Traditional retailers need digital transformation to keep up with consumers
In the digital era, everything seems to move at a faster pace. To meet the needs of today’s technology-savvy consumers, suppliers, retailers, and companies in the traditional retail sector have been seeking to transform themselves.
“Believe it or not, consumers in China they are fully digital and a lot of brands and retailers are sort of analog,” Paul Wong, Vice President of Fung Group Explorium, said during a Fireside Chat on TechNode’s ORIGIN Disrupt stage at SWITCH (Singapore Week of Innovation and Technology).
Fung Group is a Hong Kong-based supply chain management company that covers a wide range of businesses from product design and development, raw materials and factory sourcing to distribution. The company work with a network of 15,000 suppliers globally.
With a rich history in retail, the company has witnessed how technology is rapidly changing the sector and that digitization is key for these traditional retail companies to survive in the fast-paced economy. The company established its omni-channel retail lab Explorium in 2015. One of the main purposes of the Explorium lab was to conduct retail experiments like how retailers can bring consumers into the physical stores using the WeChat channel and test new technologies in physical retail space, Wong said. For example, the lab conducted an 18-month long experiment, which they used Bluetooth tracking devices to collect data such as customers’ movements in store and how much time they spent there.
Wong said from the experiment they learned how retailers can better engage with customers in the physical space, but also they realized how much of the supply chain processes—from sourcing all the way to retail—needs to be improved.
Startups as catalysts
Suppliers and traditional retailers, especially those in China, are starting to undergo a digital transformation, but the consumers are moving at a much faster pace.
Wong said that a lot of the times companies take the typical route—trying to improve their ERP (enterprise resource planning), CRM (customer relationship management), POS (point-of-sale) systems—but the way they go about it is time-consuming and inefficient. To speed up the processes, Explorium works with incubators to bring the startup ecosystem into the equation.
With the new technologies, companies can now optimize their supply chain not just for cost but also for speed.
“Li & Fung is helping the retailers and brands develop their products digitally,” Wong said. For example, through their digital platform, their partners can now share product samples with buyers and receive quick feedback about the changes they need to make. “Instead of months now it takes days to develop a sample because everything is digitized.”
Shortening the lifecycle of supply chain is crucial to bringing more relevant products to consumers. A clothing brand, for example, has to be able to keep up with the latest fashion trends.
The data game
There is no doubt that the future is going to be data-driven. Companies that can manage data and make sense of data will have the upper hand. Wong said offline retailers and traditional retailers have to learn how to capture data along the supply chain and how to deploy AI and other new technologies to optimize and shorten their processes.
While many non-digital native retail companies still struggle to integrate with emerging technologies, the rise of O2O (online to offline) may serve as a positive push. Wong said they are now seeing a lot of tech-savvy operators, like Alibaba and JD.com, making their forays into offline retail, which are helping to speed up the transformation for the traditional retailers.
“We rely on the partners to become more data-driven,” Wong said, the supply chain will be digitally connected so if the suppliers and retailers are not tapping into big data, then it won’t matter how innovative the company itself is.