Edge by Ascential uses our STEIP framework to identify drivers of change in society, technology, economy, industry, and policy, and evaluate how they are affecting retail and its future developments.
To remain relevant in the future, retailers must cater to the changing shopping habits of today’s on-demand consumer.
Customers’ expectations are mainly driven by the digitization of experiences. They enjoy constant access to the Internet via an increasing variety of mobile devices, and they demand convenience, flexibility, personalization, and transparency.
However, they also require experiential retail environments; the ability to touch, taste, smell, and feel products remains important to them. This is clearly an area where the physical store still has a unique and important role to play.
Retail is undergoing an unprecedented period of change, led by the growth of e-commerce, which is forecast to grow from 19 percent of global chain retail sales in 2018 to 27 percent by 2023.
All over the world, physical stores are under pressure and growth rates have slowed as consumer spending shifts online.
In response, retailers are scaling back new store expansions, closing stores, or investing in smaller store formats. Leading operations have begun to reshape their existing physical assets by reimagining the Store of the Future.
In the Asia Pacific region, the growth of e-commerce is even more pronounced, led by the rapid expansion of leading players such as Alibaba and JD.com. Anny Huang, Head of E‑commerce, NTUC Income Insurance, Singapore, agrees, “E commerce has evolved a lot … Given the pressure coming from China, we were kind of forced to leap and speed up a lot faster than what we imagined.”
In this region, e-commerce will approach 50 percent of the total retail chain by 2023, with Alibaba and JD.com both building an O2O network of digital-first stores. Both of these retailers are able to leverage the benefits of the physical store environment by using sophisticated customer data to optimize store layouts and offer personalized solutions for shoppers (see case studies in the following section).