IDC InfoBrief APRIL 2021 Retail Digital Pulse Asia/Pacific IDC Doc. #AP241238IB Sponsored by EXECUTIVE SUMMARY This IDC InfoBrief The retail sector has undergone dramatic changes The adoption of use cases and technology shows The current digital pulse of Asian retail analyzes Asia’s in 2020. The shift to digital has accelerated, with marked differences: is low, with only 2% of retailers at Stage retail digital pulse, many organizations speeding up their digital 4 (digitally resilient) and 55% at Stage 1 and identifies the transformation journey. As we move into a post- Use case adoption among retailers shows (digital participant). There is variation use case focus areas COVID-19 operating environment, we have seen that for Stage 1,2 and 3, the focus is on the across markets and segments with, and technology some retail businesses survive and thrive while theme of marketing/customer acquisition. respectively, Australia and pure online adoption of retailers others are still struggling. across the four The orientation towards merchandising, players being the most advanced digitally. different stages of To understand the current state of retail digital logistics, and fulfillment is seen across maturity, with the transformation, Google Cloud commissioned all stages. aim of providing IDC Retail Insights to conduct research into a framework to Asia/Pacific’s retail digital pulse and develop a Stage 4 organizations stand out in their assist retailers in Google Cloud Retail Digital Index. adoption of omni-channel commerce developing their and product lifecycle management (PLM). Specific digital roadmap for IDC analyzed 1,108 retailers across seven use case adoption shows a much greater focus the future. countries (Singapore, Hong Kong, Australia, South on personalization, and product discovery Korea, India, Thailand, and Indonesia) and across and search. eight different segments (online, drugstores, specialty shops, convenience stores, department Technology implementation for Stage stores, restaurants, supermarkets, and 1, 2, and 3 organizations have focused hypermarkets/big box stores), and investigated on the base technologies: security, customer their digital maturity across five dimensions – engagement platforms, collaboration platforms, strategy, people, data, technology, and process – content management applications, and analytics. to arrive at a digital pulse score. In analyzing the factors that were hindering Asia/ The Stage 4 difference is the adoption of Overall, of the five dimensions that make up Pacific retailers’ adoption of digital, having a digital “as-a-service” technologies: Software as a the digital pulse, strategy and process are the transformation roadmap in place surfaced as the Service (SaaS), Infrastructure as a Service highest ranked, with technology at the bottom. top challenge. (IaaS), and Platform as a Service (PaaS). 2 IDC InfoBrief The Digital Pulse of Asian Retail Retail Challenges Asian Retail Today Retail is one of the sectors most Digitalization Is Key MARKET Which one best describes where your organization currently is? impacted by the COVID-19 pandemic. to Success For businesses to continue operating, OVERALL 38.6% 9.3% 52.1% retailers have had to embrace As part of the retail digital pulse research, we also explored the digital to not only satisfy customer THAILAND 47.0% 7.5% 45.5% demand, but also support back-office impact of digital technologies over % % % operations. the past year: INDONESIA 28.0 6.5 65.5 INDIA 43.0% 2.5% 54.5% Just over half of Asian retailers 8 out of 10 Asia/Pacific retailers % % % are back to growth mode, but said that digitalization was essential SOUTH KOREA 31.5 18.5 50.0 for success. % % % there is significant variation across SINGAPORE 41.2 10.8 48.0 geographies and segments. % % % They said being digital had HONG KONG 36.9 12.6 50.5 In assessing the business confidence assisted in growing revenues or AUSTRALIA 47.6% 8.7% 43.7% of Asia/Pacific retailers, the results mitigating declines: are mixed: SEGMENT Which one best describes where your organization currently is? • 43% believed it has helped them increase revenues, 31% An average of 52% of retailers OVERALL 38.6% 9.3% 52.1% said they were returning to growth maintain revenues, and 27% mitigate decline. and planning for the future, HYPERMARKETS/BB 44.7% 8.2% 47.2% and 39% said they were still in 39.2% 13.3% 47.5% survival mode. • Restaurants saw the greatest RESTAURANTS impact with 72% stating that CONVENIENCE 44.3% 8.7% 47.0% Indonesia retailers were the most being digital helped drive up DRUGSTORES 42.7% 9.3% 48.0% optimistic, and Australia the least. revenues. SUPERMARKETS 36.8% 11.3% 51.9% Across the different segments, % % % DEPARTMENT 35.1 10.1 54.8 online retailers were the most confident, with convenience stores SPECIALTY 39.9% 8.0% 52.1% the least optimistic. ONLINE 29.3% 6.7% 64.0% Business Continuity/Economic Recession: As our revenue is Return to Growth/Next Normal: As Slowdown: We are responding expected to be in prolonged our revenue is returning, we are looking to the crisis and focused on business