Latest / The Retail Podcast / Five Things Friday: Consumer Mobility, Asian Loyalty Shifts, and Rapid Commerce Trends in APAC

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Five Things Friday: Consumer Mobility, Asian Loyalty Shifts, and Rapid Commerce Trends in APAC · The Retail Podcast

• 0:00
  Hello and welcome back to another awesome edition of Five
• 0:03
  Things Friday and Mr Reef Quail is back.
• 0:19
  Thank you, Alex. I've had a wonderful time in New
• 0:21
  Zealand skiing with my family. It's not something I've done for
• 0:25
  a long time, but it was a wonderful trip and I've come
• 0:27
  back a little bit euphoric actually, just having such a
• 0:30
  wonderful time with the kids and my wife was awesome.
• 0:33
  Sorry, I'm ready to go. I'm I'm glad to see you back and
• 0:36
  I'm glad to see you back in one piece.
• 0:38
  All limbs attached and none are broken.
• 0:40
  I am a little battled and bruised I must say.
• 0:42
  Oh, OK, All right. And for the sharp eye to
• 0:45
  listener or watcher, you'll see that Laura is missing.
• 0:49
  Unfortunately, Laura's had an emergency of a baby kind and so
• 0:53
  she's not able to join us today. But hopefully you should be back
• 0:56
  with us on the on the podcast next week.
• 0:58
  So Reef, why don't we start with you and just jump straight into
• 1:03
  this? But what's what's top of mind
• 1:05
  for you? I think there's a few things,
• 1:07
  there's a few things fighting around.
• 1:08
  I think the first thing I think as I've dug into this region and
• 1:13
  become and moved around, you could really see how mobile the
• 1:18
  consumer is in the shoppers in this region and all the time
• 1:23
  consumers are taking advantage of moment in time opportunities.
• 1:28
  In recent times, we've seen the weakening of the yen in Japan.
• 1:33
  And so what's happened is we've seen this amazing surge of
• 1:37
  tourism to Japan and Japan is quite a static market in terms
• 1:41
  of population. In fact it's shrinking, but
• 1:44
  we're seeing growth in retail in Japan and in major retail
• 1:48
  precincts 10 to up to 20% of retail spend is driven by
• 1:56
  tourism. Now that is mind blowing, right?
• 2:01
  You know, major retail precinct in Tokyo, maybe up to 20% of the
• 2:06
  of the retail spend is coming from a tourism dollar.
• 2:08
  That's a massive achievement for a retailer and that's a big
• 2:11
  portion. And then 20% could be a
• 2:14
  difference spend, you know, making a lot of money and and
• 2:17
  just breaking even, you know, so that's pretty, pretty
• 2:19
  interesting. Then you're seeing, the other
• 2:21
  thing you're seeing in the region is there is disparity
• 2:24
  between markets. So if you think about Hong Kong
• 2:28
  and Southern China as regions, as part of China, Hong Kong has
• 2:33
  the legacy of of price, whereas if you drive across the Causeway
• 2:38
  into Southern China, things are a lot cheaper.
• 2:42
  So what's what we've discovered is that people are prepared to
• 2:47
  invest time to find particularly commodities and things that are
• 2:51
  cheaper. So the traditional behaviour in
• 2:54
  southern in Hong Kong and southern China is to drive
• 2:56
  across the Causeway from Hong Kong to China on Saturday to buy
• 2:59
  petrol. Yeah.
• 3:01
  To buy groceries, to buy clothes, to buy anything,
• 3:05
  because it is just so much cheaper.
• 3:07
  More closer to home, because I spent a bit of time in
• 3:09
  Singapore, you know, there's a little bridge that drives from
• 3:12
  Singapore up to Malaysia to a place called JB or Java Hall.
• 3:16
  And so that area is also quite fascinating because Singaporeans
• 3:22
  now have their insurance covers Malaysian dentistry.
