Retail business leaders in Southeast Asia see digitalization as the driving tool in returning to growth in the post-Covid-19 era according to a study by Ernst & Young.
The responses reflect a slew of physical store closures as online platforms are increasingly becoming the key sales avenue for retailers during the pandemic.
Bit, while digitalization is a very visible option in current times, an online strategy alone may be insufficient for retailers to stay profitable or successful in the long run, warns Ernst & Young ASEAN consumer products & retail sector leader Olivier Gergele.
“We are seeing a fundamental shift in the retail industry that demands a rethinking of business and operating models.”
According to the survey, 59 percent of retailers intend to digitalize their business within the next year, while 23 percent are looking at restructuring their businesses; 11 percent are seeking an exit due to non-performance, and 3 percent are intending to merge with another retailer.
The majority of respondents (57 percent) saw improving topline performance through online sales and market listings as a clear and immediate priority, while 40 percent of those surveyed admitted to facing resource constraints. 61 percent of retailers surveyed are turning to work capital optimization to improve cash flow.
“This crisis is fast-evolving consumer’s preferences, behaviors and values,” said Gergele. “Online retail penetration is expected to grow at an accelerating pace, and the industry’s economics will shift with e-commerce gaining a fair share of the profit pool.”
The results of the survey suggested retailers in the region should focus on five key areas during the upcoming period: driving an omnichannel strategy; driving supply chain resilience; expanding offerings; engaging in timely M&A; and driving agility.
“From what we have seen in previous crises, retailers that embrace change are more likely to emerge as leading businesses while those who persist in conducting business-as-usual may fall behind,” said Gergele.