BRICK-AND-MORTAR stores are here to stay, even with the recent boom in e-commerce, with vendors and malls tipped to focus more on activities and experiences to woo shoppers in South-east Asia.
The name of the game of keeping consumers engaged now: omni-channel retail.
The subject was the focus of a presentation on Friday at the Credit Suisse Asian Investment Conference, where watchers stressed the need to balance online and offline business activity.
Varun Ahuja, Asia telecoms and Internet securities research analyst, called Asean "highly attractive for e-commerce", but added: "We expect a growth in omni-channel commerce, where consumers can enjoy a unified user experience across a seller's offline and online channels."
More than three-quarters (78 per cent) of Asia-Pacific consumers were already omni-channel shoppers as at May 2020, Credit Suisse estimates - and this is even as Bain last year forecast that South-east Asia's Internet economy would hit US$309 billion in gross merchandise value in 2025, up from US$105 billion in 2020. The lion's share is projected to go to e-commerce, followed by travel, transport and food, and media.
Said Hazel Tanedo, consumer securities research analyst for the Philippines at Credit Suisse: "In Asean's increasingly competitive e-commerce space, businesses are shifting from the retail-centric model to engagement-centric models, in order to maximise consumer touchpoints."
For now, though, Singapore and Malaysia pack an outsized punch in e-commerce. In spite of their smaller population sizes, they make up a third of regional online retail sales.
To be sure, Credit Suisse estimated that 93 per cent of users in Indonesia who started using digital services during Covid-19 lockdowns will continue to do so post-pandemic.
But high logistics costs, consumers' preference for live interactions and lifestyle offerings such as family-oriented activities at shopping centres, will continue to pose barriers to e-commerce.
Similarly, the Philippines is challenged by poor mobile connectivity, as well as a lack of access to digital-payment methods, as two out of three Filipinos do not own a digital wallet or account.
"E-commerce value rose during the pandemic, but as only a meagre 6 per cent of Filipinos shop online, brick-and-mortar stores therefore remain central to retailing in the market," said Ms Tanedo. "Traditional sales channels such as sari-sari stores and hypermarkets have remained the primary drivers for fast-moving consumer goods sales in the Philippines."
Brick-and-mortar stores are also expected to continue growing strongly, especially in Vietnam, on the back of low penetration of alternative retail methods.
Credit Suisse added: "E-commerce is still at a very early stage in Indonesia, the Philippines, Thailand and Vietnam, and remains an important reservoir of growth for the region."