• 3:26
  So they cross the Causeway again into Malaysia and are buying,
• 3:31
  buying obviously services, dentistry, massage to to clothes
• 3:38
  and food and what have you. And, and driving back in.
• 3:41
  There's some contentious around petrol because petrol pricing is
• 3:44
  different on either side of the border too.
• 3:46
  But yeah, the law says you don't let it come back, leave with
• 3:50
  half a tank of gas. You've got to leave with a full
• 3:52
  tank of gas. I think.
• 3:53
  So there's though something. So people, I think over time
• 3:56
  will see those, those, there'll be equalisation around the
• 3:59
  region. But right now people are really
• 4:01
  taking advantage of currency and Tier 1 and Tier 2 markets.
• 4:05
  And they're not afraid to it's and they're and they're quite a
• 4:08
  vert about it, which is interesting.
• 4:10
  Yeah, when you think about the region.
• 4:12
  So that's by #1 and, and I think clever retailers, we'll start to
• 4:17
  think about taking advantage of these moments in time.
• 4:20
  The second thing that really interesting, I don't think it's,
• 4:23
  I don't think it's unique to Asia Pacific is, is the
• 4:25
  discussions around brand loyalty.
• 4:27
  We a few weeks ago we talked about Gen Z and we can never
• 4:31
  stop talking about Gen Z because in the next five years.
• 4:33
  Yeah. Excuse me, They'll be the
• 4:35
  dominant part of the retail spend, but these guys are also
• 4:41
  the most connected group. So they actually have the
• 4:45
  ability to find information about anything online really
• 4:49
  quickly. If they don't go through the
• 4:51
  research process, they almost feel a bit of buyer's remorse.
• 4:54
  Have they made the right decision?
• 4:56
  Right. Yeah.
• 4:57
  And you can see it with their politics.
• 4:59
  You can see it with their retail experience.
• 5:01
  So what you're seeing is this erosion of brand loyalty because
• 5:05
  they're so connected that they're making the, the the
• 5:08
  rational is overcoming the emotional part of brand loyalty
• 5:11
  because it becomes a very rational decision when when
• 5:13
  you've got so much information at your fingertips.
• 5:16
  It's the tension. You know, we in the car industry
• 5:18
  talk about do I buy a do I buy a sports car or do I buy a Volvo
• 5:23
  1's a rational decision and one's an emotional decision.
• 5:26
  You know, when rational and emotional clutter.
• 5:29
  It's very interesting. So what you're seeing is this,
• 5:33
  this supplementation of brands by manufactured loyalty
• 5:38
  programmes and in Asia and Asia Pacific particularly, loyalty
• 5:41
  programmes are enormous. You know, if you look at you
• 5:45
  rewards in in Hong Kong, it's, it's, it's the 711 loyalty
• 5:51
  programme owned by the DFI dairy farm group, DFI, 60% of the Hong
• 5:56
  Kong population participate in new rewards, which is a reward
• 6:00
  programme for 711. Now other store retailers
• 6:03
  participate in this programme, but it's come out of 711.
• 6:07
  The other week we talked about, we had Ryan, I talked about Ryan
• 6:11
  Kohler who is from Alpha Mart, who's CEO of Global Loyalty
• 6:14
  Indonesia. Now Alpha Mart is $0.15 in the
• 6:17
  dollar of every retail dollar spent in Indonesia.
• 6:19
  So that's a big country, right? Yeah, 60% of the revenue for
• 6:23
  Alpha Mart is driven via the loyalty programme, right.
• 6:25
  So we're talking about massive numbers.
• 6:28
  So all of a sudden loyalty programme is removing the
• 6:31
  emotional value and putting in the rational benefit, right.
• 6:35
  And so there is a, there is a change that's happening, right.
• 6:39
  And I think, I think Asians are in Asia in particularly, they
• 6:42
  are very rational people. Yeah.
• 6:45
  So therefore there, if there is a, a programme that drives that
• 6:48
  rational behaviour, then absolutely.
