An ever-changing operating environment …
It is a well-known fact that Singaporeans are some of the most well-travelled people in Asia- Pacific. The incidence of outbound air travel is also on the rise. According to the Department of Statistics of Singapore, outbound departures of Singapore residents by air rose from 6.08 million in 2011 to 7.77 million in 2016 and outbound travel by sea rose from 1.67 million to 1.7 million during the same period.
Old business models disrupted
With greater exposure to different service experiences afforded by international travel and the growth of e-commerce and digital services offering options and convenience, the consumers of today have never been savvier or more spoilt for choice.
At the same time, the local retail sector in Singapore, in particular the bricks-and-mortar stores, has been facing a period of slow down in recent years due to a host of issues ranging from tangible problems such as high rental fees and manpower challenges, to changing consumption patterns, as well as competition from a growing number of e-commerce retailers.
In the mid-1990s and early 2000s when travel was not as commonplace and digital platforms were still nascent, retailers could bring in goods from neighbouring countries or even concepts from the West and consumers in Singapore would be impressed by the new arrivals. The strength of a shop was in its ability to curate products and maintain relationships with consumers.
Today, thanks to low-cost carriers and rising affluence, consumers are able to go directly to the source markets, or sit in the comfort of their homes and wait for their purchases to be delivered at the click of a few buttons. Bricks-and-mortar retail businesses are facing a rude wake-up call.
The reality is that businesses are operating in an environment where transparency is high — consumers can share their interactions or experiences with businesses online, across multiple social media platforms. The impact of this could be far-reaching and even damaging to the reputation of the brands if external communications is not handled well. Given the viral nature of social media, brands cannot afford to ignore messages online.
Look into the entire customer journey
Against this backdrop, businesses will need to be cognisant of the fact that they are no longer able to rely on the strength of their product offerings alone. They will have to invest in understanding the end-to-end customer journey and realise that consumers can and will shop on their own terms. To compete with e-commerce players, bricks-and-mortar retailers could consider adopting an omni-channel strategy as this will open up more channels of interaction with consumers, thereby widening their addressable market.
Interestingly, in the Institute of Service Excellence (ISE) at the Singapore Management University’s recent 2017 Q1 Customer Satisfaction Index of Singapore study of the retail and info-communications sectors, we found that customers who shopped only at physical department stores registered lower satisfaction and loyalty compared to customers of the e-commerce sub-sector.
In contrast, customers of department stores who had experienced the stores’ digital platforms showed similar levels of customer satisfaction but higher levels of customer loyalty when compared to e-commerce-only customers. In other words, bricks-and-mortar retailers with omni channel capabilities are rewarded with higher levels of customer loyalty.
From the supermarket sub-sector, we also observed that customers who used self-checkout counters expressed greater satisfaction levels compared to those who frequented the manned cashier counters.
Meet consumers where they are
Offering retail customers more ways to shop, whether through online channels or self-checkout counters, could enhance the customer experience, thereby positively impacting customer satisfaction and loyalty. These challenges and opportunities echo the Retail Industry Transformation Map led by SPRING Singapore, an agency under Singapore’s Ministry of Trade and Industry, to encourage digitalisation and innovation to transform the retail sector. In fact, support is available for retailers to drive omni-channel adoption and improve customer experience in light of the shift towards evolving customer needs and purchase patterns.
For retailers who are keen to embark on omni-channel retailing, they should bear in mind that simply duplicating efforts across the offline and online channels may not be the best use of resources. What is important is the integration of both channels to ensure that they work together seamlessly and that the consumer is presented with a unified, consistent service experience.
To ensure this, there has to be co-ordination and alignment — not just from a brand execution perspective, but also within the internal communications channel across the online and offline teams.
Nothing would put the consumer off more than to know that service personnels in store are not equipped with knowledge to help them with a product or promotion they saw online prior to entering the store.
In order to thrive in the digital age, retailers will need to put themselves in the shoes of the consumer and start injecting a greater dose of empathy towards designing the end-to-end customer experience in their journey towards service excellence.