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Category: Research

Retail News Asia is committed to providing both local and global retailers with the latest Research throughout the Asian market. This on a daily base.

  • Property Sector Will Continue to Face Headwinds in 2019

    Property Sector Will Continue to Face Headwinds in 2019

    Indonesia’s property sector will continue to face headwinds next year amid the usual uncertainties associated with an election year, a declining rupiah and rising interest rates, global credit rating agency Moody’s Investors Service said.

    In a report titled “Indonesian Property Developer Chartbook,” Moody’s rated eight of the country’s property developers, Bumi Serpong Damai, Lippo Karawaci, Sentul City, Intiland Development, Alam Sutra Realty, Agung Podomoro Land and Modernland Realty.

    “The chartbook [report] provides updated snapshots of the developers’ business positions, marketing sales trends, revenue, profitability, cash flow, liquidity, leverage and interest coverage ratios, debt maturity profiles, foreign exchange exposure and covenant quality scores,” Jacintha Poh, vice president and senior analyst at Moody’s Investors Service, said in a statement on Tuesday (04/09).

    Moody’s said further rupiah depreciation, along with rising interest rates, will hamper growth in the property sector.

    Bank Indonesia has raised interest rates by 125 basis points since May this year and many observers expect further increases towards the end of the year.

    The rupiah has depreciated by 11 percent against United States dollar so far this year and traded at 14,927 against the greenback on Wednesday, near its lowest point in 20 years.

    Moody’s found that five of the eight property companies did not have sufficient cash as of June 30 this year to repay their short-term debt. These are Agung Podomoro, Modernland Realty, Intiland Development, Sentul City and Lippo Karawaci.

    For example, Agung Podomoro Land had Rp 1.3 trillion ($87 million) in internal cash, while its short-term debt stood at Rp 5.9 trillion as of June 30. Intiland Development had Rp 976 billion, while its short-term debt stood at Rp 4.61 trillion.

    But the global firm noted that some of these companies have replaced short-term debt with longer-term debt, which in the end could improve their cash coverage ratios.

    Higher debt-funded capital expenditure and a surge in the cost of funding will further weaken some developers’ leverage and interest coverage ratios over the next 12 to 18 months, Moody’s said.

    The ratings agency also highlighted that most of the developers will generate operating cash flow over the next 12-18 months, but only Pakuwon Jati, Bumi Serpong Damai and Intiland Development will be able to generate free cash flow – allowing them to expand, reduce debt or pay dividends to shareholders.

    However, Moody ‘s still expects demand for property to recover next year. The increase in new property projects, sales promotions and lower property prices will boost demand and support an improvement in marketing sales.

    Moody’s said in the report that the marketing sales of Bumi Serpong Damai, Alam Sutra Realty and Modernland Realty have exceeded 50 percent of their full-year target in the first half.

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  • Growth of Indian fashion e-commerce

    Growth of Indian fashion e-commerce

    E-commerce is the future of retail, and is taking giant steps as technology is being redefined with each successive year. But, contrary to popular belief, e-tailing can be expected to actually augment the growth of traditional retail in India along with consolidating wholesale and distribution channels.

    The Indian retail market is emerging as one of the most dynamic and fast-paced sector attracting several new domestic and international players. It accounts for over 10 percent of the country’s Gross Domestic Product (GDP) and around 8 percent of the employment. India is the world’s fifth-largest global destination in retail space. The Indian retail market is estimated at Rs 46,15,000 crore (US $710 billion) in 2017, and is expected to grow at a CAGR of 9 percent to reach Rs 1,08,58,000 crore (US $1,672 billion) by 2027. Corporatized retail had only a share of 11 percent in 2017, out of which, e-retail accounted for meagre 2 percent (Rs 92,300 crore). After the implementation of unified taxation under GST regime, it is expected that the share of corporatized retail will increase at higher rate. With increasing penetration of Internet in India, the acceptability of online shopping is expected to grow at a phenomenal pace.

    INDIAN RETAIL MARKET

    The Indian retail market is primarily dominated by food and grocery (~67 percent) followed by apparel and accessories (~8 percent), jewellery and watches (~8 percent) and others.

    India has witnessed a drastic shopping revolution in terms of retail formats, distribution channels and consumer buying behaviour. There has been an increase in purchasing power of consumers owing to the growth of middle class with higher share of disposable income, easy financial options, etc. The consumers today are more educated and well informed thus becoming more experimental and willing to try new products and new modes of purchases.

    E-retail is one of the fastest growing formats in Indian retail market owing to the convenient and personalized shopping experience. The Indian e-retail is estimate at US $16.3 billion in 2017 and is expected to grow at CAGR of 45 percent to reach US $49.5 billion by 2020.

    E-TAILING IN INDIA

    India is expected to become one of the world’s fastest growing e-tail markets, driven by robust investment in the sector and rapid increase in the number of internet users. Under Government initiatives like ‘Digital India’, Internet has penetrated to 400 million users, 48,000 gram panchayats are connected by optical fibres under Bharatnet program and 120.8 million have access to broadband. The increasing spectrum of Internet reach across geographies of India coupled with corporatization of apparel sector is paving way for emergence of e-commerce as a major retail channel in apparel category.

    E-tailing evolution took place in India starting with books and media as the key category. Electronics joined the e-tail bandwagon next and apparel, lifestyle were the third product categories. The other categories that have found traction include babycare, home and living, etc.

    At present, the e-commerce market is led by electronics category with a share of ~49 percent followed by apparel and lifestyle which is ~25 percent (including footwear, bags, belts, wallets, watches, jewellery, etc.). The adoption of e-tail in apparel and fashion industry is resisted by the consumers’ willingness to touch-and-feel the product before making purchase decision. To address this issue, initiatives like cash on delivery, easy return and exchange, discounts and offers are being implemented to encourage consumers to use online channel for shopping.

    E-tailing is in early stage but is growing rapidly and it will be further catalysed with the digital India program and structural reforms like GST implementation. Current share of e-retail in apparel and lifestyle segment is estimated at 4 percent in 2017 and is expected to grow four times from US $4 billion in 2017 to US $13 billion by 2020.

    E-retailers have rapidly scaled up their product offerings, providing a wide choice to customers. Several players have adopted marketplace models (pure or managed) which has enabled them to offer more categories, more brands and greater market reach for brands. E-retailers are opting for Omnichannel retail model by opening their physical store to capture a bigger market share. In addition, E-tailers are also investing into studios to improve uniformity in product catalogue for different suppliers, thereby enhancing customer’s shopping experience.

    Along with faster and easier navigation, most e-tailers provide detailed specifications of the products to make it easier for consumers to make purchase decisions. For instance, high resolution pictures and zoom in features are provided on the website to showcase the details of the products. Multiple images from different angles enable detailed view of product. Measurement charts assist the customer to make the right fit decision in case of apparel products, etc.

