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.

  • Singapore Targeted By Cybercriminals with Banking Trojans

    Singapore Targeted By Cybercriminals with Banking Trojans

    IT Threat Evolution report of Kaspersky for the third quarter of 2015 reveals that Singapore suffered maximum attacks from banking Trojans during second quarter of 2015 with 496 individuals reporting attacks.

    It is not a coincidence that Singapore is one of the ASEAN countries with the highest rates of digital banking.

    According to an A.T.Kearney and EFMA global retail banking study, Singapore has the highest inclination for digital banking in the global arena.

    Computerweekly.com published news during the last week of October, 2015, quoting Jimmy Fong, Channel Sales Director Southeast Asia, at Kaspersky Lab, as saying “The nation was also placed among the top three in banking capabilities which included technological developments, a strong financial environment and digital infrastructure”.

    Computerweekly.com published news during last week of October 2015 quoting Michael Yeo, Senior Market Analyst at market research firm IDC, as saying “Singapore is a magnet for such banking Trojans because of combination of the country’s general wealth levels and growing use of associated services like e-commerce and mobile commerce”.

    Yeo added that Singapore is one of the nations which use maximum online banking services with 74% of the population using it.

    The statistics also reveal that patrons in Austria were targeted by banking Trojans excessively than in any other region: Around 5% of all Kaspersky Lab patrons in Austria faced this malware during the quarter. Turkey (3%) was placed at number three.

    Geographically most of countries in the top ten lists of information-stealing malware attacks during Q3 have a large number of users of online banking. Trojan-Downloader.Win32.Update was the most rampant malware used to target users of online banking, as it is being employed in 63.1% of attempted assaults to embezzle payment credentials of users.

    In third quarter, the Kaspersky Lab Global Research and Analysis Team (GReAT) identified a number of advanced cyber-espionage operations. Amongst others, comprising of the infamous Turla gang that employs satellite communications to administer traffic of its command-and-control server for subsequent operations known as Darkhotel APT, which penetrates Wi-Fi networks of hotel to put backdoors on target systems and fresh activity of the Blue Termite APT focusing on embezzling information from establishments in Japan.

  • Study Shows Popular Fish Consumed in Hong Kong under Serious Threat

    Study Shows Popular Fish Consumed in Hong Kong under Serious Threat

    A new study on the future of fish in the South China Sea reveals that key species consumed in Hong Kong are under serious threat from overfishing and habitat destruction, and unless immediate action is taken it will be too late.

    Some of the topline findings of the study, Boom or Bust, The Future of Fish in the South China Sea, show that some marine resources have been fished down to as low as 5 per cent compared to the 1950s, with others reduced to just 10 percent of their populations since the mid-1990s. Even in more remote fishing locations, catch rates have declined 3 to 4 times over the past two decades. Conducted by the University of British Columbia (UBC) Economic Research Unit and funded by Hong Kong-based ADM Capital Foundation and RS Group, the study offers a pathway to a more sustainable future.

    “The study shows that to rebuild biomass of key groups to a healthy level, fishing efforts of all fishing fleets have to be substantially reduced,” said UBC’s Rashid Sumaila, principal investigator for the project.

    Species under threat include the Napoleon Wrasse and the Coral Grouper, both highly prized in Hong Kong.  Relative abundance of these two reef fish has declined by 80 percent in the past eight years alone.

    While pollution and water quality is partly responsible, overfishing is the main culprit, and fishing methods play a key role in impacts on the environment.

    “One of the findings of the study demonstrates that the way fish are caught is no longer sustainable,” said Doug Woodring, Co-Founder of Hong Kong’s Ocean Recovery Alliance. “Not only are species being over-fished but the current fishing methods are destroying some coral reef habitats at a rate of 16 percent per decade. It is time to take action before it is too late.”

    The study also contains projections through to 2045, with dire consequences for our future if action is not taken.

    If nothing is done, by 2045, relative to 2015 fish stocks, all species studied will experience a decrease in biomass (quantity of fish in the ocean) ranging from 9 to 59 percent as a result of overfishing, ocean warming, ocean acidification and changes in primary productivity.  We must urgently improve fisheries management and consider our impact on the ocean via CO2 emissions.

    “The most vulnerable groups include grouper, large sharks, threadfin bream and large croaker, which are projected to drop by 50 percent or more during this period,” said UBC’s William Cheung, a co-author of the report.

    The good news is that it is not too late to take action. The UBC scientists also conducted a best case scenario analysis under a sustainable management fishing regime with lowered global CO2 emissions. This indicates that efforts to improve fisheries management and reduce carbon emissions would have a positive impact on the wild population biomass of all species except crabs (due to their predators).

    Either way, there are economic implications to these scenarios, both potentially with a loss of income and livelihood for fisherman, and an increase in the cost of fish to the consumer. If we engage in better resource management, however, there is a chance to modify practices and sustain stock levels, so that fisheries can still be productive for those who rely on them today.

    “This study should be of interest to anybody who likes to eat seafood and cares about society,” said Yvonne Sadovy, a professor at Hong Kong University’s School of Biological Sciences. “Major urban centres like Hong Kong depend heavily on importing seafood, while hundreds of thousands of people in developing countries need wild fish for food and to support their families.”

    The stress on regional fishing resources is a reason that November also marks the start of the Kin Hong “Healthy” Seafood Festival.

    Organised by Ocean Recovery Alliance and ADM Capital Foundation, the aim of the festival is to raise public awareness through education and increased variety from our restaurant and catering industries, giving people the option to consume sustainable seafood.

    It also aims to help restaurateurs access sustainable seafood, with the intention of increasing availability and visibility in the market place. A selection of prominent Hong Kong restaurants, hotels and organisations have already pledged their support, including Four Seasons Hotel Hong Kong, Grand Hyatt Hong Kong, Café Gray, Sohofama, Café Deco, Ocean Park, the University of Hong Kong and the Hong Kong Jockey Club.

    The full report, Boom or Bust, the Future of Fish in the South China Sea, can be downloaded here: https://oceancanada.org/wp-content/uploads/2015/03/FCWP_2015_99_Witter.pdf

    For more information on the Kin Hong “Healthy” Seafood Festival, visit: https://www.oceanrecov.org/activities/events/kin-hong-seafood-festival.html

    List of Restaurants, Hotels and Organizations Participating in Kin Hong Seafood Festival:

    1. Cafe Gray
    2. Cali-Mex
    3. Chinese University of Hong Kong
    4. City University of Hong Kong
    5. East Hotel Hong Kong
    6. Fishful Season
    7. Four Seasons Hotel Hong Kong
    8. Gitone
    9. Grand Central
    10. Grand Hyatt Hong Kong
    11. Holy Crab
    12. Hotel ICON
    13. Locofama
    14. Ocean Park Hong Kong
    15. Scirocco
    16. Sohofama
    17. Table Seafood
    18. The American Club Hong Kong
    19. The Continental
    20. The Foreign Correspondents’ Club, Hong Kong
    21. The Hong Kong Jockey Club
    22. The Landmark- Mandarin Oriental
    23. The University of Hong Kong
    24. Wilfred Catering Limited
    25. Yorkshire Pudding

    ADM Capital Foundation

    ADM Capital Foundation (www.ADMCF.org) was established in 2006 by the partners of Hong Kong-based investment advisor, ADM Capital www.admcap.com to fund innovative approaches to promoting equity and environmental conservation in Asia. The Foundation helps organisations in Asia achieve positive social and environmental impact and aims to foster sustainable growth in its local partners by providing not only funding but also specific and relevant organisational support.

