In 2017, the global retail sector hit a worrying slump as sales figures plunged, fashion businesses were forced to close the doors shut on their brick and mortar establishments. The closure of shopping malls in the United States were reminiscent of abandoned grounds depicted in on-screen post-apocalyptic narratives.
Closer to home, even shopping malls along Singapore’s busiest shopping belt, Orchard Road, are facing a similar fate. Data from property firm Jones Lang Lasalle early last year showed that the average vacancy rate of suburban malls here has more than doubled from less than 1 per cent in 2013 to 2.4 per cent in the fourth quarter of 2016. Additionally, a fall of 7.5 per cent in rentals for prime retail space in Orchard Road over the same period was also reported.
In explaining what seemed to be the dawn of the retail sector’s plummet, the media was, and still is, rampant with claims of e-commerce putting physical stores out of business. Data gathered from across the region by leading Southeast Asian e-tailer Zalora, indeed points to a prominent shift in consumer behaviour.
“Consumer behaviour across the region has changed dramatically and mobile has become a preferred option for many consumers today. More than half our customers are buying fashion items through their mobile phones and devices,” says Tito Costa, chief marketing officer of Zalora Group.
The appeal of virtual shopping lies largely in its convenience, ease of purchase and a wider selection. Shoppers have unbridled access to a seemingly endless catalogue of clothes within the reach of a few clicks no matter the time or day. The quick turnover of stock, relative to that in physical retail spaces, acts as another key draw for consumers. As new releases are uploaded onto the e-commerce site bi-weekly or weekly, the range of clothing online satiates the consumer’s desire for newness.
The consumer behaviour report by Zalora from 2017, further supports the claims of consumer preference for adding items to their carts virtually. Despite having more than 10 retail stores littered across the country, Spanish fast fashion label, Mango, racks in sales online. Together with Zalora's eponymous label and in-house brand Something Borrowed, Mango ranked among the top 5 sellers on the site last year. Similarly, brands such as Nike, Adidas and Cotton On who also boast prominent retail visibility emerged amongst best-sellers online.
In keeping up to speed with the current consumer spending habits, expanding operations onto online platforms is shaping up to be a mandatory money-making move as there is no denying the stronghold that e-tailers have gained on consumers. Often times, the online stores also serve as data collection points, allowing brands to document and distil the shopping patterns of their consumers to a greater detail. This awareness, in turn, a leverage in better catering to the needs of consumers and keep them returning.
“E-commerce players have been focusing on making it as easy as possible to find and purchase something customers are looking for. In other words, e-commerce players have largely optimised the transactional elements of the shopping experience,” says Costa.
“The next frontier, especially in e-commerce verticals like fashion, is leveraging data to help customers discover products they are not explicitly looking for, by building a personalised experience and offering curated edits at scale, powered by customer data insights,” he continues.
As strides are made in online retail, the relevance of brick-and-mortar stores increasingly come under question. Can the physical touch and real-life shopping experience be overhauled by the virtual alternative?
“Consumers of the future want to have options anywhere and everywhere — they are thumb shoppers who are looking for the retailer that have the best product offering and best story to tell,” says Costa.
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