    KEY GROWTH DRIVERS OF E-TAIL IN INDIA

    Indian online retail has witnessed a surge in recent years and is expected to swell up to ~15 percent of the total retail by 2020 from current contribution of 4 percent (2017) in apparel and lifestyle segment. There are multiple factors which contribute to the growth of e-tail in India.

    Growth of digital penetration – India is in the midst of a digital revolution. The number of Internet users is likely to cross 650 million by 2020 and it is expected that half of the Indian population will be online in the next 3 years. Mobiles have become the most preferred device to access internet. The availability and affordability of smartphones with access to cheap internet data coupled with the rise in disposable income is fuelling the growth of digital penetration.

    Reach of e-retail channel – In next 3-4 years, more than half of India’s incremental Internet growth is expected to come from rural India. Additionally, the digital user demographic is expected to expand beyond the traditional stereotype, with a significant growth in female and older Internet users by 2020. This will result in a larger market size across different geographies, age and genders and not just a small targeted group. The diversity in the Internet users will facilitate an opportunity for online retailers to expand their product portfolio as per the increasing customer base.

    Impact of digital age – Though, Internet has penetrated to 400 million users today, but they are different in usage behaviour and needs. 60 percent of rural Internet users go online using Internet enabled phones and not smartphones. The major use of Internet in rural consumers is limited to entertainment, education and social networking. The online purchase behaviour is best predicted by the ‘digital age’ (years spent online), and not by demographics. With an increase in digital age, the internet users even from rural areas are expected to use e-retail for making their purchase decisions.

    Increasing fashion demands in small cities and towns – With the media exposure, rising awareness, growing aspirations and increasing share of disposable income, Indian consumers are looking to get access to global fashion brands. Limited reach of brick and mortar retail outlets of brands in smaller cities provides an opportunity for online retailers. Heavy discounts and promotions, availability of exclusive products, customized experience, availability of global brands, etc. Have made consumers residing in Tier -II and -III cities and semi-urban areas migrate to these online channels.

    Improved supply chain and end delivery logistics – E-commerce business is completely dependent on effective supply chain management. Successful supply chain management coordinates and integrates activities like manufacturing, operations, transportation and physical distribution of product with last mile connectivity to end users into a seamless process. For customer acquisition from traditional way of brick-and-mortar channel and their retention, it is necessary to provide customized shopping experience to the consumer by giving several convenience options like various payment options, mode of delivery, point of delivery, etc.

    Growth of private labels – With increasing acceptability of private labels among Indian consumers, e-retailers are entering into this emerging segment. The access to exhaustive informative data on consumer’s buying behaviour and preferences have provided an advantage to online retailers in terms of understanding the consumer’s needs. With private labels, online retailers are able to increase their revenues owing to lower distribution overheads, lesser number of intermediaries and negligible marketing cost involved in private labels.

    KEY CHALLENGES

    Despite high growth, e-tailers face several challenges in the country. Challenges and concerns related to e-tailing in India are enumerated as under:

    Competitive intensity – Changing customer preferences and their competitive demand has made e-tailing a highly competitive business which results in cash-burn with regular promotions/ discounts. High discounts by e-retailers to acquire customers have led to unreal customer expectations, low loyalty and losses.

    Sub-optimal logistics and infrastructural bottlenecks – Most of the logistics companies do not have pan-India reach. As some regions are not easily accessible, retailers have to cancel such orders due to inability of logistics partners to provide service in those areas. Inadequate infrastructure such as poor conditions of roads, highway, etc., is one of the main challenges faced by the e-retailers resulting in a major roadblock in their growth story.

    Inability to convert returns into retails – The conventional brick-and-mortar channel is able to convert the return of product into sales. Consumers when go to shop to return the product, they generally shop for other goods due to easy accessibility to other designs and variety in the shop, which is not the same in case of online shopping.

    Different Drivers for online purchase – The purchase drivers are very different across different geographies, regions and population centres. Factors such as promotions, discount and offers are the key driving factor for online purchase across all the regions – metros, tier -I and II cities. But there are other region specific factors such as, availability of new products, better product assortments, easy return policy, express delivery options, etc., which drive growth in different cities and regions. Thus e-tailers have to develop different strategies for different regions and geographies.

    CONCLUSION

    In the current shopper-centric era, Indian fashion industry is joining hands with technological advancements. Retailers are progressively accepting innovative ideas and tactics to create a memorable and personalized shopping experience, at the same time ensuring lower logistics and operational cost thus leading to higher revenues. With increasing internet penetration, e-commerce is expected to grow at relatively higher rate in comparison to conventional retail channels. With increasing acceptance of private labels within the Indian consumers, e-retailers are venturing into private labels.

    E-tailing can play a crucial role in consolidating wholesale and distribution channels, and in developing India-specific business models. By virtue of the advantages discussed in previous sections, e-tailing can bring down the cost of distribution and can complement the growth of traditional retail. In future, e-retail is expected to take a step ahead in adopting Omnichannel retail strategy, capturing higher market share.

  • How to get GEN Z?

    How to get GEN Z?

    From a shared workspace in Shoreditch, Threads Styling sells luxury fashion to ultra-wealthy twenty-somethings from around the world the same way they are used to chatting with their friends: via social media messaging platforms like WhatsApp, Snapchat, Instagram and WeChat.

    A recent Instagram Stories posted by Threads, called “Fresh Fendi Finds,” shows a video of a model in a denim logo-covered trench coat posing in a decadent store, a close-up of her white knee-high crocodile-skin cowboy boots and a series of photos of her gold logo earring hoops with the hashtag #hardwareheaven. Swipe up and you are connected to a personal stylist. “Hello! I would love to help you with this enquiry,” a live chat begins.

    “It’s something really personal and really digital and how you can go beyond e-commerce,” says Threads Styling founder Sophie Hill. The company is not yet profitable, but sales growth has doubled annually for the past four years, putting yearly revenue “in the tens of millions of pounds,” according to a source close to the business. Revenues come from “wholesale to commission” partnerships with brands, though the company does not hold inventory, Hill explains. Now, the start-up has secured $20 million in Series A funding from Highland Europe and C Ventures.

    Hill, a millennial herself, launched Threads Styling in 2010 as a personal shopping service that was entirely mobile and social media-based because it was “exciting, convenient and more personal and curated.” She started by partnering with five-star hotels in London to deliver a shopping concierge service to their guests and quickly built up a following with young, Middle Eastern royalty who not only wanted the bag of the season, but also advice on how to style it, serviced exclusively via their phones. Freelance stylists curated a constant stream of looks to post on social media, while personal shoppers offered fashion advice, sourced items and then dispatched them globally. In 2012, Hill hired her first full-time staff member. Today she has 90.

    Powered by algorithmic “chatbots,” messaging-based e-commerce, or “conversational commerce,” was once believed to be the next big thing in online shopping. Facebook was particularly bullish, painting a bright future for chat-based commerce on its Messenger app. But the technology failed to take off and the hype died down. Now, the introduction of Apple Business Chat has rekindled interest in the space. Threads Styling plans to scale its business with chat bots that can handle conversations with demanding luxury customers. It also plans to add offices in the US and Asia.