    Ocean Recovery Alliance

    Registered in Hong Kong and California, Ocean Recovery Alliance forges new ways of thinking, technologies, creativity and collaborations to introduce innovative projects and initiatives that will help improving our ocean environment. This includes creating business opportunities for local communities when applicable, and addressing some of the pressing issues that our ocean faces today. It is one of the first the NGO’s to work with both the United Nations Environment Programme (UNEP) and the World Bank on their respective ocean programmes related to plastic pollution. It also runs the Ocean in Motion Film Festival each year, the only annual ocean film festival in Asia.

  • China’s Singles Are Big Spenders

    China’s Singles Are Big Spenders

    The U.S. has holidays like Valentine’s Day and Christmas when couples are expected to exchange gifts, but China’s Singles’ Day proves even lonely hearts can get in on the retail action — and according to a recent Nielsen study, China’s lone wolves plan to do just that.

    In a study conducted by Nielsen and released to Reuters, 56 percent of 1,000 Internet users in China said that they planned on spending more on Singles’ Day than they had in 2014. Nearly 33 percent indicated they would purchase roughly the same amount, and only 6 percent said that they planned on pulling back on Singles’ Day spending.

    “It’s not a huge surprise that consumers are planning to spend more during this year’s [Singles’ Day],” Yan Xuan, president of Nielsen Greater China, told Reuters. “Income levels and Internet penetration continue to rise throughout China, so this is a natural progression.”

    Greater spending totals in 2015 could push Singles’ Day into unprecedented territory for retail holiday traffic. MarketWatch reported that Alibaba, China’s largest eCommerce marketplace, processed more than $2 billion in sales in the first hour, 11 seconds of Singles’ Day 2014 alone. By the time the day drew to a close, the site had surpassed $9 billion, 43 percent of which was due to mobile purchases.

    Since the first “official” Singles’ Day in 2009, Alibaba’s sales alone have skyrocketed by more than 5,740 percent, and it appears that trend will continue. According to Reuters, the average Singles’ Day shopper is projected to spend about $277.76 in 2015, 22 percent more than the average shopper spent in 2014.

    MarketWatch explained that Alibaba CEO Jack Ma has expressed a desire to turn China’s Singles’ Day into a global retail holiday on the same level as Black Friday and Cyber Monday, and if these sales numbers continue, retailers in other countries might have no choice but to follow China’s lead.

  • South Korea Online Retail Market Outlook to 2019

    South Korea Online Retail Market Outlook to 2019

    Ken Research announced its latest publication on “South Korea Online Retail Market Outlook to 2019” which provides a comprehensive analysis of the retail market in South Korea. The report covers various aspects such as market size of South Korea online retail market, segmentation on the basis of product type and modes of distribution. The report is useful for government, industry consultants, online retailers, offline retailers, food and grocery stores, online electronic chains, apparel and footwear manufacturers, other stakeholders and new players venturing in the market.

    The demand in online retail market of South Korea has inclined at a substantial growth rate even after the economic slowdown in 2008. This demand has enhanced due to the increased usage of high speed internet, rising smart phone penetration and high proportion of old aged people in the country. These factors are expected to lead the growth in online retail backed by the improvements in the payment gateways, better packaging and delivering options. During the period 2009-2014, online retail market in South Korea has expanded at a substantial CAGR of 17.7%, which has marked the gross merchandise value at USD ~ billion during 2014.

    According to the research report, the South Korea online retail market will grow at a considerable CAGR rate thus exceeding USD 66.2 billion by 2019 due to the rising income level and growing influence of social media with increasing demand for clothing, fashion products, electronics and beauty products by a large number of middle aged people in the country who wish to upkeep with the trends and stay up-to-date in line with developments in the country.

    “While, rising disposable income, hike in middle aged population and increasing number of internet and smartphone users in the country will result in increased revenue from online retail in South Korea, Cyber crimes and frauds, higher competition and customers’ reluctance to pay high amounts online are few of the major challenges which will affect the growth of this industry in the future”, according to the Research Analyst, Ken Research.

    Key Topics Covered in the Report:

    South Korea Online Retail Market

    Market Size by Gross Merchandise Value, Number of Orders by Product Type, Average Order Size by Product Type Market Segmentation by Product Type Mode of Distribution Trends and Development SWOT Competition and Market Share Important Mergers and Acquisitions Important Investments Growth Drivers Government Rules and Regulations Pre-Requisites to Enter the Market Analyst Recommendation Cause and Effect Relationship Future Outlook Macro Economic Parameters

    Key Products Mentioned in the Report

    Online Clothing, Footwear and Fashion Products

    Online Books and Stationery

    Online Electronics

    Online Beauty Products

    Online Sports, Music and Entertainment Products

    Online Food and Grocery

    Online Baby Products, Household Goods, Motor Parts & Accessories and Garden Products

    Companies Covered in the Report

    eBay, GMarket, eBay Auction, 11 Street, Interpark, Lotte, Emart, GS Home Shopping, CJ O Shopping, Hyundai Home, Shopping, Lotte Home Shopping, Home and Shopping, NS Home Shopping, Fashion Plus, Dahong, Yesstyle.Com, Bershka.Com, Musinsa.Com, Fashionstart.Net, Elf Fashion, Hiphoper.Com, Etude House, Pore Lab, Thefaceshop, Missha, Roseroseshop, Moonshot-Cosmetics.Com, Naturerepublic.Com, Theskinfood.Com, Sokoglam.Com, Kyobo, Yes24, Aladin, Ypbooks.Co.Kr, Bandinlunis.Com, Libro.Co.Kr, Heyeonni.Com, Compuzone, Himart, Icoda, LG Electronics, B-Store.Co.Kr, Lots Etland, Hello Nature, KGC shop, Highstreet, Expatmart.Co.Kr, Fatbag.Co.Kr, Ezshopkorea.Com

  • 5 cutting-edge retail technology trends

    5 cutting-edge retail technology trends

    You may not think of your local department store as a hub of innovation. But technology drives almost every step of the retail experience. Here are five ways some companies are tapping emerging to provide ever more value to their customers.

    retail ecomm thinkstock

    As retailers rev up for their busiest shopping season, they know some things never change: Holiday deal-seekers will race like mad through store aisles for the best Black Friday deals. Last-minute shoppers will wait until December 24 to make their purchases. Crowds will swarm stores the day after Christmas in a whirlwind of gift returns.

    The shopping experience itself, however, has undergone massive changes over the past two decades, especially as ecommerce has won over consumers and smartphones have become the must-have accessory. These days, retailers work around the clock to navigate a digital world that continues to evolve at a dizzying pace, while tech-savvy consumers have increased their demands for seamless experiences and personalized touches, wherever and however they shop.

    “In today’s increasingly connected world, brands and retailers are struggling to find ways to appeal to omnichannel shoppers,” says Mike Paley, executive vice president of shopper marketing at agency The Marketing Arm. “Technology advances have created an environment in which the line between brick-and-mortar and e-commerce is blurred and fading fast.”

