Brick and mortar here to stay

E-COMMERCE will never replace “brick and mortar” retail.

Acknowledging that the new buying pattern is a strain on traditional business models, the Malaysia Retail Chain Association (MRCA) – which has over 300 members covering more than 20,000 outlets nationwide – believes it’s about adapting to changes.

Businesses have seen a 20% to 30% drop in spending but e-commerce isn’t solely to be blamed. Weak consumer sentiments and purchasing power are a challenge too, association deputy president Valerie Choo says.

Already faced with rising costs, talent shortage and the depressed ringgit, retailers must now contend with users who test products in-store but buy them online. Mobile devices are also driving footfall by allowing consumers to locate stores and interact through apps, beacons or QR codes.

There’s greater customer participation beyond the usual feedback forms. E-commerce enables direct engagement with customers who go online to get information, compare prices, and read and offer reviews.

Online shopping complements, not replaces traditional retail, Choo insists.

“Millennials and high-income shoppers are especially keen on experience, differentiation and personalisation. They respond to interactive video displays, retail tables with touchscreen technology, personalised fitting-room lighting, and digital memory mirrors. Ultimately, most still want the sensory experience before buying,” she opines.

Online marketplaces like Taobao and eBay aren’t threats, she adds. They’re opportunities for retailers to attract new and return consumers, and foster brand loyalty. Retailers, however, must evolve and equip themselves to handle this new way of doing business.

Offline, not online retailers, have the advantage, she feels.

“We can get our business onto the Internet faster. And, we have outlets that let customers experience the products directly.” Learn from others, she suggests. Singapore, for example, has a retail productivity centre to promote the use of technology by local SMEs. Retailers can also work with online partners.

“(Fitness class booking site) KFit leverages excess capacity in existing retail outlets and reaches out to untapped markets. It’s a winwin situation for both online and traditional retailers.”

“Click and-mortar” businesses also let shoppers buy online and pick up the product in-store, she adds.

It’s crucial, she says, to cater to consumer preferences and convenience. A mix of physical and virtual models reduces the need for large spaces.

Businesses that want to grow must create value. Today’s customers are defying classic notions of what drives their purchasing decisions.

The key is to embrace technology fast and have access to a well-developed e-commerce ecosystem. Retailers must change their organisation’s DNA, not just their marketing and branding strategies.

Choo said due to our humid weather and culture, shopping malls and other retail outlets have evolved into popular lifestyle venues.

She, however, urged retailers to ride the e-commerce wave.

“Unfortunately, the use of technology tools among local retailers – particularly the SMEs that make up 80% of our members, is low.

“Many don’t go beyond having a website.

“Only 19.8% of total SMEs in the country are involved in doing business online,” she said, adding that retailers must upskill and engage directly with consumers through multiple channels like social media and pop-up stores.