    Hill had the foresight to see that Generation Z, born post-1996, do most of their shopping research on social media, while their smartphone ownership is close to universal, with an average of 2 hours 43 minutes a day spent on social networks and messaging services, according to GlobalWebIndex, a consumer data analytics firm. Gen Z are also less loyal to retailers, so developing real relationships is key.

    “It’s a relationship we build with the customer. We’re more like an influencer and less like a brand,” says Hill. Their shoppers are “extremely loyal” repeat buyers, who shop at full price and often buy the entire look in one of the company’s social posts.

    The average shopper at Threads is 25 years old. Many of them are also ultra-high net worth individuals, defined as those with assets over $30 million, says the company’s vice president of brand strategy Rachel Reavley. Average basket size is $3,000 with a return rate below 5 percent. That compares with average order size of $373 at Yoox Net-A-Porter, $729 at MatchesFashion and $1,400 at Moda Operandi. No wonder Threads has over 250 luxury brand partners from Fendi to Chopard and Dior.

    Gen Z is growing in importance for luxury brands. Currently, this generation only accounts for 2 to 3 percent of luxury market sales, while millennials make up 30 percent, according to John Guy, luxury analyst at Mainfirst Bank. But the split is set to shift. In China, half of luxury shoppers are under 30, according to research by Secoo and Tencent.

    Threads is certainly not alone in targeting wealthy Gen-Z shoppers. At MyTheresa ultra high net worth individuals account for 30 percent of total revenues, and “the speed with which Gen-Z customers currently show up in this group is faster than any other customer type, although still at a small scale,” says Michael Kliger, president at MyTheresa. “We have seen a progressive increase in the number of young customers shopping with us globally and have to tailor the way we service these customers, particularly with their focus on social and mobile. They react with speed to any social content, in particular pre-launches, new arrivals or exclusives.”

    “One thing we find that sets Gen Z apart from our other EIP customers is their openness to try new designers; they’re not brand loyal and instead they look for the right product and design over the designer,” says Elizabeth von der Goltz, global buying director at Net-a-Porter, referring to high-spenders that the e-tailer calls “Extremely Important People” or EIPs. “Having said that, the brands that consistently perform really well for this audience are those whose collections are more logo-focused or who offer a more streetwear aesthetic: from Gucci and Balenciaga to Vetements and Off-White. And they’re obsessed with newness.”

    But physical stores are anything but dead. Most Gen-Z consumers actually prefer to make purchases in physical spaces though they may be researched, price compared and influenced by friends on social media prior to the actual transaction. That means luxury stores need to be experience-focused, Instagram-worthy, fun and include engaging customer services akin to a VIP experience, according to Tiffany Zhong, the 21-year-old founder of Zebra Intelligence, a Gen-Z consumer insights platform.

    “I think a lot of luxury brands are missing out, they think millennials are more important and they do not know how to target Gen Z,” Zhong says. “For them, luxury is stuff that’s scarce or stuff that others don’t have, limited edition items. Gen Z cares about being unique,” she continues, adding: “The experience is just as important as the product, whether its in-store or online it’s about making it unique and fun.”

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  • The great differentiator in retail industry

    The great differentiator in retail industry

    The retail industry is competitive, it’s relentless and the success of brands and retailers depends on how firmly they deal with their competition. One way to stay ahead of the curve is the incorporation of technology in a brand’s operating model.

    Technology is changing the shape of the global retail industry as also the way many retailers and businesses operate. In retail, technology gives brands the platform to better satisfy their customers by helping them concentrate on consumer needs.

    According to a Walker study, customer experience will overtake price and product as the key brand differentiator by 2020 and 86 percent of consumers will pay more for a better experience. The challenge in serving the modern customer for most retailers, therefore, lies in bringing about the right balance between technology and humans.

    Retailers with the foresight to understand the potential of technology without getting lost in its complexities, and merging it with human interaction, have always been able to grow faster and bigger. Simply put, technology is beginning to play an increasingly important role in the management of complex retail operations all over the world. To stay ahead of the game, retailers are taking the help of different technologies to lead the way in changing two aspects: their points-of-sale and their points-of-supply.

    As retail markets continue to grow and become complex, it is becoming increasingly tough for businesses to keep a track on new developments and then to figure out how these developments can be combined into their operating models in order to come up with a winning proposition – both for themselves as well as their consumer. This is one of the many reasons that retailers need technology.

    Other important factors for retail brands to transform their IT capabilities include:
    – Increasing the company’s ability to respond to the evolving marketplace through enhanced speed and flexibility
    – Collecting and analysing customer data while enhancing differentiation
    – Working effectively; retailers need one system working across stores (or even across national borders) to make sure the most effective use of stock and improve business processes

    Technology in Retail

    High tech innovations help retailers stay competitive in key categories including consumer convenience, price, size and speed. High tech tools help in manufacturing products in bulk, ensuring fulfillment of consumer demands with greater speed and ease both at the warehouses/ stores and on the sales floor.

    Technology also balances inventory assortments, manages ordering and tracks pricing. Customer tracking tools increase customer satisfaction and promote loyalty by enhancing shoppers’ in-store experience.

    For example, in-store sensors and beacon technology can record behavioral and demographic data to a business’s cloud computing system, offering insight into the customers’ psyche. This data can then guide product, layout and display strategies. The data gathered systems can analyse customer browsing and buying patterns, which then be used to personalise in-store experiences for consumers. IoT beacons can also help customers quickly find items in a store and notify them of offers and discounts via their smartphones.

    On the executive level too, technology plays a positive role in strategy and decision making, saving time and adding convenience and profits to the business.

    Personalisation & CRM Through POS Systems: Thanks to modern technology, cloud-based POS systems aid business owners in the automation of daily tasks. These include payment and checkout like interactive signage, employee attendance, self-service applications like customer check-in. POS systems also help in the overall optimisation of processes like tracking inputs from different access points, implementation of a reservation system (in case of a restaurant) and developing a customer loyalty program.

    These smart register terminals provide reports, calculate discounts, offer coupons, capture and match tally of customer profile information with ease to avoid chaos at the billing counter. They use a signature capture technology for credit card transactions which retains receipts electronically.

    Use of POS technology has served towards making the payment process easier and contactless. RFID and NFC technology provide customers with the bonus of making a purchase using their smartphones and smartwatches.

    It is important for retail businesses to streamline these processes to develop a system which is informative and error-free.

    Inventory Management: According to stores.org, “Retailers will continue to explore ways to use IoT in the coming year for everything from keeping better tabs on their inventory to managing losses from theft and connecting with shoppers.

    With the help of technology, managers can track inventory in an organised manner through its purchase cycle and offer real-time information and updates about the product to consumers. Technology is also already helping in informing managers of the status of the store stock – whether it needs replenishing or not.

