The retail industry has been just as badly affected in the Asian market as anywhere else in the world. Retailers have been forced to close their stores because of constant lockdowns, which has led to major revenue losses. Even as economies have started to rebound, the recovery will be a slow one for retailers, especially those who have just started their digital transformation.
However, the shift to digital has been faster than we had expected. Most retailers now realize the rapid shifts in consumer behavior and are bracing themselves to deliver effective experiences at every stage of the customers’ buying journey.
To understand how Asia Pacific retailers are digitizing and developing competencies to enable themselves to compete in the post-COVID world, the Google Cloud Retail Digital Pulse has come up with a report that seeks to highlight the maturity of retail digital transformation in the Asia Pacific region. The study assesses the digital maturity of retailers across five dimensions (strategy, people, data, technology, and process) to arrive at a 4-stage Digital Pulse Index, with 4 being the most mature.
Here are the major highlights of the report.
Digital Pulse of the Asian Retail Sector
Although retail has been severely impacted by the onslaught of the COVID-19 pandemic, it is also bouncing back slowly. But the unique market challenges mean that business confidence is mixed across markets in the Asia Pacific. So, while Japan and Hong Kong are optimistic with over 60% of retailers looking to invest aggressively, over 50% of the retailers in Thailand still believe that they going through either an economic slowdown or recession.
As 73% of the organizations are still at Stage 1 or Stage 1 of the Digital Pulse Index (DPI), there is an opportunity for companies to develop, implement, and execute digital strategies to differentiate themselves from their rivals. While the more digitally mature retailers (DPI Stage 3 & 4) tend to focus on digitally connected experiences, the less digitally mature (DPI Stage 1 & 2) tend to prioritize innovations for demand planning, allocations, and assortments.
From the perspective of market maturity, Singapore leads in digital maturity along with Hong Kong, South Korea, Australia, and Japan who are all in Stage 2.
Innovation Hotspots
The journey to digital resilience has established the significance of keeping up with the ever-changing consumer demands and expectations. While the digital pulse index seeks to understand the current level of digital resiliency, the innovation areas explore where the retailers are investing for the future. The study analyzed 7 innovation hotspots, identified as the ‘big investment themes with specific use cases across markets & segments.’
Customer retention was identified as the top innovation hotspot followed by store/ warehouse operations and omnichannel commerce, respectively. While retailers at Stage 1 of DPI were more focused on customer acquisition, retailers at Stage 4 were more inclined towards customer retention and enhancing omnichannel capabilities.
Challenges to Digitial Transformation
While the challenges to digital transformation are still there, there’s a shift in the barriers to adoption where the biggest challenge has now moved from having a digital plan in place to having the right culture and digital mindset to drive implementation. Companies are still hesitant and don’t necessarily understand the value of the ROI that these technologies can deliver.
Even the most digitally developed retailers who have the luxury of these technologies struggle to find the right digital skills while facing a lack of digital mindset within their respective organizations.
Drive for Digital Resilience
Although the average Digital Pulse Index in the Asia Pacific is still quite low, there has been some improvement in digital maturity with the acceleration of emerging markets. However, the advancement towards digital resiliency entails retailers to improve across all the five dimensions of the Digital Pulse Index.
At the same time, embracing innovation with an ability to adopt new technologies and leverage data at a high scale will be instrumental for success.
Final Takeaway
Having a solid plan for digital transformation is no longer optional but a must to stay relevant and competitive in today’s retail landscape. Digital resiliency means that a company has the technology foundation to enable innovation to quickly respond to any changes in external situations without disruption.
However, it is not only critical to have a proper understanding of your digital pulse but also your appetite for change. As most retailers now have technology roadmaps in place, the challenge that is now in front of them is to embrace a digital mindset and a culture of innovation to accelerate the journey towards the adoption of digital resiliency.
To delve deeper into the findings of the study, click here.