Q&A with Officers of the Philippine Retailers Association on Retailing

(From left to right, first row: Lim, Mendiola, Go, Ong. Second row: Chan, Tantoco, Santos, Lorenzo)

The Philippine Retailers Association (PRA) will be holding its 25th National Retail Conference and Stores Asia Expo in SMX on August 9-10, 2018. We asked some of the PRA officers to update us on retailing trends.

Q to Samie Lim, PRA Chairman Emeritus and Chairman of Blims Lifestyle Group : The biggest internet-only retailer in the Philippines claims to have 100 million hits a day. What is the state of store retailing in the Philippines?

A: While there has been a lot of buzz on the e-commerce lately, and the Philippines being one of the fastest-growing e-commerce market in Southeast Asia, the country is not yet dominated by online shopping, which shares only about 1-2% of our total retail value. Brick and mortar stores remain relevant in the Philippines as we see malls and retail businesses continue to expand. This is because it is in the Filipino culture that we like to go out with family and friends whether to eat, watch movies, or shop. Moreover, given the fact that we do not have a lot of other attractions in cities like parks or museums, the mall is usually the go-to place for Filipinos to hang out, which is a one-stop shop for all our needs from stores, food, and services—while staying comfortable.

In addition, countries where e-commerce sales are thriving, are considered cash-rich, time-poor societies. Meaning they have money to buy, but do not have a lot of time to do their personal shopping. Unlike in the Philippines, which is a cash-poor, time-rich country, we have a lot of time to do personal shopping, and during the process, it is often a “Filipino trademark” to enjoy haggling to get the best deals when shopping. For these reasons, we see that brick-and-mortar stores are here to stay.

Q to Jorge Mendiola, PRA Vice Chairman, and Director of SM Retail Inc. : Technology has been viewed as a cost-saver before, but it has now become a customer experience differentiator. What are some key technological trends we are seeing in the Philippines?

A: Technology specifically digital innovation plays a big role in retail. Not only through online shopping, but in brick & mortar stores as well, bringing in digital touch to customers’ experience can give huge advantage to businesses. While the Philippines may not be a leader in terms of digital innovations, as we credit this to big companies in developed countries, like the Amazon Go’s no checkout required or IKEA’s augmented reality app, we see in the Philippines that the internet and social media play big roles in helping people discover and patronize more retail businesses – whether it is a new place where they can eat or get reviews on a certain product they are planning to buy.

Chatbot which is artificial intelligence embedded in messaging apps is also utilized among key retail stores to make customer service more convenient. Financial technology are also becoming a trend in the country, with digital payments through QR codes or apps being utilized in major malls and retail stores. For entertainment in retail, augmented reality is also key factor in driving customers to their stores. While of course we see digital technology a big boost for business, retailers should not forget that retailing is customer service/customer experience and that at the heart of the business, the quality of service they provide the customers will determine their success.

Q to Frederick Go, PRA Vice Chairman and President of Robinsons Recreation Corp: Amazon started opening retail stores in the US way back in November 2015, acknowledging that pick up is cheaper than door-to-door deliveries and enabling them to provide the retail experience book buyers enjoy. Do you see online retailers eventually going into the physical store space as well?

A: Yes, online retailers have started going into physical store space as pick up points for their products. These online retailers are also joining bazaars/exhibits in the mall. A lot of customers who view products online go to the brick and mortar stores for a better shopping experience. Here they can try out the shoes, clothes, etc. before buying.

“Bricks and clicks” is indeed an emerging trend these days, especially for the younger customers segments. Shoppers need accessible locations that is currently offered by malls. It is more impactful/successful for brands to combine both online and offline sales channels. Brick and mortar stores still act as showrooms and venues. Customers can have better experiences in trying out products that they want to shop.

Q to Rosemarie Ong, PRA President and SEVP – COO of Wilcon Depot Inc.: What does your Outstanding Filipino Retailers award tell you about how to be an outstanding retailer?

A: The award seeks to recognize Filipino retailers who have epitomized the model of a successful retailer in terms of growth, creativity, and best business practices. It also distinguishes exceptional local retailers who exemplify ingenuity and creativeness that makes their business stand out in the ever-dynamic retail industry.

The Outstanding Filipino Retailers Awards encourage Filipino retailers to adopt world class standards and practices to become globally competitive.

