Hey, 2021 big spenders
The series of plant thefts in protected areas in September last year was but another indication that Filipinos under community quarantine had been hit by a plant craze. Google data confirm this: searches for plants in the Philippines more than doubled in 2020 compared with the previous year.
This is one piece of evidence that Southeast Asia is undergoing swift and dynamic changes amid an imminent retail industry boom, says a report from Zalora, an e-retailer based in Singapore. The report, which draws on research from Zalora’s 50 million monthly customers, identifies trends shaping the consumer-goods industry in the region, and provides insight into the future of the industry. It shines a light on important shifts in lifestyle and spending brought on by major factors such as the COVID-19 pandemic.
The report noted, for example, that because of the still-raging pandemic, fashion retail in Southeast Asia had changed drastically.
“What once was a thriving and dynamic ecosystem is now marred by disrupted business operations, forcing radical transformations in consumer behavior and values,” the report adds. In 2020, the pandemic unexpectedly disrupted the economy and daily life, accelerating and creating certain megatrends in the region, where most people are under the age of 30.
Here are some of the major trends which the report says will drive Southeast (SE) Asia’s coming retail boom post-COVID:
Perhaps the most glaringly apparent trend is the digital shift spurred on by the pandemic. As the region went into lockdown in the first half of 2020, brick-and-mortar shops were forced to shutter and entire businesses closed down—in the Philippines alone over 2,000 establishments went out of business.
What followed was a huge move online: the Philippines saw a 77-percent year-on-year increase in online shopping in June, according to data from Google. Thanks in part to the pandemic, many Southeast Asians completely skipped the “desktop phase” and became mobile users, comments Alessio Romeni, Zalora’s chief revenue officer.
With this technological advancement came other phenomena, such as the wider use of e-wallets in the region. Though Filipinos still prefer cash on delivery, digital wallets and bank transfers are gaining traction in Indonesia and Malaysia—even hawker stalls in Singapore are adopting online payment methods.
The region’s online economy is expected to be worth $300 million by 2025, more than thrice the 2018 value, according to Bain & Co., a consultancy.
Apart from the obvious link between the plant thefts and a demand for home decor, there are a few other trends which began during the height of the pandemic. Children’s wear was one surprise, says Alex Lin, a senior director at Abercrombie & Fitch. “Parents are looking for fashionable yet comfortable options for when their kids are at home doing virtual schooling, or Zoom parties.”
Under lockdown, people across the region also began to invest in activewear and fitness equipment to replicate gyms in their own homes. Google searches for resistance bands in the Philippines soared by 4,328 percent in mid-2020. Fitness tops, sports shoes and yoga mats are among the items in great demand today.
Southeast Asians are also beginning to invest in self-care and personal grooming. “As people spend more time at home, people are spending more time pampering themselves,” says April Hu, Shiseido’s regional e-commerce manager, noting that activities like hair care and face masking are now part of self-care routines for many.
Post-pandemic customers will be more informed, discerning, and cautious than ever, says the report. One focal point will be safety, of course, and many customers will continue to avoid malls—businesses can adapt only by embracing an omnichannel approach, offering offline and online services.
At the heart of the more informed consumer is increased attention to sustainability. Ninety percent of shoppers in the region polled by Zalora showed interest in buying sustainable products.
Innovations like vegetable leather and biodegradable fabrics enabled businesses to offer more eco-friendly items, and results are showing: two in three Filipinos say they would pay 5 percent more for sustainable skincare products. Another interesting trend is growing interest in second-hand shopping. As consumers look for more sustainable products, the resale market could overtake the fast fashion market by 2030, says a report by Thredup, an online thrift store. Shoppers now are looking for value deals and cheaper products, and this helps explain the interest in thrift shopping.
When shopping moved online, so did events and advertisements. Retailers across Southeast Asia invested vast amounts in influencers, localized campaigns, and “shoppertainment”: online shopping games and see-now-buy-now events. Nike’s modest wear campaign in Indonesia and Malaysia last year was a success because it engaged Muslim customers looking for activewear.
More memorable are online shopping festivals in the likes of 9.9, 10.10 and 11.11. These events are successful at getting customers to spend more by reducing prices. “It’s something the customers like so much, and the players have executed so well that it makes sense to participate in these events throughout the entire year,” Romeni thinks. Aside from the prospect of discounts, people are lured into these events by the fear of missing out.
Millennials and Gen Z, who compose a majority of Southeast Asia’s population, are poised to drive the post-pandemic retail boom. These are progressively affluent and tech-savvy generations, with 79 million people predicted to gain affluence by 2030, says Boston Consulting Group, a consultancy. What makes this group unique is unlike their peers in other parts of the world, a large number of them still live with their parents. This frees them from financial burdens like bills and rent, and gives them higher purchasing power.
There’s one thing that brings these shoppers across the region from different cultures and identities together: they’ve got money and they’re ready to spend it. —CONTRIBUTED
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