• 6:50
  That's the last point of that is that if there's not a loyalty
• 6:52
  programme, there's things that brands are doing which are
• 6:56
  rational benefits, which Dr loyalty as well.
• 6:59
  So we had Dion sung, the CEO of Love Benito speak and she talked
• 7:03
  about loyalty in the context of knowing every customer when they
• 7:06
  walked into the store into physical retail.
• 7:08
  Yeah. And they're doing things to
• 7:10
  create loyalty around the experience.
• 7:13
  So the, the one she called out was called the partner benches.
• 7:17
  Yeah. Which was fascinating, you know?
• 7:19
  So you've got. Yeah.
• 7:21
  So there's not a loyalty programme per SE, but what wife
• 7:24
  or girlfriend wants to be interrupted by their husband or
• 7:27
  boyfriend cutting their shopping exposition short because they're
• 7:30
  having a whinge? So they put these partner
• 7:33
  benches outside the store or in the store where the husband or
• 7:37
  boyfriend can sit on their with their phone or their gaming
• 7:40
  console and not rush the shopping experience.
• 7:44
  Right. Says there's other ways to build
• 7:46
  loyalty, which is a tangible benefit from the brand, right?
• 7:50
  So it's which is not a programme.
• 7:52
  So you know, this loyalty, this tangible piece of loyalty where
• 7:56
  where there's a rational reward as opposed to an emotional brand
• 8:00
  connection, which is it seems to be eroding.
• 8:03
  That's there's a real changing of the guard.
• 8:05
  He would reach out, I think. And I think Asia Pacific's are
• 8:08
  particularly Asian, Southeast Asian, N Asian countries.
• 8:11
  Participation in loyalty programmes really reflect that.
• 8:13
  Now very interesting, there's very little for me to to to
• 8:16
  comment on that because it it's just the the demographics of the
• 8:20
  region plays into a lot of the research about, you know,
• 8:24
  loyalty being non existent about shoppers going with what's hot
• 8:29
  for that generation. You know, people that are
• 8:32
  blindly loyal irrespective of many think and I'm well, there's
• 8:36
  not much stake here out there so I can't really comment on.
• 8:39
  It although I, I, I, you know, it's very funny.
• 8:41
  I had a I've been, I flipped. I was a Qantas Platinum frequent
• 8:45
  flyer. I'm.
• 8:46
  Australian, he changed. And I went and Singapore
• 8:49
  Airlines basically were our partner and Qantas were have
• 8:52
  just have have lost their way in many cases.
• 8:56
  Yeah, I've had. And tried Singapore Airlines
• 8:58
  because they were a partner with the show.
• 9:00
  I had such a wonderful experience with them.
• 9:02
  I went that's it change. And as a Gen XR that's quite a
• 9:06
  big step to take. I'm like.
• 9:08
  That's that's, that's a very big thing.
• 9:11
  I know to to to bust away from your from your airline is not
• 9:15
  that. Not I mean, that's the pushing
• 9:18
  ground, that's. For a genexa.
• 9:20
  So there you go. That's incredible.
• 9:22
  My few are based around some of the changes and and trends that
• 9:27
  I'm that I've seen or noted. One being that Korean, everyone
• 9:31
  loves Korean products, Korean music, K pop, we all know.
• 9:35
  But now we're seeing these huge powerhouses such as Mussinsa,
• 9:40
  this sort of online marketplace that is huge in Korea and now
• 9:45
  expanding into physical stores across China and one of my
• 9:49
  favourite cities in Shanghai and looking at how they're going to
• 9:52
  grow their business is setting up their logistics, setting up
• 9:56
  all of the infrastructure needed to expand.
• 9:59
  So I think it's really interesting again, regionally,
• 10:03
  seeing how you do have these cultural powerhouses and it's
• 10:08
  not just in popular culture or fashion here, coupon being a
• 10:12
  marketplace expanding out throughout the region.
