Insights taken from an Oliver Wyman presentation at the NACS Convenience Summit Asia on July 21, 2022.
There is a once in a generation shift in consumer behavior today that is opening new opportunities for retailers in Asia.
How are consumers living and shopping in 2023? Some long-term trends:
- sustainable consumption and choices
- shopping convenience
- online for almost everything, also in food
- inspirations driven by social media
- less driving/traveling
- cashless payments
The short to medium-term trends are no less exciting and are defining the future of convenience and fuel retailing. In many Asian markets, a Nielsen survey found that more than 60% of respondents would keep dining-in behavior post-COVID. This figure is highest in China at 86%. Footfall traffic changes post-COVID have also prompted retailers to reconsider their channel strategy, shifting towards online channels.
Overarching market shifts such as price inflation, supply disruptions, improved connectedness of the masses, and digitalization of micro entrepreneurship have also contributed to the unparalleled competition for ‘share of stomach’.
Partnerships will be key to unlocking value
In Nielsen’s Consumption Global Survey 2022, 49% of consumers identified themselves as regular shoppers of omnichannel retailers, signaling an omnichannel presence is key for future retail success.
While nobody is really prepared, deals and partnerships are soaring. There are many examples of partnerships:
- 7-Eleven Hong Kong is using its large expansive network of retail outlets to provide consolidated parcel pick up points for customers of various e-commerce platforms, e.g. IKEA, Zalora, and Marks & Spencer.
- Meituan looking to leverage influencer marketing to boost merchant revenues through partnership with short video platform Kuaishou.
- Indomaret partners with ShopeePay to support and incentivize cashless transactions, e.g. during promotional events. Indomaret also offers additional cashback on ShopeePay transactions.
- Fuel players are increasingly looking to differentiate their stores by enhancing their backcourt offerings – either organically (e.g. Deli by Shell) or through partnerships (e.g. Esso Singapore and FairPrice).
- Petronas partnering with Shopee to grow its e-commerce presence by selling merchandise and lubricants on the platform.
Six strategic directions for retailers
- Product leadership: Offer market-beating products which consumers can’t get elsewhere and that offer value for money and unbeatable quality on dimensions the customer cares about.
- Magnetic platforms / ecosystems: Enhance ecosystem stickiness by creating a compelling shopping and consumption experiences that builds customer loyalty.
- Customer experience specialists: Focus on best experience, product and service quality, and innovative approach.
- Go-to choice intermediaries: Help customer save time and money while finding better products.
- Fulfilment intermediaries: Own the last mile – getting products from distribution centers or stores, straight to the customer’s front door in the most efficient and reliable way, targeting the same audience as convenience stores.
- Proximity players: Own the best locations for capturing the customer’s attention, reinforced by attractive value proposition management.
To summarize, retailers should react by closing the gap to the ‘new standard’. This requires optimization of costs, assets, and network footprint, seeking partnerships to help drive growth, and digitalize to reduce transaction friction. Retailers should also play to their strengths by differentiating their offerings against competition and prioritizing the customer’s experience.