    Here are five cutting-edge technology trends taking retail to the next level:

    1. Beacons

    With millions of shoppers toting smartphones in their pocket or purse, it’s no surprise that proximity marketing, through the use of location-based technologies such as Bluetooth-connected beacons, is becoming more than a flash-in-the-pan – as retailers look for ways to provide more personalized, real-time messages, offers and promotions. Macy’s, for example, recently rolled out beacons to 4,000 stores using Shopkick’s offering, and Swirl’s platform and hardware is being used by clients including Lord & Taylor and Urban Outfitters. According to Business Insider, beacons will directly influence over $4 billion in U.S. retail sales this year and climb 10 times that next year.

    “Beacons were a novelty 15 months ago, but this year retailers are starting to take them more seriously,” says Scott Bauer, U.S. Retail & Consumer Partner at consulting firm PwC. “There’s more experimentation about how to treat users in their stores with mobile phones.” The question is how to use them, he cautions, “so it doesn’t seem creepy or annoy customers.”

    2. Biometrics

    Biometrics, which uses technologies like fingerprint systems, facial recognition, iris scanning and voice identification, seems like a natural fit for retailers. Brands and banks that want to improve targeted marketing efforts and boost security. Biometrics Research Group predicts the global biometrics market to soar to $15 billion this year, up from an estimated $7 just three years ago. And, technology consulting firm Frost & Sullivan forecast that nearly a half-billion people will be using a smartphone equipped with biometric technology by 2017.

  • Indonesia ICT sector assessment

    Indonesia ICT sector assessment

    Information and communications technology (ICT) connectivity in Indonesia as a growing economy faces huge challenges in preparing for the future.

    The world’s largest archipelago consisting of more than 17,500 islands with a population of nearly 250 million requires substantial investments in domestic ICT infrastructure and international connectivity to meet the strong growing demand from the private and public sectors.

    New technologies require an ICT infrastructure with sufficient capacity. Reliable interconnection with other ASEAN member countries to remain competitive in the interconnected world is another aspect of why ICT should be considered a priority sector.

    In October 2014 the Indonesian government unveiled a Rp 278 trillion broadband connectivity plan in order to boost economic growth. The plan defines broadband development in Indonesia and sets the strategy and major milestones for the coming five years.

    The main purposes of broadband development are to encourage economic growth and increase the competitiveness of the nation, to support the improvement of human development and to safeguard the sovereignty of the nation.

    The Networked Readiness Index (NRI) 2015, published by the World Economic Forum, includes 143 countries and measures the propensity for the countries to exploit the opportunities offered by information and communications technology.

    The NRI considers several indicators, such as the political and regulatory environment, the business and innovation environment, infrastructure and digital content, affordability, skills, individual usage, business usage, government usage, economic impacts and social impact.

    In the last assessment in 2014, in which 146 countries were covered, Indonesia dropped 15 places to 79th, while Singapore claimed first, Australia 16th, Malaysia 32nd, China 62nd, Thailand 67th, the Philippines 76th, Vietnam 85th, Lao PDR 97th, Cambodia, Timor-Leste 134th and Myanmar 139th.

    To attract local and foreign investments a more business friendly environment is required in Indonesia. The business society in particular is demanding a fight against corruption, the cutting of red tape, infrastructure development and the improvement of the tax system. The same applies, of course, for the Indonesian ICT sector.

    To meet the requirements and keep pace with international developments, including connectivity to other ASEAN member countries, the broadband connectivity plan, which describes the path to the right direction, should be implemented in the given timeframe. Further considerations, recommendations and implications related to ICT development in Indonesia are pointed out in the following:

    As addressed in the broadband connectivity plan, educational and training skills, including English language skills, should be enhanced by connecting schools to the Internet and implementing e-Education and e-Learning programs. Competence centers consisting of experts from academia and the private sector should be established to boost research and development (R&D) in Indonesia.

    World Bank data shows that Indonesia spent the equivalent of 0.07 percent of its gross domestic product (GDP) on R&D in 2010. Meanwhile, Malaysia spent 0.63 percent, Singapore 2.2 percent and Thailand 0.25 percent in the same period.

    For a modern technology infrastructure, state-of-the-art data centers for public use (e.g. national and international telecommunications operators and companies) are required in major cities and business centers, taking into consideration environmental risks (e.g. earthquakes, floods, landslides and volcanos), redundancy aspects (backups and disaster recovery), security (access, surveillance and stable power) and professional operations.

    Cross-sector infrastructure sharing reduces costs. Ducts, towers, masts, power grids, facilities, etc. can be shared between the telecommunications, the energy and the transportation sectors.

    For public-private partnership (PPP) opportunities identify and classify infrastructure development and new public service provisions that will improve ICT usage and convergence in Indonesia (e.g. increased Internet penetration, improved mobile services, improved opportunities for convergence, content development, etc.).

    Beside manufacturing of ICT products, promoting niche markets or new technologies and trends like mobile applications, IT outsourcing, hosting services, enterprise private clouds, 4G/5G, Internet of Things (IoT), Machine to Machine (M2M) communications, Green ICT, Call Centers, etc. shall be considered.

    International development and trends in the ICT sector should be observed to ensure harmonization of policies and regulations including cross-sector regulation.

    For international connectivity, Indonesia is depending on international submarine cables, most of them currently routed via Singaporean and Malaysian waters. New submarine cables with diverse routes are planned for the coming years. For example, the Southeast Asia-US submarine cable will connect Manado in Indonesia as the new eastern Indonesian gateway and Davao in the southern Philippines via Guam to the United States’ west coast.

    When completed in 2017 at an approximate cost of US$250 million, the approximately 15,000-kilometer cable system will provide an additional 20 terabits per second (tbps) capacity, connecting Indonesia and the Philippines to the US with state-of-the-art 100G technology.

    Redundancy and diverse routing of submarine cables is important to protect connectivity against terrorist attacks, sabotage and cable cuts by natural disasters such as seaquakes or by anchors.

    The announcement of the Indonesian government for the formation of the National Cyber Agency (NCA) is a step in the right direction. With regard to cyber-attacks, Indonesia is ranked as one of the world’s top three targets. The NCA should develop and implement strategies for the defense against rising cyber-attacks to protect Internet users, the government, financial services institutions and other businesses, including sensitive sectors like the transportation and the energy sectors.

    Strengthening the awareness of the public about privacy and cybercrime committed through e-mail scams, SMS or social media should be another focus area of the NCA.

    On behalf of consumers, the government of Indonesia shall ensure that the service quality of telecommunications operators improves and minimum international accepted quality of service (QoS) standards shall be enforced and regular monitored for all segments (fixed, mobile, Internet and broadcasting services). With currently more than 280 million SIM cards issued to users, mobile is the main access to the Internet.

    “Last mile” and campus/in-house cabling are very often bottlenecks for high speed landline data connections. Even if the fiber optic backbones of the telecommunications operators allow high speed data, cable connections between the exchanges of the operators and campuses or buildings (“the last mile”) of the consumers are often old and faulty copper cables that do not allow high speed data transfer. The telecommunications cabling on campuses and in buildings (“in-house cabling”) is mostly the sole responsibility of the landlords.

    With its young population, Indonesia has a market potential of about 250 million consumers. Taking the right measures, considering the actual international development and best practice experiences in the global ICT sector, Indonesia has a realistic chance to strengthen its national ICT sector in the coming years and so play an equal role in the very competitive Asian and global markets.

  • E-commerce startups: a wild card for the industrial market?

    E-commerce startups: a wild card for the industrial market?