• 10:15
  So you're seeing these, I don't know if you've got a specific
• 10:18
  commentary on it from mine. It's just an observing element,
• 10:21
  right? I've noticed this and I find it
• 10:23
  interesting because again, when I, when I apply it to local
• 10:27
  knowledge, it's what we're so used to Amazon doing this and
• 10:31
  and other marketplaces. And I know Laura's always
• 10:34
  talking about marketplaces. But I think it's £2 I think.
• 10:37
  I think with those guys though that, and I think you got to
• 10:40
  start with, you made the point. Korea has the product, Korean
• 10:42
  culture, fashion, beauty, top, they have culture, right, which
• 10:47
  means that that's a powerful pace.
• 10:49
  And so being able to export that route right now is really
• 10:53
  appealing. Coupon is, you know, well
• 10:56
  connected with the Korean market, obviously, because it's
• 10:58
  a Korean marketplace. So on the back of really strong
• 11:02
  product, they're able to expand across the region, you know, and
• 11:06
  I think the third thing is I think it's also a bit of a
• 11:08
  reaction in Korea because probably three years ago,
• 11:12
  probably just after COVID, even, you know, Alibaba dropped a
• 11:15
  billion dollars in infrastructure into Korea.
• 11:18
  Wow. And so that really upset the
• 11:21
  apple cart with Korean retail because they were going, holy
• 11:25
  cow, what are we going to do? These Chinese retailers are
• 11:28
  going to come and take everything.
• 11:29
  And there was a big lobbying of the government to put
• 11:32
  protectionist mechanisms in play.
• 11:34
  You know, the horse had bolted by that time.
• 11:36
  But I think, I think this is this, this, this, this career
• 11:40
  going out and exporting is very much a reaction to the inbound
• 11:44
  that's been coming in from from particularly China.
• 11:46
  On China, and this is just a game observing rather than
• 11:50
  comment, commentating on, on the political landscape.
• 11:53
  But when you look at Chinese growth, you, you see or you will
• 11:57
  notice that domestic demand has not grown as fast as they would
• 12:02
  like, but now it's a national priority or strategic priority.
• 12:06
  And I think the commentary here is how for me, it's interesting
• 12:10
  whenever I see coalition's come together for this greater good
• 12:15
  and the greater good is how do we get our consumers to buy
• 12:18
  local and to buy national. There are these challenges that
• 12:22
  still need to be worked out. It was an interesting
• 12:25
  observation from my perspective. Yeah.
• 12:27
  And I think, I think, I think that's the things that on this
• 12:30
  point is this is a shift in economic policy from the Chinese
• 12:32
  government as we know. But I think that if you think
• 12:35
  about big retail, big retail conglomerates, their biggest
• 12:38
  customers is probably their own employees.
• 12:40
  Yeah. So you think about China.
• 12:42
  China has been very spoiled. They don't need international
• 12:44
  product. They've got everything can be
• 12:45
  made domestically in China. Yeah, it's actually about
• 12:48
  creating the demand to to actually because they've got the
• 12:52
  population to the same, you know, the electric car market or
• 12:56
  the the lower in manufacturing. But I think at the end of the
• 12:59
  day, this is a shift in a shift in policy in the Chinese, in the
• 13:04
  Chinese domestically. And I think the Chinese they
• 13:06
  want to they what they want them to consume.
• 13:08
  And it hasn't always been a consumer market like some of the
• 13:11
  Western countries. So this is a shift in mindset.
• 13:13
  And then flying over to India, which again, every time I do an
• 13:16
  Indian story, sort of blows my mind.
• 13:19
  You know, again, what we're used to seeing Tata in so many
• 13:23
  different brands, but obviously Tata also makes jewellery.
• 13:27
  And what's the thing here? If we look at European brands
• 13:30
  such as Pandora, I was looking at their delivery.
• 13:33
  The what, what, how long does it take for delivery in the UK?
• 13:36
  And it's about one to two days in.