    Features like ‘Electronic Data Interchange (EDI)’ help in maintaining direct computer-to-computer transactions from the store to the vendors’ databases and ordering systems. The wireless hand-held inventory units keep a check on the entire database at the headquarters by downloading and help in downloading the data regularly.

    The Universal Product Code (UPC), is used for product identification system using bar code and unique numbering for organising the goods category wise. Automatic replenishment manages restocking of what’s been sold. Customer Relationship Management (CRM) software allows retailers to track customers.

    Price Auditing: Despite being a time consuming and costly process, price auditing is another important aspect for retailers which ensures that the consumers are not being charged extra or less. Auditing has been streamlined to a large extent by the introduction of technology as products can now be scanned at the time of purchase. Th is creates more accurate pricing, saves store employees a lot of time and creates better trust between the store and the customers.

    Impact of Technology on the Retail Industry

    The dawn of e-commerce had dealt a huge blow to the traditional retail – that is until retailers discovered the advantages of Omnichannel retail. With the advent of new technology, retailers are now raising the industry from the simple concept of buying and selling and taking Omnichannel to another level altogether.

    “Retailers will continue to adopt emerging technologies in 2018 to close the gap between the digital and physical worlds, and to learn more about consumers. Mobile will become an increasingly important part of the retail equation as stores also evolve. And throughout the industry, retailers will attain more data about their shoppers and use artificial intelligence to enhance their marketing and merchandising. Personalisation in retail will play a important role in 2018.

    Retailers will use data and AI platforms to better engage customers with personalized shopping experience both online and in the store. More retailers will use AI-based capabilities and technologies to better match shoppers with products. They will be able to access personal shopping history, demographics, page views and clicks then use AI to offer better recommendations and individually tailor their marketing,” says Sunil Nair, Sr. Vice President IT & Business Solutions, SPAR India (Max Hypermarkets).

    Indians as customers are more digitally aware now than ever before, and this number will increase over the next few years. More Indians getting into the digital space would mean more opportunities and challenges for us retailers in terms of getting through to the right audience in a manner that converts them into loyal customers. Upcoming technologies are going to make way for the Indian Retail Industry to make a digital breakthrough and provide exactly what the digitally-aware customers would want,” he adds.

    “India is one of the biggest consumer market in terms of mobile devices. Coupled with an efficient distribution and logistics setup, the retail industry is set for exponential growth. The real time analytics could bring in efficiencies in inventory management, product placements, supply chain, deliveries, and even product development for the right consumer market. The two hot technologies that are becoming very popular are ‘Robotics & Drone Deliveries’ in retail are yet to get a serious consideration in Indian market,” says Chetan Chaturvedi, CIO, Head – IT, Reliance Market Retail Ltd.

    “With the availability of new technologies each consumer today can be viewed as a unique individual with clearly identifiable preferences. Therefore, Indian retail needs to move from one-size-fits-all approach to a highly-customized, consumer-centric
    approach. The way retail is currently structured, this requires a both a big paradigm and structural shift,” adds Abhishek Lal, Sr. Director E-commerce – Emerging Markets, adidas Emerging Markets.

    “AI has become one of the biggest technological developments in recent years. With its ability to help turn large and diverse data sets into enriched information that can help improve speed, cost and flexibility across the value chain. In fashion, AI helps brands and retailers with predictive forecasting, capacity planning and merchandising. Consumers enjoy the benefi ts of better product availability,” says Manoj Patel, Dep. CIO, House of Anita Dongre Ltd.

    How IOT is Shaping the Industry

    “Retailers will make greater use of beacons, sensors and the Internet of Things devices to drive the in-store experience in 2018. IoT will be the tool that can finally bridge the gap between the digital and physical worlds as it finally offers the ability to obtain and use data in stores. Retailers will be able to use these devices to gather more information about consumers in the store and convert that into data that can also be used online and through mobile. They will pilot more IoT programs to enhance store entry, customer interaction, improve merchandising and offer more rapid checkout. We are in the process of implementing IOT for inventory management, improving in-store experience through personalised marketing and energy management,” explains Nair.

    “IoT adaptation varies from company to company. For beauty and cosmetics retail, it would help in recognizing customer sentiments through camera sensors, analysing in-store traffic and converting them as shoppers in real time. IOT can help out in building virtual assist to ‘try on’ makeup look before actually buying the final products. We are working on that,” says Tarun Bali, Head IT, Quest Retail Pvt. Ltd., The Bodyshop.

    “IoT is key for this consumer facing industry and it would create a huge impact in our customer offerings. There is use of sensors which capture Image/ Video/ Product information which are critical elements for retailers. Organizations need to store IoT data and use in for better operating decisions,” Piyush Chowhan, Chief Information Officer, Arvind Fashions Ltd.

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  • Providing agile recovery solutions for Marks & Spencer

    Providing agile recovery solutions for Marks & Spencer

    Marks & Spencer (M&S) is a British multinational retailer which households across the world. With an annual turnover of over £10.6 billion and global operations, keeping such a large business moving requires a balancing act of behind-the-scenes logistics and planning. To ensure they can deliver the quality items its customers expect even in the event of a business emergency like inclement weather or political unrest, M&S partners with flexible workspace provider Regus for business continuity solutions utilising their workplace recovery services.

    Regus offers M&S’s critical business functions, such as payroll and logistics, the security of having somewhere to go if they couldn’t access their normal offices due to interruptions, including natural disasters, fire, flood and/or cyberthreat. M&S kicked off an international partnership with Regus in 2015, covering back office functions located worldwide, and are now expanding their business continuity partnership in the UK.

    This partnership allows M&S to recover in an agile way, and test their recovery processes at their convenience – just a few of the benefits of using flexible workspace providers for such a service.

    Workspace recovery: a retail necessity

    Retail businesses like M&S play an important role in UK infrastructure and the day-to-day lives of people living in the country. From food to clothing, M&S deliver the necessities. What’s more, because these products often need to be delivered fresh and sold quickly, if critical business functions go down in a company like M&S, it has less than 24 hours before the delivery of these services are compromised for the general public. Nobody likes to run out of bread and milk. Workplace recovery is one way that retail businesses like M&S can make sure its operations can continue running.

    Cambodia – workplace recovery in action

    When union protests – unrelated to M&S – broke out near one of the company’s infrastructure support offices in Cambodia, employees felt unsafe to go into work for two weeks. Given the risk to critical business functions managed by that location, such as paying employees and managing the supply chain, M&S relocated staff to Regus centres.

    Regus immediately supported M&S in secure offices, hosting 15 employees while the protests continued – just one example of the backing that Regus provides M&S with internationally.

    Mindset change – finding an agile solution

    While most large organisations have a workplace recovery plan in place, few have made the shift from a traditional provider to a flexible provider like Regus. Historically, workplace recovery firms operated by having empty space available, ready for the company that needs it. However, this led to long periods of buildings going vacant, and if for some reason multiple companies needed the space at once – a local flood, for instance – they would be overbooked.