    THE bulls and bears of Singapore’s industrial property market often reflect the pace of economic growth and the composition of the manufacturing sector. Since its post-independence days, the manufacturing sector in Singapore has evolved to be a key contributor to gross domestic product (GDP) at approximately 20 per cent with strong support stemming from the chemicals, electronics and precision engineering clusters in 2014.

    In recent times, however, the Republic’s manufacturing activities have slowed down due to the external and internal headwinds which this export-reliant nation is highly susceptible to.

    The government has long recognised the need to boost the island’s overall productivity and export competitiveness in the region to maintain economic growth. To this end, Singapore’s manufacturing sector has been undergoing economic restructuring to shift the value-chain upwards to focus on higher value-added industries. More emphasis is placed on higher automation and less labour-intensive manufacturing activities as firms grapple with rising labour costs and lean manpower.

    Post-Global Financial Crisis, the rapid recovery in GDP in 2010 was accompanied by a spike in manufacturing output. As one of the underlying demand drivers for industrial space, the increase in manufacturing activities propelled the demand for industrial space, as indicated by the positive net absorption islandwide. On the back of limited net supply, this translated to occupancy rates hovering above the range of 93 per cent until 2011.

    Subsequently, demand for space began to soften from 2012. The softening is primarily attributed to three key factors – the hike in labour costs, rising competition from neighbouring countries that offer an alternative cheaper manufacturing base and weakening external demand from Asian economies, especially China. Cost containment became a top priority, which led to existing demand being mainly driven by renewals and consolidations.

    On the back of rental and capital value escalations in 2011, the government introduced a slew of industrial property measures such as tighter occupation requirements for industrial space, seller’s stamp duty, shortened land tenures, and ramped up supply through the Industrial Government Land Sales (IGLS) Programme to cool the market. This eventually resulted in a surge of supply which far surpassed demand from 2013 onwards.

    Furthermore, a strong supply of industrial space is expected to be completed in 2015 and 2016. In the face of decelerating economic growth and contracting industrial output, it is likely that demand for industrial space will remain subdued in the near term, as the surge in supply corresponds to twice the amount of the 10-year average demand of 10.42 million square feet (see chart).

    Given this supply overhang situation and less favourable economic conditions, it is imperative to explore other complementary uses for industrial space while adhering to existing JTC Corporation and Urban Redevelopment Authority (URA) guidelines.

    ANCILLARY USE

    Under URA guidelines, industrial properties are segregated for use by a 60 per cent-40 per cent quantum, where 60 per cent is predominantly used for core industrial activities and 40 per cent for ancillary uses. To obtain Written Permission for the 40 per cent ancillary use such as industrial canteens, showrooms and selected commercial uses, occupiers have to comply with the following requirements:

    • Capping industrial canteens at 5 per cent of total proposed gross floor area (GFA) or 700 square metres, whichever is lower.
    • Showrooms are only allowed to display products which are typically not transacted over the counter and are predominately delivered and installed off-site.
    • Selected commercial uses include clinics, banking hall/ATMs, minimarts and fitness centres and are capped at 10 per cent of total proposed GFA per development or 200 sq metres, whichever is lower, on the first storey of the building only.

    As long as the proposed ancillary uses conform to the above guidelines, it provides landlords with the flexibility to revamp the use of existing industrial space and widen the pool of potential occupiers.

    In the past, industrial spaces were primarily used for core industrial activities namely, manufacturing and warehousing. However in 2004, the Economic Development Board (EDB) introduced the Warehouse Retail Scheme – an initiative which ended in 2007 – which led to megastores such as Ikea, Giant, Courts and Big Box operating in industrial locations.

    Notwithstanding the short-lived three-year tenure of this initiative, in 2015, Gain City and NTUC FairPrice incorporated retail components into their industrial developments under the 40 per cent ancillary use.

    While adhering to the 60 per cent allocation for warehousing, Gain City’s Sungei Kadut development, for instance, sets aside 20 per cent for retail, and incorporates other uses such as offices, café, sky terraces, a children’s play area and a diesel pump area. Consolidation of uses into one location enables industrialists to enjoy cost-saving benefits, which have been passed on to consumers. Gain City, in fact, reported 20 per cent in cost savings with its consolidation exercise.

    Through a similar re-adaptation of industrial spaces, it is plausible to extend the same cost-saving benefits to entrepreneurs. For one, e-retailers could potentially benefit from a re-think on warehouse space usage. By designating 60 per cent to store e-retailers’ inventories in self-storage, the remaining 40 per cent can be further proportioned to develop an all-encompassing pro-business environment with courier services, serviced offices, Wi-Fi-equipped cafés and showrooms.

    A development that has adopted a similar concept is the Entrepreneur Business Centre, a self-storage and serviced office facility with ancillary uses, namely baby-care retail and delicatessen.

    The purpose of incorporating Wi-Fi-equipped cafes and showrooms in industrial developments is to transform industrial estates into a one- stop e-commerce hub for startups.

    Firstly, business operations and logistics are supported through having 24/7 wireless access, storing inventories in self-storage and having shared in-built courier services. Secondly, it attracts clientele as displaying products in showrooms creates an experiential retailing concept for consumers to touch and feel e-retailers’ products prior to purchasing them online.

    One retailer that offers this omni- channel retailing experience through the online-to-offline (O-2-O) concept is Decathlon, a sporting goods firm which only had an online presence in Singapore. The introduction of the Decathlon eXperience showroom has encouraged customers to have more hands-on interaction with the products before proceeding to purchase them online. Undeniably, this creates a cost-friendly working environment as it promotes the growth of e-commerce by compressing e-retailers’ risks through reduction of overhead costs and lock-in periods.

    GATEWAY FOR E-COMMERCE

    There is strong support for Singapore to grow as an entrepreneurial hub. Firstly, more industrial spaces are being slated for entrepreneurial activities such as at JTC Launchpad @ one-north, and secondly, there is rising investment interest in Singapore’s startups, especially in the e-commerce sector.

    According to Techlist, 80 per cent of venture funds raised by Internet companies are being invested in Singapore where the beneficiaries are predominantly e-commerce players such as Lazada, Zalora and Reebonz.

    This is not surprising as Singapore is ranked 14th on the 2015 Global Retail E-commerce Index, indicating the strong fundamentals which have established Singapore as the gateway for e-commerce.

    According to Euromonitor International’s June 2015 study on retailing in Singapore, Internet retail sales grew 12.5 per cent year-on-year to S$1.08 billion, while mobile Internet retail sales expanded even more significantly by 53.9 per cent to S$280.9 million.

    All these indicate that Singapore’s e-commerce sector is poised to expand further, which could potentially be the next underlying demand driver for the industrial market.

    Leveraging on the aforementioned opportunities, the pool of end-users for industrial space may be extended further to include e-commerce startups. Previously, this group of users was hindered by barriers of entry such as high occupancy costs and inability to occupy the minimum GFA requirement in industrial developments. However, by consolidating uses and re-adapting the 40 per cent ancillary use, this creates a win-win situation for landlords, consumers and entrepreneurs.

    In addition to injecting fresh demand for a muted industrial market, it creates a viable operating business environment for startups, thus promoting the development of the e-commerce scene.

    Instead of depending on external trade and manufacturing to propel demand for the industrial market, widening the list of potential occupiers to startups may potentially inject life into industrial estates. That may be the solution to cost containment which businesses are seeking.