• 13:39
  In India, one of the highest new categories that sort of booming
• 13:44
  in quick commerce is jewellery and jewellery to be delivered in
• 13:49
  minutes, in 15 minutes or under which I was like, I know you've
• 13:54
  got a specific use case that you've had experience of.
• 13:58
  But again, these are sort of these little waves, little
• 14:01
  echoes of trends that I think when we look at growth
• 14:05
  opportunities across the world. You think, OK, maybe some some
• 14:08
  categories are underserved from an infrastructure perspective,
• 14:13
  but we're here, we have one of them, the main brands in India
• 14:17
  offering under 30 minute delivery, which I just thought
• 14:21
  was incredible. I don't know if you want to
• 14:22
  Share your story. Yeah.
• 14:24
  Well, I think, I think just adding to this, I think the
• 14:27
  quick commerce piece, I think it's, it was led by grocery.
• 14:30
  And when, when grocery takes hold of a retail e-commerce
• 14:33
  category, it the tide rises all by so it drags everyone along.
• 14:38
  So grocery is a is a routine purchase as opposed to buying
• 14:41
  jewellery, which is more sporadic.
• 14:43
  But I think if you put this quick commerce concept concept
• 14:46
  together is a low wage cost, high density living, big
• 14:49
  populations in in an urban area. You could play it across
• 14:52
  anything now because Indians are so used to it and are kind of
• 14:55
  happy to pay for it. The use case we talked about was
• 14:58
  that the conversation I shared with you around I had lunch with
• 15:03
  in I think November, December last year with the CEO of the
• 15:06
  Retail Association of India and his wife while we're in Sydney
• 15:09
  visiting for the cricket. And we had, there was a good bit
• 15:11
  of banter there. I can tell you that right now,
• 15:12
  but we won't talk about that now.
• 15:14
  But what's really interesting was I said I was asking where
• 15:18
  could quick commerce stretch to? What are the categories?
• 15:21
  How diverse can it get? Jewellery was the costume,
• 15:24
  jewellery was the category. So Kumar's wife was saying,
• 15:28
  well, it was our niece's birthday lunch that day on on a
• 15:32
  Saturday and said we got up in the morning, we went for a walk,
• 15:36
  I got online, I bought a whole bunch of costume jewellery.
• 15:39
  It arrived in half an hour all wrapped and then we went to
• 15:44
  lunch. So wow, you know, they're like.
• 15:47
  It's incredible. This is not reading it out of
• 15:49
  this. She's like, this is they're
• 15:50
  living it, which is just, I'm intended just to go to India to
• 15:53
  buy stuff that comes really quickly.
• 15:56
  Imagine that it's like, it's just cost, like you thought the
• 15:59
  jury. The day I'm going, I can tell
• 16:00
  you a real story of someone I know who does it all.
• 16:02
  The time, yeah, No, exactly. I mean the other thing here is
• 16:05
  the platforms that are enabling this that you can.
• 16:09
  See where Swiggy, yeah, Swiggy isn't amazing, but Swiggy is
• 16:13
  definitely the one, you know, they're they're the ones who are
• 16:15
  doing amazing things and really pioneered quick commerce in in
• 16:19
  India. Fantastic.
• 16:20
  So, OK, I think obviously without Laura, we're a little
• 16:23
  bit lost, but. We're almost, we're almost
• 16:26
  rudderless, I would suggest. I felt like I'm skipping.
• 16:29
  It's almost like me snowboarding down a mountain with actually
• 16:31
  any directional control, which is.
• 16:33
  Forget the thing, she just insults us anyway.
• 16:35
  But you. Stupid boys.
• 16:38
  We've got so many floors, I'm pretty much used to it.
• 16:40
  It's OK. And as I always like saying on
• 16:42
  that bombshell, that brings us to the end of our Five things
• 16:45
  AIPAC edition. OK, Thanks, Sophie.
• 16:48
  Have a wonderful week. OK, thanks.
• 16:49
  Bye. Bye.