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More clicking, but touch and feel still matter for the Lunar New Year

Digital push makes inroads but it's brick and mortar for traditional activities like queueing for bak kwa and bank notes, and beauty-related services

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During the Chinese New Year period, when demand is highest, Lim Chee Guan has suspended its delivery service to have "all hands on deck", forcing customers to head down to its brick and mortar stores. Despite the hassle, customers dutifully formed long queues outside the stores.

Singapore

AT any other time of the year, Singaporeans craving grilled pork jerky from popular bak kwa retailer Lim Chee Guan can simply order home delivery direct from the company.

Yet during the Chinese New Year (CNY) period, when demand is highest, Lim Chee Guan has suspended its delivery service to have "all hands on deck", forcing customers to head down to its brick and mortar stores. Despite the hassle, customers dutifully formed long queues outside the stores.

"There isn't much of an impact as we are fortunate enough to have a lot of understanding customers who understand our reasons for halting the delivery service during this period," a Lim Chee Guan spokesperson told The Business Times (BT).

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Singapore consumers may have embraced the digital economy in many other aspects of life, but when it comes to the CNY festival, they remain solidly in the physical realm, even as a relentless wave of digital innovations is starting to wear away resistance in some corners.

Internet search giant Google told BT that more than 90 per cent of all retail sales in Singapore were still being done offline during the festive season in 2018.

SAP's S Pranatharthi Haran, who heads customer experience in Southeast Asia, said that the preference for offline channels could be due to factors such as delivery timings, particularly so for clothing, which customers expect to receive in time for the holiday.

Around 30 per cent of Singaporeans abandoned their online shopping due to longer-than-expected delivery times, according to SAP's Consumer Propensity Study 2018, which surveyed 1,000 Singaporeans about their purchase motivations.

Certain activities and traditions during the festive period are also difficult to replicate online, said United Overseas Bank head of research, Suan Teck Kin.

The impact of online shopping is being felt more in the retail space as opposed to the service sector, as the latter requires in-person consumption, Mr Suan said. This includes tradition-based activities such as queueing for fresh bank notes for red packets, and beauty-related services like hair cuts.

"Activities which involve relationship building like the delivery of bak kwa to clients or customers by businesses may still be done by hand as opposed to courier services," Mr Suan explained, adding that sincerity in such occasions is still a priority.

Selena Ling, head of treasury research and strategy at OCBC Bank, said that some consumer goods, especially the lower value ones, could face price pressures from new digital platforms because there is usually a "fair bit of price transparency" for consumer goods.

"However, there is a certain premium that consumers would pay for certain brands or purchases regarded as an occasional once-a-year splurge," Ms Ling said. This usually applies to brands consumers feel are worth queueing up for.

Yet despite its slow progress, the digital economy is making some inroads during the festival. Even if consumers are mostly sticking to offline purchases, they are showing growing interest in online options, according to Google.

During the CNY period last year, Google saw 65 per cent of Singaporeans going online to prepare for festive season through searches and YouTube. Online interest on the holiday "accelerated" five weeks prior to CNY, and peaked during the week itself, read data from a Google survey conducted with 300 respondents in October 2018.

Moreover, 14 per cent year-on-year growth was observed for CNY-related content across all categories from 2017 to 2018. A 46 per cent increase in searches of e-commerce brands was also found in the same period, compared to searches in the months before CNY 2018.

Some of that interest has filtered into actual transactions.

Local supermarket chain FairPrice saw an increase of over 60 per cent in online sales for the festive period this year compared to last year, the supermarket chain told BT. This was via its FairPrice On platform, which was revamped and relaunched last year.

RedMart, which recently folded into Lazada, has also experienced CNY-related sales increase this year. In the past two weeks leading up to CNY this year, sales for mandarin oranges doubled year-on-year. The online grocer also saw an 87 per cent year-on-year sales increase for private label products and a 30 per cent year-on-year sales increase for fresh meat and seafood products, which are typically used in steamboats during reunion dinners.

According to SAP, discounts and promotion notifications were top reasons driving Singaporeans to purchase online last year. Travel and fashion-related goods came up as top online purchases for Singaporeans. Meanwhile, entertainment experiences and groceries were items Singaporeans were "most comfortable" buying online, while items such as furniture were less popular.

The red packet has also been getting a digital makeover.

Investment company Schroders Singapore continued to add digital elements to its traditional red packet corporate gifts this year, as the move was "well received" last year by clients, said Jerry Low, South-east Asia head of marketing. This year, the company brought back its interactive red packets, which launch colouring games when a QR code is scanned on mobile and online.

Standard Chartered has also piloted eAng Bao initiatives via the PayNow electronic funds transfer system. This was after witnessing PayNow transactions grow to four times year-ago numbers following the launch of PayNow in 2017. Meanwhile, ride-hailing and payments platform Grab, brought back its eAng Bao initiative after it saw more than 1.6 million eAng Baos being sent last year in the same period.

DBS Bank recently piloted its QR Ang Bao which allows users to pre-load cash amounts which can be deposited to a recipient's PayLah! account after they scan a QR code located on the packet.

The digital initiative supplements DBS's eAng Baos service, introduced in 2015 to allow users to send digital red packets to loved ones via PayLah! as opposed to physical red packets. eAng Baos have been "steadily rising in popularity since", with transactions in 2018 being six times higher than those in 2017, said Jeremy Soo, the bank's managing director and head of Singapore consumer banking.

Deposits made via DBS's PayLah! electronic funds transfer system during "Li Chun", the first day of spring, also increased by over three times between 2017 and 2018, with an average of S$28 being deposited per transaction in 2018. The bank also rolled out an online service allowing customers to reserve new bank notes online which can be collected at a branch later on to help cut down on queuing time.

"For any innovation to succeed it is key to find a balance and still preserve core traditional values, and continue iterating based on the public's feedback," Mr Soo said.

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