.ForFeelunique’slong-termstrategy,PalixmentionedthatitisimportanttoincludeawiderbeautyproductrangeforChineseconsumers,whichcontainsboththemostpopularaswellasthe

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

nicheproductstocatertotheincreasingsophisticationoftheChineseconsumer.

Amajorfocusofthediscussionwasontrafficacquisition,asthisisbecomingmoredifficultforretailersinChina,andrequiresintegratedmethodsincludingmarketplaces,influencers,socialmediaandsocialcommerce.

ZhaoofAzoyaseescross-bordere-commerceasanenablerforretailerstoselltoconsumersacrossborders.HebelievesthereareprimarilytwowaysforabrandthatislessestablishedamongChineseconsumerstoenterthemarket:1)gowithmarketplaces;or2)gowithastrongretailer.Azoyaismainlyresponsibleforhelpingretailerpartnerstostarttheire-commercebusinessinanewmarket,includingmarketing,supplychainandlogistics.

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October16,2017

DeborahWeinswig,ManagingDirector,FGRTdeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEsmePau,CFAAnalyst

HongKong:2ndFloor,HongKongSpinnersIndustrialBuildingPhase1&2800CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017

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