  • Philippines ranked among most vulnerable to retail systems hacking

    Philippines ranked among most vulnerable to retail systems hacking

    The Philippines ranked among the countries in the region most vulnerable to hackers who target electronic retail systems, cybersecurity company Trend Micro’s Philippine unit said on Wednesday in a media briefing.

    Point-of-sale (POS) system malware incidents, affecting purchases made through a credit card or a debit card, are among the most prevalent cyber crimes in the Philippines.

    In the Asia-Pacific, the Philippines had the fifth highest rate of POS attacks at 6% while the United States topped the list at 31%. Countries in second to fourth place were Australia (10%), Taiwan (9%), and Brazil (8%).

    The study covers the first half of 2015.

    POS systems are becoming increasingly available to even small to medium enterprises due to the influx of card-swiping devices employing cheap hardware, it sad.

    “It’s not just the cards, but the system server where the data is stored or the gadget being used to swipe the card is also vulnerable,” said Myla V. Pilao, Trend Micro Philippines’ Director of Marketing Communications said.

    Meanwhile, online banking was also an area of concern, as the Philippines had the fourth highest number of attacks in the region. There were over one million malware detections in the Philippines for the third quarter alone, Trend Micro said.

    As Filipinos become more accustomed to make their purchases through e-commerce, Trend Micro noted that local banks still do not use the most modern security practices for their credit and debit cards.

    Financial institutions in the Philippines still do not employ EMV cards that come with embedded chips as an added security feature to the personal identification number.

    “Anything that is connected to the Internet, we have to assume that it is a target,” said Ms. Pilao.

    “It would take us years to put up regulation (against cybersecurity threats), that is the biggest hurdle. We also need capacity building. Our law enforcement, they are used to investigating crimes on the street but to get them to investigate online won’t be easy because it’s not their habit,” she said.

    The country’s e-commerce law, which Ms. Pilao pointed out, is outdated based on what is happening in real world attacks. — Nicolo Paolo A. Pascual

  • 5 unique challenges all ecommerce firms face in Indonesia

    5 unique challenges all ecommerce firms face in Indonesia

    People talk a lot about Indonesia’s burgeoning ecommerce market, and how Jakarta may very well be on the cusp of an online retail revolution. Over the past 12 months, we’ve seen more activity in the sector than ever before, with new firms emerging and big-league investment coming in simultaneously.

    Naturally, these are all positive signs that point toward a maturing market in the region; hopefully one that can push Indonesian ecommerce into the mainstream conversation in Asia. It would be great to see online shopping reach five percent or more of the nation’s overall retail sector, but for now we can only speculate on the future.

    indonesia-streets-1

    Like any market, Indonesia has its own set of challenges, caveats, and peccadillos that all ecommerce founders are forced to cope with. In the past, we’ve cited the archipelago’s hellish logistics landscape, weak payments infrastructure, and a fragmented market as some of those limitations. However, there is a second layer of challenges that all estores will face in the gauntlet that is Indonesia.

    This is a set of generally accepted idiosyncrasies that newbie e-tailers — and especially foreigner founders — will run into on a daily basis in Jakarta, so take notes. In no particular order, here are five cultural challenges all ecommerce firms, new or seasoned, will face in Indonesia.

    Price-sensitive shoppers

    Indonesia-ecommerce

    It’s true, Indonesia has one of the most attractive emerging middle-classes in the world. By 2030, an estimated 90 million people will have joined the consuming class. That said, Indonesians are, to put it mildly, true suckers for sales and discounts. Locals have a strong proclivity toward finding the best prices at all costs.

    This is no secret to anyone who lives in Jakarta, as it’s extremely common to see hundreds (sometimes thousands) of locals waiting in line at the mall just for a 50 percent off sale to happen at Bershka or the Samsung store. Nevermind the time, energy, and fuel spent to get to the store across town or the fact that folks may not have felt compelled to buy anything in the first place, had there not been a sale.

    Boston Consulting Group says Indonesian shoppers actively seek out promotions and hunt for deals. At the lower half of the income pyramid, this is a function of family dynamics. Men typically give their wives a monthly budget for the family. The more money these women can save on groceries, the more they have to splurge on small indulgences for themselves. However, the bargain-hunting drive spans the wealth spectrum — more than 60 percent of the overall population says they enjoy searching for discounts and promotions, and more than 70 percent of the country’s affluent population says they enjoy doing so.

    This might seem like more of a blessing than a curse at first glance, as demand can be easily created so long as merchants temporarily lower their prices. But in the end, competition often becomes a race to the bottom and profit margins suffer if you don’t plan your discounts as if you were going into brain surgery. Anyone thinking about opening an estore in Indonesia needs to firmly understand the lowest price they can offer while still being able to turn a profit. If it’s not in the same ballpark as the nation’s big competitors, both online and offline, new web firms will need to rethink their strategies.

    Risk aversion

    New ecommerce names in Indonesia, even ones as big as JD for example, are going to have to work twice as hard as their more established counterparts when it comes to acquiring and retaining users. According to a recent McKinsey study, Indonesian consumers have some specific shopping behaviors. They are risk-averse and brand-loyal. 63 percent of Indonesian consumers only buy products from brands they already know. This positions them as late adopters because they need to be encouraged by friends and family before they choose to adopt new products.

    Bank Mandiri cites this challenge as a short-term hurdle in the grand scheme of things, however, as purchasing behavior will likely change when Indonesia’s internet infrastructure improves, and more people come online for the first time. However, for smaller ecommerce sites without a bankroll and several years of runway, they’ll need to find new and creative ways to get local shoppers to trust their brand, and do so fast.

    Deep-pocketed competitors

    Lazada-indonesia-home

    Rocket Internet’s Lazada Indonesia, Lippo Group’s MatahariMall, SoftBank and Sequoia-backed marketplace Tokopedia, and now JD.id — the Indonesian arm of the Chinese ecommerce giant — are all firms with copious spending power. All are up and running in Indonesia, and those who are intimate with Indonesia’s ecommerce landscape understand how unwise it is to challenge these guys head-on.

    Lazada Indonesia is perhaps the biggest force to be reckoned with, as overall spending on Lazada Group’s Southeast Asia portals jumped from US$89 million in 2013 to US$350 million in 2014. Indonesia’s shoppers made up over 30 percent of that, says CEO Max Bittner. To date, the firm has pulled in US$686 million in funding on public record. Tokopedia grabbed US$100 million last year, and MatahariMall also claims to be earning hundreds of millions. JD is a publicly traded company that’s raised around US$2.6 billion to date.

    If you want your fledgling ecommerce venture to work out, you’re going to need to find multiple ways to differentiate yourself from these firms or face certain death. Homework and competitive analysis is a must.

    An increasingly frothy market

    There are many figures that paint a positive picture of Indonesia’s ecommerce scene. The most referenced one is a 250 million population with a recent annual GDP increase between 5 and 6 percent, primarily driven by people buying things. In reality, Indonesia’s ecommerce market is still in its infancy, yet an increased level of attention and hype is drawing entrepreneurs who think the market and investment scene are already primed.

    Zalora Indonesia was able to succeed in its early days because of Rocket Internet’s vast resources and a long period of trial and error. Today, seemingly strong competitors like Paraplou Group are closing their doors in Jakarta, citing reasons of market immaturity, uncertain financial conditions, and a hard time getting funded as the primary reasons for closure.

    With firms like MatahariMall making bombastic funding claims and many early-stage VCs adopting the spray-and-pray investment method (without disclosing round sizes), all the news coming from Indonesia makes the archipelago seem like a perfect lilly pad for incoming ecommerce companies.

