Stress shopping

Revenge may be the theme for just about any activity nowadays after pandemic restrictions were lifted. Filipinos are rebooting their travel plans, once again party hopping, and visiting their favorite dining jaunts, or at least those that have managed to remain open.

With Christmas Day just a little more than a week away, the season’s merry-making mood is being ramped up by colorful street lights on major thoroughfares and on the facades of most commercial establishments.

Most department stores are all dressed up, hoping to entice people to step in and buy. The big crowds are still not coming in for their holiday shopping, although storeowners are still hoping that the shopping rush will happen this weekend through to next week until Christmas Eve.

The noticeable absence of shopping crowds can be attributed to more Filipinos moving to online shopping. Visiting a brick-and-mortar shop has become a less preferable option after thinking of the inconveniences of braving traffic, finding parking, and queuing to pay, or even the possibility of getting COVID-19.

Inflation, however, is also playing a big role. In our consumer-led economy, imported goods have become more expensive because of the weaker peso. Locally manufactured goods are likewise affected by high oil prices.

Unfortunately, this inflation that’s hitting almost all countries, including the Philippines, is peaking right during the Christmas holidays when wallets are supposed to open up. Revenge spending is definitely not on top of households’ priorities, especially after two years under pandemic restrictions.

Still, Filipinos will be giving gifts even if these are “tokens” compared to previous years’ spend. It’s the though that counts, right?

Omni-channeling challenge

If consumers are stressed with shopping these days, retailers have their own monumental concerns as they enter what seems to be a new epoch in the industry. Two years under a pandemic has forced many to accelerate their move to online channels, but it’s only now when economic activity is returning to normal that retailers will be able to get a better reading of what’s to come.

While most retailers agree that an omni-channel approach is the way to go, the process of fine-tuning such is only starting. For example, just how much of an online presence should be pursued, and how will this affect any brick-and-mortar presence?

New challenges abound in coming up with retail pitches on many channels, platforms, and devices available, which consumers incidentally are also learning to use. Customers want to “experience” a product offered online, and brands are developing sensual approaches that entice their target audience to make a purchase.

Retailers realize that expanding customer reach will depend on how quickly they are able to move from multi-channel retailing, where sales pitches are tailor-made individually for unique channels or devices, to omni-channeling, where their campaigns are seamlessly integrated on all possible platforms.

Brand loyalty has become even more important. Thus, building brand value through solid reputable means has come in more creative ways. Product endorsements are no longer the playground of entertainment personalities; more vloggers with immense following are given equal importance.

More advertisements formerly tailored only for print, radio or television are being produced to air on digital sites, which is also causing major shifts in the behavior of advertising agencies and even traditional media channels.

Retailers are now keenly studying artificial intelligence, augmented reality, and virtual reality as new tools to sell their products, perhaps even without customers going to a brick-and-mortar store to actually experience an item of interest.

More investments are being planned to scale up e-commerce capability, and the backroom information technology to unlock customer preferences will guide retailers where to put their money in the medium- and long-term.

Reevaluations and repositioning

The ramifications of this quantum leap in e-commerce are also being felt in other business areas as well.

In malls where brand retailers occupy more than 50 percent of the space, this could mean major repositioning of the mall experience, perhaps emphasizing more on the dining, entertainment, and health and fitness experiences, and less on shopping.

This comes as retailers are seriously reevaluating their brick-and-mortar investments. The lower sales growth from such outlets compared to online channels will ultimately decide the extent of commercial in-store spaces needed to keep them profitable.

Multi-vendor online sites like Lazada, Shopee, and eBay have not only duplicated the department store concept popularized by SM, but have even become better at offering a wider range of products that are at times way cheaper.

Advertising companies that formerly relied on big-budget ad productions are enhancing their offerings with campaigns that cater to online shoppers, focusing on drawing out detailed preferences from a wide-range and highly segmented profile of customers.

The carrier business, which is also in a state of transition, will likewise depend on the direction and growth of e-commerce. Options for more B2B joint ventures remain sketchy as carriers struggle with profitability under a B2C environment.

Uncertainties

As more aggressive plans are being developed by retailers next year, apprehension over another economic downturn continues to be a real threat to growth.

Recent inflation data in the US points to less aggressive rate hikes by its Federal Reserve, which may be a good thing. But the possibility of many European economies heading for negative growth next year could cancel the effect of a tempered inflation.

The retail industry is well too aware of what dampened consumer demand can do to all its plans no matter how well thought out. It could turn out to be a long transition phase for them stretching beyond 2023.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.