    Flexibility is one of M&S’ core values, so the company was looking for a more agile approach that matched its business strategy and current corporate thinking. Regus doesn’t require all client employees to reach one central location, but can accommodate staff across a city, in multiple centres, or even multiple cities and countries if required.

    John Frost, Head of Business Continuity at M&S said: “For us, turning to Regus for workplace recovery was part of our whole business shift towards being more agile. The Regus approach has allowed us to support our head office “smarter working initiative” in London and our multiple-location approach fits the issues we face in the modern world. Their dynamic and fluid approach to recovery fits our purpose and our mindset, allowing our staff to be safe while at work during a crisis event and continue business as usual.”

    Testing

    Another benefit for M&S of this new partnership was an easy-to-use testing system. Any partnership needs checks and balances, which is why M&S and Regus work together to trial their workplace recovery process at least once a year in several locations. Tests are standard protocol, Regus provides free annual test time and makes it very simple to book through their dedicated Workplace Recovery Operations Team.

    During a test, Regus provides the client private office space, laptops, and IT capabilities – just like they will have if a crisis happens. Additionally, Regus can also offer day-to-day access to business lounges so that employees can experience a Regus workspace. These services help employees to ensure they are prepared and to feel more familiar with their surroundings before they need to use it in a real-life recovery scenario.

    Frost adds, “Internationally the service really worked for us and they have made the testing process genuinely enjoyable – a first for our industry! Their team knows me. I’m not just a number – I’m a customer and the service is personal. Regus have always been proactive about testing, and will check in about whether we require a service even before we’ve had to ask for an activation. In recovery scenarios, being able to work quickly in this way and have people who understand you and your business is crucial.”

  • Smart Solutions Can Improve Lives in Southeast Asian Cities: McKinsey

    Smart Solutions Can Improve Lives in Southeast Asian Cities: McKinsey

    Solutions such as ride-hailing services, data-driven transit planning, intelligent traffic systems, data-driven disaster risk assessments and smart energy meters, could save lives, add jobs, reduce living costs and curb emissions in cities across Southeast Asia, according to a recent study by McKinsey Global Institute, the research arm of the global consulting firm.

    In the study’s findings, released earlier this month, McKinsey said combined smart solutions in mobility, crime prevention and emergency response can prevent the loss of 5,000 lives to traffic accidents, fires and homicides each year.

    Almost 1.5 million additional jobs could also be created by creating a better hiring environment through digital applications, while citizens could save $16 billion through the implementation of smart-home solutions that lower energy bills and provide better housing alternatives.

    Moreover, these solutions could cut greenhouse gas emissions by 270,000 kilotons annually, or equal to the Laos’s total emissions per year, McKinsey said.

    Some private companies in Southeast Asia have found a foothold in advancing these solutions in the region. Smart mobility applications, such as those implemented by Indonesia’s Go-Jek and Singapore-based Grab, could create up to $70 billion in value across Southeast Asia, McKinsey said.

    Still, a thorough implementation of smart solutions would need government and the private sector complementing each other.

    “Smart solutions include an integrated mix of hardware, software and changes to the physical infrastructure,” said Mukund Sridhar, a McKinsey partner and co-leader of infrastructure practice in Southeast Asia.

    “Neither the public nor the private sector can build and run smart cities by themselves. Most infrastructure systems and critical services are public goods of which the public sector is the natural owner,” Sridhar said.

    Public goods, such as roads, can benefit from private-sector solutions. These include real-time road navigation apps such as Google Maps and Waze, which enable road users to avoid congested areas and accidents, saving them time.

    But roads can reach a point when it cannot accommodate more traffic, and that is when smart regulations are necessary. These include dynamic congestion pricing, which charges road usage fees adjusted dynamically based on road conditions and road speeds with higher fees charged during peak hours to reduce the number of private vehicles on the road, Sridhar said.

    “An example of this is Singapore’s electronic road pricing, or ERP, which has kept road speeds within ‘optimal’ range despite growth in the vehicle population,” he said.

    Sridhar said for countries like Indonesia to benefit from smart solutions and use it to overcome urban challenges, the government must lay out a clear roadmap on the role of the private and public sectors and implement it consistently.

    “It makes sense to identify those areas where city agencies can step back and make room for other players, including private-sector companies, state-owned utilities, universities, foundations and nonprofits,” he said.

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  • Rise of robots fuels slavery threat for Asian factory workers

    Rise of robots fuels slavery threat for Asian factory workers

    Drastic job losses due to the growth of automation in the region – a hub for many manufacturing sectors from garments to vehicles – could produce a spike in labour abuses and slavery in global supply chains, said risk consultancy Verisk Maplecroft on Thursday.

    More than half of workers in Cambodia, Indonesia, Thailand, Vietnam and the Philippines – at least 137 million people – risk losing their jobs to automation in the next two decades, the United Nations’ International Labour Organization (ILO) says.

    The risk of slavery tainting supply chains will spiral as workers who lose their jobs due to increased robot manufacturing will be more vulnerable to workplace abuses as they jostle for fewer jobs at lower wages, said Alexandra Channer of Maplecroft.

    “Displaced workers without the skills to adapt or the cushion of social security will have to compete for a diminishing supply of low-paid, low-skilled work in what will likely be an increasingly exploitative environment,” she said.

    “Without concrete measures from governments to adapt and educate future generations to function alongside machines, it could be a race to the bottom for many workers,” the head of human rights at Britain-based Maplecroft said in a statement.

    Farming, forestry and fishing, manufacturing, construction, retail and hospitality are the sectors in Southeast Asia where workers are most likely to be replaced by robots, Maplecroft said in an annual report, with Vietnam the country at most risk.

    Workers in the garment, textile and footwear industry – mostly women in countries such as Cambodia and Vietnam – face the biggest threat from automation in the region, Maplecroft said.

    The five countries the report lists are already considered high-risk for modern slavery as labour abuses are rife, wages low and the workforce dependent on low-skilled jobs, the firm said, with automation set to make things worse.

    “Automation has always posed a risk to low-skilled jobs, but governments and business can determine how it impacts on workers,” said Cindy Berman of the Ethical Trading Initiative, a group of unions, firms and charities promoting workers’ rights.

    “Technology can be disrupting, but it can also be part of the solution by creating opportunities for better jobs,” its head of slavery strategy.

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  • Why Bitcoin Mining Is A Vital Aspect Of This Popular Cryptocurrency?

    Why Bitcoin Mining Is A Vital Aspect Of This Popular Cryptocurrency?

    Many people have heard about the term Bitcoin floating around, but fail to understand properly what it is. This article looks at what Bitcoin is, and dissects one of the most important processes associated with this cryptocurrency – Bitcoin mining.