    Lyall Taylor, associate director at global financial services firm Macquarie Group in Jakarta believes there is a lot of hype about future ecommerce growth in Indonesia. He recently broke down typical causes of market hype for Tech in Asia.

    “Usually what happens is that rapid growth in an industry […] results in profits to early investors,” said Taylor. “These profits get increased media attention and eventually attract more and more people to enter the fray, driving prices higher still […] investors are extrapolating growth well into the future and assuming a high likelihood of success for many tech ventures, even when high levels of future growth and profitability may not be assured.”

    A preference toward brick-and-mortar

    Plaza_indonesia

    Shopping is undisputedly a religion in the archipelago. When friends get together on a Friday night, the question is not “Should we go to the mall?” Instead, it’s “Which mall should we go to?” Local business portal Indonesia-Investments says it’s astonishing how many new malls have opened during the last decade or are currently being developed in Jakarta. Most new malls are part of large real estate projects that also include apartment complexes, office towers, hotels, and sometimes even hospitals.

    The mall is usually the epicenter of everything on a Jakarta superblock, connecting all other buildings. For Indonesians, from the middle-class up to the elite, these malls are places to hang out, relax, and eat because the environment is enjoyable: pleasant temperatures, no pollution, and clean spaces. Most Jakarta malls contain one or more floors with several restaurants, which are inevitably popular among young adults. Malls are also common places to have business meetings. Live music is a regular occurrence.

    Jakarta alone has nearly 200 shopping malls and counting, despite the government trying to curb mall growth in recent years.

    The reason this is important for incoming foreign ecommerce founders, or anyone considering starting an estore in Indonesia for that matter, is that ecommerce is not going to replace brick-and-mortar shopping in the archipelago anytime soon. In fact, startups will need to work much harder to provide incentives for shoppers to transact online rather than simply taking the elevator downstairs and buying offline.

  • In Asia mom-and-pop stores continue to beat supermarkets

    In Asia mom-and-pop stores continue to beat supermarkets

    In Asia, the traditional ‘mom-and-pop’ stores draws about half of retail sales. This research firm Nielsen reveals the oversight by marketers and brand managers, who may have dismissed the transactional potential of the more traditional trade stores.

    Fast-moving consumer goods vying for market share and customer loyalty ought to look to these traditional stores when it comes to engaging the Asian shopper.

    A better understanding of this fragmented yet ubiquitous traditional trade channel – which comprises more than five million outlets in Southeast Asia alone – has the potential to drive sales by putting brands in front of more consumers.

    Traditional trade channels account for almost half of all grocery sales in Asia. In 2014, 47.9% of all retail sales were made through traditional trade channels, compared to 17.2% for supermarkets which accounts for the second-largest proportion of sales. 

    nielsen-traditional-trade-chart1

    Connie Cheng, executive director of shopper solutions for Southeast Asia, North Asia and Pacific, says traditional trade accounts for up to 70% of all retail sales in key markets such as Jakarta and Ho Chi Minh City.

    “While there’s been a headlong rush into the hypermarket and supermarket retail formats throughout most of Southeast Asia, there are untapped loyalties between brands and consumers shopping at traditional trade stores on every street corner, in every town, village and city,” said Cheng. 

    The who, what and where of traditions

    The research founds that the humble warung in Indonesia, the Philippine sari-sari, Malaysia’s kedai runcit and Vietnam’s cử a hàng tạp hóa are used by consumers in similar ways. The majority of consumers shop at traditional trade stores for daily meals, snack foods and beverages for immediate consumption, while they are less important for top-up or main shopping trips. 

    nielsen-traditional-trade-chart2a

    Majority of consumers plan their trips to the most conveniently located store in advance, and have a specific brand in mind.

    Such behaviour highlights opportunities for brands to vary pack formats or leverage loyalty for premium lines to increase basket size.

    Who are your shoppers?

    When it comes to commonly purchased products, powdered coffee blends, coffee and carbonated drinks top the list in Indonesia, the Philippines and Vietnam, respectively.

    While shoppers clearly tend to view the traditional trade store as an extension of their kitchen pantry, sales of homecare and personal care lines are also common purchases. Laundry items, shampoos, makeup, vitamins, baby-care lines and general household products are the most frequently purchased items at grocery stores in Indonesia, the Philippines and Vietnam.

    Studying segmentation

    Marketers need to undertake a more thorough segmentation analysis to maximise market share. Although traditional trade grocery outlets are plentiful in Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the market is fragmented.

    Cheng suggests extending segmentation and tapping shopkeepers for their intimate understanding of hyper-local consumer behaviour. “Information on demographics, psychographics and shopper behaviour can help provide actionable information for sales teams,” she added.

    A better understanding of grocery shoppers can also assist in brand strategy and modelling, potentially unlocking value for brands in regions with a higher average GDP. This may help overcome issues in a fragmented market.

    There’s a disconnect between the desires of brand managers, who may think that bigger is better, and the demands of shoppers utilising Southeast Asia’s most popular channel for purchasing groceries – the traditional store format.

    “Traditional format stores are as relevant now as they have ever been. By better tapping into consumer behaviour, brands can discover what most Southeast Asians already know; that bigger doesn’t always equate to better,” Cheng added.

  • Hong Kong retail rents will continue to fall in next year

    Hong Kong retail rents will continue to fall in next year

    In more than three decades in Hong Kong’s real estate industry, Sheraton Valuers’ Michael Chik Pa-fai has seen a number of up and down cycles. With retail sales falling, the managing director of the retail property-focused brokerage expects the slump in retail rents to last for at least a year before the market finds its bottom.

    Q: We saw street shop rents falling sharply in Causeway Bay and Central in the last quarter. Will the falls stop?

    A: I do not think so. The falling trend began when luxury brand Coach terminated the leasing contract of its Central shop due to slow sales of luxury goods. Adidas will now move into the three-storey shop for lower rent. The fall led to a domino effect and extended the pressure to Causeway Bay in the third quarter, and it will spread to Tsim Sha Tsui soon.

    There are still a number of shops vacant in Causeway Bay, such as those in the second-tier street Percival Street. One landlord of a Percival Street shop wanted to rent out his shop with a monthly asking rent of HK$450,000 in May this year, but no one showed interested. The shop was recently sold and the new owner cut the asking rent to HK$300,000 a month but so far it has not found a tenant.

    In Central’s China Building at 29 Queen’s Road Central, landlord Cheung Kong Property Holdings is still looking for a tenant to fill the vacant space after Italian brand Baldinini left by the end of July. Baldinini rented shops three to five on the ground floor as its Hong Kong flagship store at the beginning of this year. It moved in after Asia Commercial Holdings’ shop that traded Rolex luxury watches moved out.

    Q: Are there any tenants still planning to leave before leases expire?

    A: There are quite a lot. When retail sales were good and mainland tourists rushed to visit Hong Kong, retailers opened more than one shop on one street. Now they are considering closing the worst-performing ones. The lease of Puyi Optical’s shop at 116-120 Canton Road will expire next month. It is understood that it won’t renew the lease because it has another shop on the same street.

    Q: When will the market stabilise?

