Physical retail stores still relevant in today’s digital world
KUCHING: With the rise of digital economy, it has become increasingly easy to buy anything online with just a few taps on our devices. This convenience has led to a huge change in shopping habits as we shift towards online retailers.
According to data released by the Malaysian Digital Association (MDA), revenue for e-commerce retail has expanded from RM626 million in 2014 to RM991 million in 2016, and is expected to continue on its rapid growth path to double in 2020 to RM1.92 billion.
The rapidly growing industry has led to the emergence of an everexpanding list of online retailers such as Lazada, Lelong.my, AliExpress, 11st, Zalora, Doublewoot, and Twenty3.
Globally, the apparel and accessories segment has been observed to be one of the worst-faring segment in the physical retail industry as evidenced by the downsizing of giant apparel retailers like American Apparel, Macy’s BCBG and The Limited.
Most notably, apparel retailer Bebe Stores, Inc who has at one point operated 312 physical stores worldwide, decided on April 21, 2017 to cut its losses and move all its operations to its online retail platform to be a solely exclusive online apparel retailer.
While these are just some signs that the fall of physical retail might be upon us, Sherlyn Tan, founder of Twenty3, a home brand fashion label and online apparel retail store, is adamantly against this notion.
Instead, she believes that future retailers will need to operate both digitally and physically in order to succeed in these changing times.
The brand Twenty3 began initially in 2013 as an online retail platform where Tan resold female apparel she had sourced from in Thailand and it quickly notoriety as Tan seemed to have a gift in choosing the right apparel styles that were highly appealing to Malaysian women.
This led to rapid growth of the brand and company. Instead of keeping the business purely online, Tan decided to instead begin crafting her own clothing designs and branch out into physical retail.
When asked why she decided to venture into the higher overhead physical retail industry, Tan explained that her company’s journey had taught her that it was necessary for a retailer to adopt both strategies (online and offline) these days if they want a develop a brand but don’t have the deep pockets to build a massive e-commerce website like Zalora who has also dabbled in physical retail.
“Our very first retail store was actually in a back alley behind our warehouse and we had lots of people coming into the warehouse to exchanges items, so I thought, ‘Why don’t I put up some changing rooms and racks?’
“More and more people started visiting, until we had to move to another location...across the back alley and the first store – Twenty3 Chapter One – grew from there,” Tan recounts.
She explained that the main motivation for the opening of the store was to allow for direct interaction with their customers in order gain deeper insights into their mindset and behaviour while testing the reception of new products.
“The government has allowed for issuance of new Manufacturing Licence for motor vehicles in the category of energy-efficient vehicles across all segments without engine capacity restriction.
“In addition, there is no equity limit for foreign investors/companies to participate in manufacturing activities in the car sector.
“Thus, there is no issue of liberalisation of the car industry to be linked with the tie-up,” he added.
As for Perodua, he said, the second national carmaker was currently doing very well with domestic sales of 207,110 units last year with 35 per cent share of the overall total industry volume, putting Perodua as market leader in the local motor vehicle industry.
Perodua was also developing an export plan to widen its market in ASEAN, Organisation of Islamic Cooperation countries and Africa, he said.
“Perodua already exports close to 5,000 units yearly to Sri Lanka, Indonesia, Fiji, Brunei and Mauritius.
“Also, it is working to get our local vendors to participate in the supply chain of Daihatsu,” Mustapa said.
Traditionally, Perodua’s strength is in the small compact car market because of its alliance with Daihatsu, renowned for producing compact cars.
Mustapa said the introduction of the Bezza model last year and its positive reception, demonstrated the Perodua’s capability in venturing to other segments,” he said.
Bezza was the first Perodua model to be designed and developed in-house.
In addition, Perodua has more than 100 local vendors to participate in the manufacturing of parts and components to meet its needs.
“These initiatives are a testament to Perodua’s commitment to move up the value chain and its ability to be globally competitive.
“Perodua’s business model to tieup with Daihatsu has proven to be successful and it must continue to undertake aggressive exports promotions to market its cars abroad,” Mustapa said. — Bernama