Is hybrid or ‘phygital’ retail the way to go? How can retailers improve experience in an increasingly digital economy?

Evolving shopper behavior in Asia Pacific, especially during recent festive shopping late last year and early this year, has provided useful insights into how retailers can improve shopper journeys and customer experience in an increasingly hybrid or ‘phygital’ world.

On the heels of Criteo’s latest Asia-Pacific Shopper Story Survey, DigiconAsia caught up with Kenneth Pao, Executive Managing Director, Asia Pacific, Criteo, for more insights into shoppers’ behavior, omnichannel strategies in the ‘phygital’ retail arena, and what it takes to improve the experience in today’s shopper journeys.

Kenneth Pao, Executive Managing Director, Asia Pacific, Criteo

Based on observations from recent shopping festivals like CNY, 11.11 and Ramadan 2021, how is shopper behavior evolving?

Pao: It’s been interesting to observe how more consumers in the region are now attracted to double-day sales beyond the conventional 11.11 and 12.12 sales.

While prizes and sales campaigns for single day sales festivals like 11.11 and 12.12 are becoming increasingly attractive – from million-dollar celebrity endorsements to million-dollar prizesCriteo Product Insights finder found increased sales spikes in the Asia-Pacific region across other double-day sales in the year too, as a result of the rise of other double-day sales campaigns during 2.2, 3.3, 5.5, 6.6 and so on.

Keeping this is mind, retailers need to focus on developing a sustained momentum throughout the year, rather than just relying on driving huge sales campaigns during the year-end period like 11.11 and 12.12 to drive revenue.

Secondly, while app sales are on the rise, there has also been a gradual decline in web sales as more users in Asia become increasingly mobile-first.

According to Criteo’s 2022 Chinese New Year product sales data in Southeast Asia, there was a strong increase in purchases only for app sales, while there was an overall decline in web sales across all product categories. This trend was mirrored in the 2021 Ramadan sales data, where mobile sales saw the largest lift throughout the Ramadan period, marking a 107% increase in sales at the end of the Ramadan period on 12 May 2021. As more consumers in the region choose to make in-app purchases over web, it is important for retailers to invest more on enhancing their mobile app customer interface and user experience to aid sales conversion.

Lastly, more consumers in Southeast Asia are embarking on shopper journeys across various  digital channels – from retailers’ websites to search engines and apps. To stay differentiated with personalized engagements, retailers should look at a full-funnel advertising campaign to ensure relevant ads are targeted at every step of the consumer’s journey.  

Are there any observable differences regarding consumer trends or shopper habits across Asia-Pacific markets – including Australia, Japan, Singapore and South Korea?

Pao: According to data from Criteo’s Shopper Story Survey, more shoppers in Asia-Pacific are adopting a hybrid path-to-purchase. While most of Korea, Singapore and Australia-based shoppers claim they browse products online before purchasing them in a retail store, Koreans (7 in 10) are most likely to make purchases online after seeing the product at a retail store in comparison to the other regional markets surveyed.

In addition, Japanese shoppers are unique in that they are most certain about the exact item that they’d like to purchase. Only 1 in 5 would look for products via search engines, with 2 in 5 say they would visit the retailer/ brand websites directly for products they want to buy.

When it comes to discovering new brands and products via advertisements, Singaporean shoppers across age groups are most likely to explore new brands and products through sponsored ads. More so than any other shoppers across the region as well as the Asia-Pacific average.

Shoppers in Asia-Pacific are also leaving more reviews now than ever​, ​with 60% claiming they have recommended a company to someone based on a good experience they had and 61% claiming to have left a positive review in view of a pleasant customer experience. Japanese shoppers are least likely to leave reviews, with only 37% recommending a company and 43% leaving a positive review. While Korean shoppers are most likely to recommend a company (77%) and leave a positive review (79%) from pleasant experiences.  

When it comes to important factors that can encourage purchase beyond free shipping and discounts, most shoppers in Asia-Pacific reported their preference for retailers to have a good range of products on the website/app, as well as the ability to purchase online and pick up their items in the store. Australian shoppers on the other hand, value quick and easy checkouts (87%) most, apart from free shipping and discounts.

What are your views on the rise of social media video advertising, live streaming, and micro-influencers in Asia?

Pao: Asia-Pacific is set to lead the world in Influencer Marketing platform spending, surpassing North America to become the world’s largest influencer marketing market by 2024. In addition, close to 80% of the influencers in Asia are micro-influencers. This popularity of micro-influencer culture implies that more users in Asia-Pacific are dependent on like-minded consumers that they trust to help guide their purchase decisions.

As this trend continues to grow, brands should invest in a more robust influencer engagement strategy and start leveraging first-party data collected via those channels to strengthen their engagements with the addressable media audience.

As video streaming continues to gain popularity in APAC and brands are funneling more ad dollars to video advertising, how can brands break through the clutter and stand out?

Pao: Brands first need to understand consumers’ video consumption behavior in order to develop the right video advertising approach. According to Criteo’s State of Video & Connected TV survey, the top channels for video streaming in Asia-Pacific include YouTube (64%), Netflix (55%), and Amazon Prime Video (30%), with a key motivation for video streaming being the flexibility it offers for users to watch anytime and anywhere.

In terms of ad sequence, Asia-Pacific consumers prefer if video ads play after the video content (26%) instead of before (19%) or in the middle of the video content they are watching (14%).

Consumers also prefer interactive and personalized ads. Hence, with three in four viewers in Asia-Pacific use the same email to log in across all video streaming platforms, websites, and apps, it’ll be advantageous if brands seek the right advertising partner that can help connect viewing habits across channels and devices to specific online shopping activities using additional commerce data.

Do you see hybrid or ‘phygital’ retail as the new normal, especially post-pandemic, and (regardless of what the new normal is) what would be useful strategies for brands in the new business environment?

Pao: Our recent survey of regional customers, such as our Asia-Pacific Shopper Story Survey, have revealed the importance of physical channels either in creating a more unique and festive shopping experience, or completing the purchase journey that might have started online.

We see this especially among the younger generation. During the last year-end festive period, Gen Zs especially reported their intention to spend more time shopping for gifts in-store. This could be attributed to their desire for experiential retail experiences, something that online shopping cannot replicate.

On the other hand, we must not forget the importance of online channels in driving the discovery of new brands and products, and kickstarting the purchasing journey for consumers.

Thus, a strong omnichannel strategy will be crucial for brands to capture as much market share as possible, amid the increasingly competitive retail landscape.

This includes keeping online transactions smooth and convenient and enhancing consumers’ physical store experiences to close the loop on their purchase journey. Enabling constant discovery of similar products across ‘phygital’ channels to keep their brand and offerings top of mind with consumers will also be an important part of this strategy for brands.