    Bitcoin – A Brief Introduction

    Bitcoin is a form of digital currency, or a cryptocurrency. Bitcoin is unlike traditional currency as it has no physical tokens or coinage, and there is also no centralized control in the way that banks or the government dictate the exchange rates of dollars – although it is possible to exchange Bitcoin for physical currency and vice versa. Bitcoin uses blockchain technology where transaction data is stored on a public ledger visible to everyone. This helps improve security as Bitcoin transactions are encrypted as a further safety measure.

    Bitcoin was first developed and released in 2009, and since then the volume of Bitcoin circulating in the world has risen to huge levels. This is undoubtedly the most popular and widely known cryptocurrency available, and it is the digital currency that is most accepted as a form of payment in business.

    Bitcoin Mining – The Integral Cog Of This Cryptocurrency

    With traditional money, new currency such as banknotes and coins are simply produced by the government. This creation is regulated to avoid hyperinflation and the money is circulated into public use through various avenues.

    The creation of Bitcoin currency, however, is completely different and uses a process known as mining. Bitcoins are effectively created as a reward from the mining process. This mining process is based on what is known as the Bitcoin protocol. It states that a total of 21 million bitcoins will exist at some point in the future. Bitcoin mining effectively brings these potential bitcoins into existence and thus fills the quota.

    The actual mining process involves adding new transactional data to the Bitcoin blockchain ledger. In essence, the Bitcoin miners are enabling the bitcoin system to work by facilitating transactions. As a reward, they are granted Bitcoins. Whilst this may sound like an attractive and lucrative way to make some money and get involved in the Bitcoin phenomenon, there are several drawbacks to consider:

    – The mining process requires a powerful computer with large storage capacity

    – The mining process also uses a great deal of electricity

    – There are many other miners to compete against for the available Bitcoins

    – The mining rewards will slowly decrease as the number of Bitcoins in circulation increases

    As you can see, it is not just a simple case of setting a computer up and downloading the mining software! As Bitcoin starts to become more popular and talked about in the general public, the negative aspects of the mining process are also starting to rear their heads. More people are realizing about the huge power consumption required and the negative impact this is having on our environment.

    The consoling fact, however, is that eventually there will be no need for mining. Once all of the 21 million Bitcoins are mined, this operation will no longer have any value or requirement.

    Article and infographic created by the crypto specialists over at BTXchange.io.

     

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  • Korean Brands Increasing Popularity Among Hong Kong Consumers Over Japanese Brands

    Korean Brands Increasing Popularity Among Hong Kong Consumers Over Japanese Brands

    A Nielsen report shows Korean products have usurped the popularity of Japanese products among young Hong Kong consumers.

    The report traces the local market’s perception of Japanese and Korean trends to assess which is perceived as being more popular. It shows that for the first time, more than half of respondents aged 18 to 54 are confident in the longevity of Korean pop-culture influences in the near future.

    Some 80 per cent of millennials, in a response pattern that skewed towards women, preferred Korean trends. And 88 per cent of higher-income respondents were shown to have strong brand recognition for Korean products and to have visited Korea twice within the last year.

    Key drivers behind Korean trends are shown to be entertainment, fashion, and personal care targeted at millennial buyers. Korean food products are also increasingly popular in Hong Kong.

    A third of all respondents indicated an intention to increase spending on Korean products in future.

    Nielsen Hong Kong & Macau’s MD Michael Lee said: “With the Korean market slowly emerging in Hong Kong, Korean brands can succeed and win Hong Kong customers’ buy in by being more customer focused, showing emphasis on product quality and charging a premium with innovation. This will certainly open up a new market for opportunities to come”.

    The Nielsen report’s release coincides with an announcement by Chinese online marketing platform iClick Interactive Asia Group that it will form a strategic partnership with MezzoMedia, a Korean digital marketing solutions firm. The move is intended to further open the large Chinese consumer base up to Korean brands.

    MezzoMedia senior VP Kim Jin-Kyu said: “As one of Korea’s largest agencies, we work with brands that have significant appeal to the Chinese consumer… [iClick] will allow targeting into the largest internet audience in the world. In addition, their strategic relations with Tencent, Baidu and Ctrip give access to premium inventory.”

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  • More complaints over foreign purchases online and fraud

    More complaints over foreign purchases online and fraud

    As more South Korean consumers opt to make online purchases through overseas websites, complaints related to direct foreign purchases are also rising.

    A 305 per cent rise in complaints last year has been noted by the Korea Consumer Agency’s Cross Border Transaction Consumer Portal, with 1463 cases, up from 361 in 2016. Between January and May, 1306 cases were filed.

    The agency said many complaints regarded lodging, plane tickets and other services as well as consumer goods such as shoes and clothes.

  • These 6 Countries Are Booming in E-commerce

    These 6 Countries Are Booming in E-commerce

    Among the 28 largest internet companies in the world, 11 are e-commerce businesses. Per Statista, Global retail e-commerce sales are forecasted to reach $2.77 trillion this year. Consider that 62 percent of the world’s 7.2 billion population already owns a mobile phone, and by 2019, over 5 billion people will have access to the internet through their smartphones.

    Yet while global e-commerce is undoubtedly thriving, it’s true potential remains untapped, especially when looking at the growth potential for these six booming e-commerce markets.

    China

    China’s 2017 retail e-commerce sales reached $1.2 trillion. From the rise of two of the top 10 internet companies in the world in JD.com and Alibaba, to socially adopted mega-shopping holidays like “Singles’ Day”—China’s large economy is turning more digital by the day. This is underscored by its high consumer confidence index (CCI), currently sitting at 122 as of January 2018. E-commerce accounts for 23 percent of China’s overall retail sales, and there’s a lot of room for growth. China boasts a forecasted compound annual growth rate (CAGR) over 17 percent. This is on par with many underdeveloped markets expecting to see major e-commerce strides in the near future.

    United States

    While e-commerce only makes up 10 percent of the overall U.S. retail economy, that market is expected to reach $5.3 trillion in 2018. U.S. e-commerce sales generated over $431 million in revenue in 2017. With a healthy 96 percent of Americans shopping online, it’s projected to be a $535 billion market by 2019.

    United Kingdom

    Over 19 percent of retail sales come from online purchase in the U.K. With an annual e-commerce revenue exceeding $121 billion, it’s the third biggest market in the world behind China and the U.S. As of March 2017, 87 percent of U.K. consumers had made an online purchase in the last year.

     Japan

    Japan was projected to generate over $111 billion dollars in retail e-commerce sales in 2017. Japan’s relatively small country size, single language, urban population and widespread tech adoption (91 percent) all contribute to its ideal e-commerce environment. E-commerce sales in Japan make up less than eight percent of all retail sales, leaving plenty of room for future growth.

     Germany

    Ninety-three percent of German consumers shopped online in 2016, according to research from Mintel. German e-commerce revenue accounted for nearly eight percent of overall retail sales in 2017 at roughly $77 billion. Growth ahead looks steady with 2018 and 2019 projected to haul in $82.5 and $87.5 billion, respectively. These numbers look even more encouraging when you consider under half of German retailers offer their goods online, leaving inevitable room for growth in the coming decade.

