In a strategic pivot towards digital engagement, 68% of Southeast Asian retailers have committed to increasing their investment in social commerce over the coming year, as detailed in the Southeast Asia Retail Report 2024 by Shopify Inc. This uptick is in response to social media's emerging role as the dominant brand and product discovery channel, with 82% of consumers encountering new products via these platforms.
The ascent of social commerce in a shifting economic landscape
Amidst the digital shift, platforms such as TikTok are expected to expand significantly, with its user base in Asia-Pacific projected to grow by 11.3% in 2024. Social media engagement is now a key metric for retailers, with 39% considering it crucial for assessing their commerce initiatives' return on investment (ROI), just slightly behind profit margin, which stands at 44%.
Eugene Chua, Executive Head of Global E-Commerce and Sales at Secretlab, commented on the evolving consumer landscape, stating, “Given the economic climate, customers have become more discerning and selective with how they spend their money. Social media continues to play a big role as a platform of discovery and in influencing customer's decisions.”
Adjusting to consumer trends under economic strain
The economic downturn has prompted a conservative shift in consumer spending, with 83% of Southeast Asian consumers scaling back on non-essential purchases. A significant majority (96%) stated that incentives would encourage brand loyalty, with consistently low prices or promotions appealing to 70% of those surveyed. To capitalise on these consumer behaviour shifts, 71% of retailers are set to enhance their investment in technologies that facilitate contextual real-time pricing to drive conversions while sustaining profit margins.
In Singapore specifically, online shopping must-haves include free shipping (71%), accessible payment options (55%), and free returns (51%). Conversely, the priorities for in-store shopping are knowledgeable staff (56%), stock availability (55%), and attentive service (36%).
Addressing new challenges and technological advancements in retail
While the preference for online shopping is high, with 52% of Southeast Asians favouring digital over physical stores, the importance of brick-and-mortar locations remains significant. About 28% of consumers equally enjoy in-store and online shopping, with an additional 19% preferring the in-store experience, underscoring the necessity for an integrated shopping approach. Reflecting this trend, over 60% of retailers intend to increase their investment in unified commerce platforms, which provide a seamless overview of customer interactions, inventory, and fulfilment across various channels.
Facing operational challenges, 85% of retailers are hindered by inefficiencies stemming from manual processes and outdated systems. Virtually all surveyed (99%) believe that technological advancements will address these issues, with plans to allocate roughly 20% of their total revenue towards innovation, focusing on areas such as real-time pricing, social commerce, and business intelligence.
Shaun Broughton, Managing Director of APAC and Japan at Shopify, articulated the critical role of technology in shaping the retail sector's future, saying, “In this current economic climate, the imperative for both shoppers and retailers to achieve more with less has never been greater. Retailers are turning to advanced technology solutions to not only meet evolving customer demands but also to fortify their long-term resilience. Unified commerce is set to be a key growth catalyst, enabling retailers to harness comprehensive data and insights across their customers, inventory, and operations to make informed and strategic decisions. With technology being the linchpin to the future of retail, Shopify is the partner of choice for retailers across Southeast Asia, from large enterprises to small businesses, with solutions that are purpose-built to cater to their unique needs.”