    A: The pace of rent correction in Causeway Bay is slowing after the recent decline. Rents will start to fall on Canton Road when a number of leases expire at the end of this year and next year. One example is that Asia Commercial Holdings moved into three shops in Manley House at 86-89 Canton Road in 2013 for a monthly rent of about HK$6.3 million. The retailer has been planning to sublet one shop with an asking rent of HK$1.3 million with the aim of reducing rental pressure. But it has yet to find a taker.

    When there is vacant shop, landlords of shops on the street will feel the pressure. New leases for some shops on Canton Road will be 30 per cent below old leases.

    It will take a year to let the market finds its bottom. It will go back to the rental level in 2011. Rents have jumped too fast over the years. Before Asia Commercial moved into the three shops in Manley House, Sa Sa International occupied the shops at a monthly rent of HK$1.59 million. Rents jumped more than fourfold.

    The recent downturn will pull rents down. Rents for this kind of shop will be less than HK$1 million.

    Q: Is it the worst time you have seen?

    A: Definitely not. The worst times were the years between October 1997, when Asia suffered a financial crisis, and 2003, when Hong Kong was hit by the severe acute respiratory syndrome (Sars) outbreak. The whole market picked up in 2004, bolstered by the introduction of the Individual Visit Scheme, announced in 2003, and rents kept rising since then.

    The good news is mid-range brands , which had been forced to move to secondary or tertiary locations to make way for luxury-market retailers, are taking advantage of the current market slowdown for opportunities to return to prime shopping districts. For example, Hong Kong-based cosmetics retailer Bonjour has returned to Russell Street, one of the world’s most expensive shopping streets.

    Q: What is Sheraton Valuers’ background?

    A: Chairman Yam Wing-Yin found the company in 1985. We specialise in the sale and leasing of shops and commercial premises. Our retailer clients include well-known brand names such as Emperor Watch & Jewellery, Chow Tai Fook Jewellery, Prince Jewellery & Watch, Sa Sa and Bonjour.

  • Everything you need to know about Indonesian telecoms and ecommerce

    Everything you need to know about Indonesian telecoms and ecommerce

    Macquarie Indonesia, the local branch of the global investment banking and financial services giant, held an invite-only conference for high-profile professionals in the telecoms and ecommerce spaces. No other press were allowed inside the venue at the Ritz Carlton, and the list of speakers included some interesting names, including Indonesia’s tech minister Rudiantara, CEOs from the top three telcos, and a slew of investors, VCs, and startup founders, among others.

    The speakers shared the industry’s latest data and insights about the future of the telco business in Indonesia, as well as the most up-to-date information about the archipelago’s internet users and online shoppers. Based on their findings, here are some insights to keep in mind going forward (Hat tip to Macquarie for providing a post-conference overview).

    A digital explosion is on the horizon in Indonesia

    Mobile data traffic has been growing at around 100 percent year-on-year in recent years, according to the telcos, and looks set to continue in the medium term as we reach an inflection point in the quantity of online content.

    This is helped by rising smartphone adoption in Indonesia, young demographics, and a growing middle income populace. Indonesia’s affinity for social media (it is number four in terms of Facebook usage) is well-acknowledged. However, what is less well-known is the development boom for localized content that helps accelerate web traffic in Indonesia.

    line-vietnam-telcos

    The government looks to give more support

    The Indonesian government claims to be highly supportive in developing the ecommerce industry. It plans to announce an “ecommerce roadmap” this year, which will involve input from nine government ministries. From a telecoms perspective, the government highlights the importance of “industry efficiency,” which in part means allowing mergers and acquisitions to run more smoothly in Indonesia. This, in turn, should improve the sustainability of Indonesia’s ecommerce industry and promote further investment.

    In addition, the tech minister wants to raise US$1 billion for local tech startups to be controlled by a non-state-owned or privately-owned venture capital firm. “I’ve approached the top 20 conglomerates in Indonesia about this issue,” explains minister Rudiantara. “We must have a roadmap for this three to six months from now and the conglomerates would be the ones to choose the VC.”

    The tech minister corrects the media

    Regarding recent media coverage about an imminent rule for locally made 4G smartphones, the minister claims he never said that 40 percent of the 4G mobile handset components will need to be produced locally. According to him, the government has not yet mandated a fixed percentage for the regulation, although Rudiantara says he has been in talks with several local mobile manufacturers regarding their production capacities. He says:

    The decree will go into effect later this year. We welcome input from all stakeholders at this time. Importing these products contributes to our trade deficit. This is a macroeconomic issue that I must address.

    Rudiantara

    The digital ecosystem is still in its early days, but that’s changing quickly

    A clear theme to emerge from the conference was the number of bottlenecks preventing Indonesian ecommerce from rapid acceleration. The key challenges currently include online payments (with credit card penetration still around three percent), weak logistics and infrastructure, shallow human capital, and regulatory uncertainty.

    According to Macquarie, telecom operators and banks are leading the charge in growing the ecosystem by allocating resources. However, the firm asserts that the demand for ecommerce will outpace supply over the next 12 months in Indonesia.

    Eruption of online traffic

    Data now accounts for 25 percent of revenues for the local telecom industry. With online traffic accelerating as demand expands beyond social media and into online retailing, we can see an upside to data-led revenues, especially if operators can execute on content strategies centered around mobile advertising, ecommerce, and mobile money.

    XL Axiata and Indosat appear more advanced in their digital sevices strategy, while Telkomsel will continue to benefit from its competitors’ early findings.

    Indonesia is definitely seeing an ecommerce surge

    Online retail has seen exponential growth the last 12 months with Lazada Indonesia, Tokopedia, BukaLapak, and Zalora currently leading the way in the archipelago.

    Lippo Group’s recent US$500 million investment in MatahariMall potentially places the firm in an advantageous position in the medium-term to capture market share in online retailing. It’s supported largely by Lippo’s strong nationwide footprint and competitive advantage stemming from a sophisticated local supply chain.

  • Corner stores still dominate Asia retail

    Corner stores still dominate Asia retail

    In Asia retail, the humble corner store is an essential ally to fast-moving consumer goods in the battle for market share and customer loyalty, according to a new report from global performance management company, Nielsen.

    The whitepaper, Maximising Traditions – The Shop. Shopper. Shopkeeper, argues that a better understanding of this fragmented yet ubiquitous traditional trade channel – which comprises more than 5 million outlets in Southeast Asia alone – has the potential to drive sales by putting brands in front of more consumers.

    Nielsen’s research suggests that to better maximise sales, brands should consider a more thorough analysis of their market segmentation, and tap into the understanding of the shopkeeper and shopper.

    Traditional trade channels account for almost half of all grocery sales in Asia and India. In 2014, 47.9 per cent of all retail sales were made through traditional trade channels, compared to 17.2 per cent for supermarkets which account for the second-largest proportion of sales.

    The paper’s author, Connie Cheng, Nielsen’s executive director of shopper solutions for Southeast Asia, North Asia and Pacific, says traditional trade accounts for up to 70 per cent of all retail sales in key markets such as Jakarta, Indonesia, and Ho Chi Minh City, Vietnam.

    “While there’s been a headlong rush into the hypermarket and supermarket retail formats throughout most of Southeast Asia, there are untapped loyalties between brands and consumers shopping at traditional trade stores on every street corner, in every town, village and city,” said Cheng.

    “With almost 50 per cent of retail sales in Asia made at a small, independent grocery store, the research suggests that FMCG brands are leaving money on the table. The key to maximising sales through traditional trade channels is to focus on the relationships between the shopkeeper and the shopper,” she said.