    South Korea

    South Korea’s e-commerce boom has largely resulted from widespread mobile phone adoption and an overall tech-savvy culture. Having the fastest Wi-Fi in the world probably helps too. Their e-commerce sales accounted for 9.8 percent of its total retail sales in 2017 at $46.6 billion annual revenue. E-commerce revenues project to hit $50.5 billion in 2018.

    Countries to Watch

    These six countries may be the powerhouses, but e-commerce is growing globally. In India, where just 2.2 of total retail sales comes from e-commerce, a massive population and widespread mobile phone adoption make it a sleeping giant. In fact, India ranks just behind Malaysia for CAGR from 2016-2021, at 23 percent. Other Southeast Asian island countries like Indonesia, the Philippines, and Vietnam forecast for 20.7, 18.3, 17.2 percent, respectively. And don’t count out large countries like Brazil and Russia, the latter of which boasts the largest number of internet users in Europe.

    Why Borders Don’t Matter

    Aside from country-specific trends, the main thing to take away is that the world is going online to shop for the things they need. According to a Nielsen report, 57 percent of online shoppers purchased from an overseas retailer in the last six months. Only one continent—North America—saw less than a majority (45 percent) of shoppers making an overseas purchase.

    Global e-commerce is on pace to truly be global, as consumers become more comfortable looking to e-stores abroad for more product selection, better prices, or more availability. This borderless e-commerce system will handsomely reward the companies that learn how to build an ecommerce website with appeal to a global audience and personalized experiences.

  • Asia Pacific Pet Food Market is Expected to Grow Massively

    Asia Pacific Pet Food Market is Expected to Grow Massively

    Pet food is animal or plant material that is used for consumption by pets. These products are sold through a variety of distribution channels. However, these products are primarily made available in supermarkets and pet stores. The global pet food market offers specific food, which can be categorized as dog food, bird food, fish food, and cat food among others. A major proportion of the meat that is made available as pet food is not of human grade. These materials are generally byproducts of the human food processing industry.

    Increasing purchasing power, rapid urbanization, and changing lifestyle are some major factors fueling the demand for pet food in the Asia Pacific region. Apart from this, increasing preference of the population for a nuclear family has also fueled the adoption of pets in Asia Pacific. Moreover, rising awareness about pet health has further augmented the demand. Due to both these factors, the demand for nutritious pet food as compared to ordinary pet food has increased considerably in the last few years. In addition, a number of regulatory issues, rising cases of pet allergies in humans, and growing obesity among pets are some of the major factors boosting the demand for pet food in Asia Pacific.

    Dog Food Segment Remains Dominant

    The Asia Pacific pet food market in terms of pet type is segmented into dog food, cat food, and others. The others segment includes bird food and fish food. The dog food segment holds the most prominent chunk of the market share and is expected to swell to 61.1% by 2020. The dog food segment was nearing a valuation of US$6.0 bn by the end of 2015.

    Currently, there are several kinds of dog feed available in the market, which include dry, wet or canned, nutritious, and treats. Increasing awareness about pet health is one of the major factors fueling the demand for dog food in the Asia Pacific. Moreover, changing lifestyle and rapid urbanization is also expected to boost the demand during the forecast period. Additionally, the percentage of dogs as pets has increased considerably in the region in recent past. In India, the dog population had increased to about 58.1% by 2013 and similar trend has been observed in markets of Australia, China, and South Korea.

    India Emerging as Most Lucrative Market

    Japan is one the major markets for pet food in Asia Pacific, and is expected remain the dominant market during the forecast period, reaching a market share of 36.5% by the end of 2020. This dominance in demand from Japan is attributed to apartment-culture, which is the most common type of domicile in Japan. Because of this, Japanese consumers tend to prefer smaller pets. Australia is second most prominent market for pet food in Asia Pacific, which is due to considerable increase in pet ownership in the country in recent years. A large number of households are switching to pets for security and recreational purposes. However, the demand for pet food is also expected to increase at a fastest rate in the countries of India and China.

    The pet food market in Asia Pacific is dominated by a few major brands that operate globally, such as Mars Inc., Nestle S.A., Colgate-Palmolive Co., Procter & Gamble Co., Del Monte Foods Co., Agrolimen S.A., and Unicharm Corporation. However, stiff country-wide competition is prevalent from smaller players. For example, Purina Friskies in Japan, Whiskas in Australia, Pedigree in India, and Royal Canin in South Korea.

  • Analysing the Increased Online Shopping Consumption During Ramadan 2018

    Analysing the Increased Online Shopping Consumption During Ramadan 2018

    The month of Ramadan is considered as the most sacred period for millions of Muslims in Malaysia & Indonesia. As such, a huge number of people observing the religious period would shift their daily routine to focus on spirituality & contribute to charitable initiatives. This also shifts the way consumers shop in a very significant manner as well.

    Just a few weeks into Ramadan, online shopping consumption increased greatly during the fasting month. This was evident as iPrice Group, a price aggregator platform for hundreds of online merchants in Indonesia & Malaysia experienced double-digits growth in online sessions. Undertaking this study, there are unique consumer insights that only occurs during the month of Ramadan.

    Online Shopping at the Wee Hours of the Morning

    While many Malaysians & Indonesians are awake in the wee hours of the morning for Sahur (pre-dawn meal), they are more likely to shop online as well. Analysis suggests that online traffic at 5:00am increased by 105% in Malaysia & 345% in Indonesia when compared to the same time prior Ramadan. The increase was much higher in Indonesia as the country has the largest Muslim population in the world. This is a continuous trend as seen in our study last year in both Malaysia & Indonesia.

    In Malaysia, the increase in online traffic was much higher when compared to our research last year, where we only saw a 90% increase in online traffic at 5:00am. Indicating an increased interest in online products this year as compared to 2017.

    Evident in both countries was that online traffic during Ramadan was significantly higher when compared to the previous period. Overall online traffic was 11% higher in Malaysia & 30 percent higher in Indonesia. In addition to this, online traffic in both countries experienced a dip in online traffic at 7:00pm in Malaysia & 6:00pm in Indonesia as many prepare to break-fast (Iftar). Online traffic decreased 9% in Malaysia & 4% decrease in Indonesia at these periods. After Terawih prayers online traffic in both countries would resume, reaching its peak at 10:00pm.

    Search Trends for Fashion Products During Ramadan

    Fashion products are among the most sought-after items during Ramadan as millions of Malaysians & Indonesians prepare for the Hari Raya Aidilfitri celebrations. Using Google Trends, we saw that keywords such as “Baju Raya” & “Baju Raya 2018” was among the most popular keywords associated with “Raya” (which is closely associated with the Aidilfitri celebrations) in Malaysia.