decline, we are focused on building to more aggressively invest/As our business continuity/As our revenue slows down, business resiliency. stabilizes into what is now the new normal, we we are in cost optimization mode. are working to operate as a digital enterprise as we see it vital to the success of our business. Source: IDC-Google Cloud Asia/Pacific Retail Digital Pulse Survey 2021, AP n = 1,108 3 IDC InfoBrief The Digital Pulse of Asian Retail The Digital Pulse of Asia/Pacific Retail The Retail Digital The Opportunity THE 4 STAGES OF DIGITAL MATURITY Pulse (RDP) With 79% of organizations The overall digital pulse of Asia/Pacific retailers is low, with slightly over half at Stage 1. The RDP aims to assess how at Stage 1 (digital participant), Asia/Pacific retailers are or Stage 2 (digital explorer), digitalizing, building resiliency, there is the opportunity for organizations to develop and developing competencies STAGE 1 STAGE 2 to enable them to compete in and implement their digital a post-COVID world. strategy and break away from Digital Participant Digital Explorer their competitors. Lack of an organization-wide Tactical DX and innovation initiatives The RDP assessment gauges innovation and transformation aimed at reactive interventions approach coupled with legacy and through technology, data, processes retailers’ digital maturity in five Digital resiliency implies that an organization has the siloed IT infrastructure, data assets, and people to accomplish short term different areas –strategy , processes, and human resources. business objectives. process, people, technology, foundation of technology and data – across a 4-stage and use cases in place that digital pulse index, with 4 being enables constant innovation the most mature. in all aspects of the business, from store operations % % The overall digital pulse of to customer acquisition, 55 24 retailers is low, with only merchandising, logistics and 2% of retailers that can be fulfillment, omni-channel considered to be at Stage 4, commerce, and PLM. and 55% at Stage 1. Digitally resilient organizations In order to move to Stage are able to respond quickly % 4, retailers need to address to external forces and to continuously innovate, driven 19 all the five dimensions, and STAGE 4 STAGE 3 advance at a similar cadence. by internal goals. Digitally Resilient Digital Aspirant Organizations at Stage 4 Enterprise wide, dynamic and disruptive Concerted effort in planning and are in the driving seat to approach towards DX and innovation, managing DX initiatives through fast track digital and have supported by executive leadership and well-laid technology infrastructure the potential to disrupt the established processes, and enabled % and data management strategies, market through its ability to through a cloud-first and data-ready processes, and human resources for culture to achieve both short-term and 2 inter-departmental business metrics. introduce innovative new long-term business objectives. business models. Source: IDC-Google Cloud Asia/Pacific Retail Digital Pulse Survey 2021, AP n = 1,108 4 IDC InfoBrief The Digital Pulse of Asian Retail About RDP The Drive for Digital Resilience As we look toward economic recovery DIGITAL PULSE INDEX - DIMENSIONS While the pulse survey reveals that DIGITAL PULSE INDEX - DIMENSIONS and the next normal, the key to Overall average overall average is low, organizations success will be digital resilience. that have invested in digital (Stage 4) have moved ahead of their peers and STAGE 1 STAGE 2 STAGE 3 STAGE 4 Digital Digital Digital Digitally The IDC-Google Cloud RDP survey set new benchmarks, as shown by the Participant Explorer Aspirant Resilient reveals that the overall average gap between the 2% of organizations scores of Asia/Pacific retailers are low, that are at Stage 4 (digitally resilient), with 55% in Stage 1. versus those that are in Stage 1,2, and 3. Advancing to the next stage will require retailers to take a digital approach Focusing on just one dimension will to the five index dimensions, and Strategy not lead to digital resilience. Progress Strategy implement a plan to progress across all has to be made across all the of these areas. These five dimensions, dimensions to build digital resilience. which all organizations need to have in place to drive digitalization are: There are variations across the five dimensions: Strategy focuses on innovation Process Technology Process Technology strategy, and digital transformation The most advanced dimensions strategy. 1.0 retailers have in place are strategy and process. However, though Technology explores the 2.0 the plans in place, the lowest technology approach for ranking dimension is technology infrastructure and cloud adoption. 3.0 implementation. 4.0 People looks at change Once retailers have progressed management and transformation beyond Stage 1, the process culture. dimension becomes the most People People Data/Intelligence mature, as change management Data/Intelligence Data/intelligence examines the and process efficiencies become management and the use of data.