    Maximising Traditions finds that the humble warung in Indonesia, the Philippines’ sari-sari, Malaysia’skedai runcit and Vietnam’s cử a hàng tạp hóa are used by consumers in similar ways. The majority of consumers shop at traditional trade stores for daily meals, snack foods and beverages for immediate consumption, while they are less important for top-up or main shopping trips.

    The whitepaper reveals that the majority of consumers plan their trips to the most conveniently located store in advance, and have a specific brand in mind. Such behaviour highlights opportunities for brands to vary pack formats or leverage loyalty for premium lines to increase basket size.

    When it comes to commonly purchased products, powdered coffee blends, coffee and carbonated drinks top the list in Indonesia, the Philippines and Vietnam, respectively.

    While shoppers clearly tend to view the traditional trade store as an extension of their kitchen pantry, sales of homecare and personal care lines are also common purchases. Laundry items, shampoos, makeup, vitamins, baby-care lines and general household products are the most frequently purchased items at grocery stores in Indonesia, the Philippines and Vietnam.

    The report suggests that marketers need to undertake a more thorough segmentation analysis to maximise market share. Although traditional trade grocery outlets are plentiful in Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the market is fragmented.

    Cheng suggests extending segmentation and tapping shopkeepers for their intimate understanding of hyper-local consumer behaviour.

    “Information on demographics, psychographics and shopper behaviour can help provide actionable information for sales teams,” she adds.

    A better understanding of grocery shoppers can also assist in brand strategy and modelling, potentially unlocking value for brands in regions with a higher average GDP. This may help overcome issues in a fragmented market.

    “There’s an unfortunate and unnecessary disconnect between the desires of brand managers, who may think that bigger is better, and the demands of shoppers utilising Southeast Asia’s most popular channel for purchasing groceries,” continues Cheng.

    “Traditional format stores are as relevant now as they have ever been. By better tapping into consumer behaviour, brands can discover what most Southeast Asians already know; that bigger doesn’t always equate to better.”

  • Vietnam e-commerce market growth to be led by online retail market

    Vietnam e-commerce market growth to be led by online retail market

    According to the Research’s recently issued report “Vietnam E-Commerce Market Outlook to 2019 – Driven by Internet Penetration and Smartphone Usage”, e-commerce managed to gain some attention in Vietnam only after 2011. The retail market in Vietnam is considered one of the most dynamic markets in the South East Asia with such a high growth rate. Hanoi and Ho Chi Minh City are ranked in the top 10 cities in the entire Asia for retail expansion. Hanoi ranked third after Beijing and Shanghai as the city with liveliest retail market.

    Vietnam is one of the top three countries with the highest rate of growth of internet and mobile phone subscribers in Vietnam, with more than four million people using the internet a day, offering great potential for online shopping development.

    In 2014, Vietnam had a total population of 90.7 million out of which 35.4 million people have access to internet, making the internet penetration rate of 39%, amongst the highest in the region. Though the E-commerce market is not very old, the country has many big players such as Lazada, Hotdeals, Vatgia and others which are driving E-commerce in Vietnam.

    Vietnam E-Commerce is one of the fastest-growing E-commerce markets in South East Asia. Cash on Delivery in Vietnam is the most preferred mode of making payments online.

    Vietnam has great potential to grow its E-commerce, especially after investors shifted attention from China towards Vietnam for the next manufacturing hub in the east. Vietnamese are digitally attuned, especially in urban parts of the country which is the main target audience for  E-commerce players, at least in their initial and growing phase.

    The online retail market of Vietnam is driven by major players such as Lazada and Amazon along with local players such as tiki, Vatiga, Zalora and others due to their focus on localized content.

    In 2014, the online retailing market contributed more than 65% in the overall B2C market of Vietnam. Constant innovation, launch of newer brands online, proliferation of affordable smartphones coupled with rise in broadband access have largely propelled market growth.

    The online retail market has been segmented into clothes, shoes & cosmetics, technology Kitchen and home appliances, books and stationery, CD’s & DVD’s, mother & baby products and others.

    The Vietnam gaming industry is the biggest in the entire South East Asia which gives its online gaming market an edge. Vietnam Online Entertainment & Services booking market has attained small but significant growth in overall e-commerce market.

    The concept of online entertainment has become prevalent since the rise in internet penetration in Vietnam, owing to the emergence of websites offering online booking of movie and event tickets as well as professional services.

    The rising share of online entertainment and services booking is supported by the fact that more players are entering the market with different business models to tap the customer base.

    Ken Research is a research and information service company operating with a network of partner firms across the US, Asia and Europe.

  • How should retailers prepare for this holiday season?

    How should retailers prepare for this holiday season?

    E-commerce presents enormous opportunity for retailers. Hong Kong’s 2014 sales value of Internet retailing, excluding tax, was HK$1.5 billion (Hong Kong Trade Development Council), and it is estimated to increase to HK$2.1 billion in 2019.

    As Singles’ Day, Thanksgiving and Christmas are just around the corner, it is time to start preparing for the holiday season as traffic spikes will affect web performance or even result in downtime.

    Retailers need to prepare to serve the needs of their customers through two primary activities that lead to revenue – the shopping phase and the buying phase, to capture additional spending during holiday seasons.

    Shopping
    As customers begin the process of searching for a product or service, there are a number of potential channels available to them, including emails from retailers, websites and online search.

    Retailers should focus their efforts on improving the personalisation of their emails to increase the likelihood of opens, click-through and eventually purchases.

    This will also push more consumers into the “shopped from this website before” group, helping to create a growing, loyal customer base.

    Success here is tied to customers’ abilities to access the content they need to move from awareness to consideration in a simple, fast and reliable way – regardless of content type, device being used, or location.

    Buying
    A cohesive purchasing experience across physical and digital channels (regardless of location, device type or size) is no longer the exception for advanced retailers. It is fast becoming the norm – table stakes for success.

    “Customers increasingly expect that all parts of their relationship with a retailer – loyalty programs, past purchase history, customer service and other interactions – will be connected, regardless of how and when they interact with the retailer,” according to 2015 Retail Holiday Planning Playbook, July 2015, National Retail Federation and Prosper Insights and Analytics.

    According to The Nielsen Global Survey of E-commerce conducted in 2014, Hong Kong consumers tend to be researchers when engaging in e-commerce.

    More than three out of five respondents will check out products in the store before purchasing them online (61%), or they will often look at products online before purchasing them in the store (60%).

    Hence, retailers need to ensure their digital experiences are optimized across devices, screen sizes, operating systems, browsers and locations so customers have a consistent, reliable experience wherever they are.

    Akamai’s Performance Matters report reveals that consumers participate in e-commerce research activity more frequently on mobile devices and tablets than on desktops in three key categories: searching for products, comparing prices, and reading reviews.

    The report shows that 56% of mobile users and 57% of tablet users search for products once a week or more, compared to 37% of desktop users.

    Additionally, 15% of mobile and tablet users search daily, compared to 5% of desktop users. In terms of price comparison, 52% of mobile users and 53% of tablet users compared prices once a week or more, while 34% used their desktops to do so.

    On the reviews front, 46% of mobile users and 50% of tablet users read reviews online once a week or more, compared to 28% of desktop users.

    The ability to quickly transition from reviewing product content, images, and reviews then into a buying decision phase increases the conversion rate. Cloud-based, globally distributed technologies are a key component to success in delivering an omni-channel experience that is content rich, fast and reliable.