    In the country, local brands have been actively showcasing their 2018 Raya collection & deals through various advertising, social media, & marketing campaigns across the country. The three most searched local fashion eCommerce brands in Malaysia during Ramadan were Naelofar Hijab, Fashion Valet & Muslimah Clothing. Towards the end of May 2018, Naelofar Hijab launched the “Shine On” collection which is their #naelofaraya2018 campaign. At this same period, Naelofar Hijab garnered a high volume of search interest between 23 – 30 May2018 indicating a successful campaign that caught the attention of many Malaysians.

    Close in fourth place was Siti Khadijah which garnered a high volume of search interest from Malaysians as well. Siti Khadijah specialises in prayer outfits specifically for women known as telekung. As such, the high level of interest for the eCommerce was no coincidence because many women are dedicating their time to pray during Ramadan.

    In Indonesia, there was high search volume for “gamis” which is a long dress worn by Muslim women along with keywords such as “hijab” & “baju muslim”. These keywords indicate that many Indonesians were looking for inspiration or sources for clothing suitable for their religion activities during the month of Ramadan. In addition to this, there was a high level of interest for “Baju Koko”, which is a fashionable traditional top for men most popularly worn during the Aidilfitri celebrations.

    Other Unique Search Trends Prior Aidilfitri

    Utilising Google Trends, there is also a high search interest for airline ticket promotions in Malaysia & Indonesia before Ramadan. This is in line with local trends since many will be travelling back to their hometown prior Aidilfitri celebrations. Search interest for airline tickets began during the second half of May 2018 which takes place a month before the Aidilfitri celebrations on 15th of June.

    In Malaysia, the most popular keywords & brands associated with “promotion” were “Airasia”, ”Malindo Air” &”Malaysia Airlines”. In Indonesia, inhabitants located in Sumatera, Kalimantan & Sulawesi were most interested in airline ticket promotions as compared to other states. This indicates that inhabitants in these regions were more likely to travel to the Java Islands or to other parts of the country for Aidilfitri.

    Other than airline tickets, the second most popular keyword used in Malaysia were related to groceries & merchandise deals. During Ramadan, there is a high demand for Raya goods such as biscuits, traditional delicacies, & other food stuff. Since these items are usually available at major supermarkets & stores many Malaysians are on the lookout for promotions by major retailers in order to maximise their spending. The top brands associated with the keyword “promotion” were:

    • Aeon
    • Giant
    • Tesco
    • Aeon Big
    • Econsave
    • Mydin
  • Digital commerce spend expected to jump high by 2022

    Digital commerce spend expected to jump high by 2022

    Consumer spend on digital commerce will reach US$14.7 trillion by 2022, up by 60 per cent on last year, according to Juniper Research.

    Its new report Digital Commerce: Key Trends, Sectors & Forecasts 2018-2022, found that the largest global contributor to payments was currently QR code-based offline purchases for physical goods, which now account for one-third of all Chinese instore payments by value. However, says the research, although QR codes will have further growth in the Indian subcontinent and Africa, their value will be eclipsed worldwide by online purchases by 2022.

    With retailers increasingly offering localised payment mechanisms and friction at checkout being reduced by stored credentials, migration from offline to online is likely to accelerate, says the report.

    Furthermore, it highlights moves by traditional retailers to develop omnichannel strategies as they seek to shore up revenues by using mobile apps both for online purchases and to drive instore footfall.

    Meanwhile, Juniper’s study found that money transfer would be a key growth area, bolstered by rapid expansion and adoption of social payments. It highlighted the activities of companies such as PayPal (via its Venmo and Xoom subsidiaries) and Facebook in the space, arguing that these players were in pole position to capitalise on the increasing transition to digital of P2P payments.

    Additionally, the report claimed that players across the ecosystem were poised to benefit from implementing blockchain technology for financial settlement. This would enable increased standardisation for payment processing; substantially reduce the risk of error (including double spend) and indeed the time taken for error checking, resulting in faster, more secure and less costly processes. This in turn would allow money transfer companies to become more competitive, reduce fees to end users and boost use.

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  • High public debt can hamper growth: AmBank Research

    High public debt can hamper growth: AmBank Research

    AmBank Research (AmResearch) which projects the gross domestic product (GDP) per capita recede by 0.007% with every 1% gain in public debt and debt service, also foresees a near-term volatility in the local and global equity markets, thanks to noises from the domestic and international front.

    “From our analysis, we found an inverse and significant impact between public debt as well as debt service against the GDP based on per capita. It implies that a 1% gain each in debt and debt service, will lower GDP per capita significantly by 0.007% and 0.22% respectively. We also found that a government consumption presents a negative and significant impact on GDP per capita with a drop of 0.05% for every 1% rise,” it said while noting that the current debt level of RM1.09 trillion to the GDP was in line with its projection of over a trillion ringgit in 2018.

    A high public debt will result in more spending on servicing the interest for the borrowings, thus straining resources. This is reflected in the low ratio of operating and development expenditure to debt at 0.20x and 0.04x respectively in 2017 from a high of 0.50x and 0.14x respectively in 2008 which is also the lowest reading since 1988.

    Noting that public debt levels had been on an upward trend since 2004, the research house said the government’s inability to curb the growth in operational expenditure over development expenditure in its budget especially in Budget 2018, raised concerns on the risk of falling into a debt overhang situation which can potentially hamper the sustainability of growth and transformation measures.

    The inability to reduce the operating expenditure, may lead to the need to improve revenue collection while simultaneously driving GDP, which in turn will help improve the debt-to-GDP ratio and fiscal balance position.

    Meanwhile, the rising government guaranteed loans and Public Private Partnership (PPP) lease repayments that lacks transparency suggests an easy way to shift the debt figures, while holding public debt below the 55% level.

    Since 2004, public debt saw an average rise of 10.2% or equivalent to an average of RM252 billion per annum between 2004 and 2009, while fiscal deficit widened from -4.3% in 2004 to -4.8% in 2008 due to higher spending on development activities amounting to RM27.5 billion in 2004 and RM41.9 billion in 2008.

    Operating expenditure rose from RM91.3 billion in 2004 to RM153.3 billion in 2008.

    The surge in total public debt was even more glaring from 2009 onwards as it jumped from RM362 billion to RM925 billlion, translating to an average growth of 13.4% or equivalent to RM639 billion per year.

    Although the fiscal deficit as a percentage of GDP narrowed from -6.7% in 2009 to -3% in 2017 due to lower spending on development activities, which shrank from RM49 billion in 2009 to RM43 billion in 2017, operating expenditure rose from RM157 billion in 2009 to RM218 billion in 2018.

    On lowering the public debt, debt servicing, and government consumption to improve growth, Ambank Research opines the focus areas should be (1) improving the monitoring of the expenditure in each area of the economic activities, especially at the micro level; (2) greater transparency on government-guaranteed loans under public-private partnerships that may not be fiscally responsible; (3) improving and effectively managing government consumption; (5) targeting high-impact and productive businesses to drive growth; (6) boosting investors’ and household confidence by addressing leakages; and (6) an attractive ringgit to support overall business competitiveness.

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