Q to Ben Chan, PRA Director and Chairman of Suyen Corporation : How does an omni-channel retailer ensure brand loyalty?

A: Bench reflects Filipino traits and values that our customers can identify with. It is a brand that our customers grew up with and it has, in many ways, evolved alongside them. We understand our market’s needs, their habits, and their psyche, and we have become their go-to brand because we stand for much more than just fashion. Rather, we are committed to forming, maintaining, and developing a global lifestyle that is proudly local in its origins.

It is in understanding our customers that we send forth a unified message that goes across all channels: TV, print, and outdoor media, and these days, our presence and engagement in social media and e-commerce. Bench delivers consistency in the service that our loyal customers experience through whichever channel they use to interact with – be it in our physical stores, our e-commerce site, or the various social media platforms in which Bench is present.

Q to Donnie Tantoco, PRA Director and President of Rustan Commercial Corp.: Which retailer, local or foreign, has a customer loyalty program that is highly differentiated, and why?

A: The loyalty program that I think was the best is Tesco. I have not seen a loyalty program that good especially for a retailer selling basic necessities. It has one of the highest engagements because they really use a combination of data and human interaction to sincerely and passionately deeply understand their customers as persons, as clusters that have similar lifestyle, and they organize solutions that squarely meet their needs and aspirations.

This is unlike other mass retailers that claim to be tailoring their offer and service to specific but are actually doing one-size-fits-all (standardized for efficiency) approach. Tesco uses its loyalty to truly build a long-term relationship with its customers, and they are willing to pay the price, and take the risk to build and sustain that relationship.

Q to Paul Santos, PRA Chairman and President of Picture City: Many members of customer loyalty programs are also members of competitors. There is hardly any shifting cost. What are some best practices to be the preferred retailer?

A: At the outset, before even implementing a loyalty program, a retailer must determine the kind of incentive its customers best respond to. Whether it’s a discount, a premium item, exclusive buying opportunities, or some other reward, it’s a retailer’s responsibility to do its research and implement the conclusions of the same.

That said, however, its competitors are surely doing the same. As a consequence, customers are spoiled for choice more than ever. How does a savvy retailer continue to seize customers’ attention when everybody is offering a loyalty program, besieging them with incentives left and right? To do so, it must be diligent in performing 3 vital tasks: first, by diligently mining its data for insights and correlating that with actual customer behavior in and out of store; second, by crafting an appropriate response as a result of those insights; and last and most importantly, effectively communicating the same to its customers.

By asking the right questions, many insights can be obtained from all that data generated by a retailer’s point-of-sale system (POS) and loyalty programs. It is now possible to rapidly modify existing rewards offers in reaction to changing conditions. A loyalty program participant will appreciate offers that continue to add value to her busy life, and will most likely act on it. It is the astute retailer who frequently studies the information it has on hand to create useful offers, even commissioning one that’s tailor-made for certain consumer categories, thus making its rewards system stand out all the more.

Yet any course of action a retailer may take, no matter how perfect it may be, will be all for nothing if a loyalty program participant is ignoring of it. For a loyalty program to remain relevant to a consumer, it is essential that a retailer constantly interact with its members. Fortunately, today’s technology makes that job much easier to implement a dedicated channel of communication to them. For example, a system anchored on a smartphone app, supplemented by email and social media makes it possible for a retailer to catch a consumer’s attention from many angles. A retailer must not assume that a consumer will inherently act on the merits of an incentive offer. She must be reminded – frequently, if possible – of how that adds value to her life. A retailer who strives to maintain these links will remain top of mind.

Q to Lorenzo Formoso, PRA Vice Chairman and Board Advisor, Ace Hardware: What metrics must retailers pay attention to? Are there new metrics that retailers need to start paying more attention to?

A: Retail is a dynamic industry, and trends and metrics change through time. Before, the metric of retail is all about inventory management – its sourcing and inventory control to avoid stock outs. Lately it has been merchandising management – the advent of focus on fashion shops and other retail categories required the development of concepts and monitoring of trends.

Now, retailers start paying more attention to customer service and satisfaction. Technology has brought about ease in knowing the customer – what they need, how they want to be served and the kind of environment fit for each category.

The advancements in technology provided for more channels and forms of retail which made customer service the metric of retailers nowadays. Focus is now shifting to personalized, efficient and quick shopping systems.

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