Reynaldo C. Lugtu, Jr. l October 19, 2023 l Manila Bulletin
The retail landscape in the Philippines has been undergoing a significant transformation in recent years. The unexpected global health crisis in 2020 led to the growth of digital technology and the increasing penetration of the internet has revolutionized the way consumers shop, presenting both challenges and opportunities for retailers. But how digitally ready is the retail industry since the end of the pandemic?
Digital readiness refers to an organization’s ability to adapt, innovate, and leverage digital technologies effectively in their business operations. In the context of retail, digital readiness implies a retailer’s capacity to embrace e-commerce, digital marketing, data analytics, and other technological advancements to cater to the evolving demands of modern consumers.
The Philippines has witnessed a significant improvement in its digital readiness in recent years. The increasing internet penetration, smartphone usage, and growing digital literacy among Filipinos have created a conducive environment for the retail industry to explore new opportunities. According to Digital 2023 Philippines report, there were 85.16 million internet users in the Philippines at the start of 2023, when internet penetration stood at 73.1 percent. This increase in digital connectivity is a clear indicator of the changing landscape.
One of the most significant aspects of digital readiness in the Philippines is the growth of e- commerce. The pandemic accelerated the shift towards online shopping, and this trend has continued. In 2022, e-commerce sales in the Philippines reached $14.96 billion, an 84% increase from the pre-pandemic level, according to Statista. Leading e-commerce platforms like Lazada and Shopee have played a pivotal role in this growth.
Consumers are increasingly turning to online shopping due to its convenience, variety, and competitive pricing. For example, Lazada’s “11.11 Shopping Festival” and Shopee’s “9.9 Super Shopping Day” have become major events, highlighting the potential of e-commerce in the Philippines. Retailers that embrace online platforms, such as SM Malls launching its online shopping site, have benefitted from the surge in online sales.
Digital readiness also involves the effective use of digital marketing and social media to reach and engage consumers. Social media platforms like Facebook, Instagram, and Twitter have a massive user base in the Philippines, making them invaluable tools for retailers.
For instance, local fashion brand Bench has leveraged social media to connect with its customers. Bench’s Instagram page boasts millions of followers, and they use it not only for marketing but also to engage with their audience and conduct contests. Their digital readiness and social media presence have contributed to their brand’s success.
In addition, retailers in the Philippines are increasingly recognizing the value of data analytics to understand customer preferences and behavior. By collecting and analyzing data, they can create personalized shopping experiences. A case in point is Zalora, an online fashion retailer, which uses data analytics to recommend products based on individual browsing and purchase history.
Mobile commerce, or m-commerce, has also become a significant aspect of digital readiness. Filipinos are increasingly using smartphones for shopping, making it crucial for retailers to provide a seamless mobile shopping experience. In 2021, mobile accounted for 61% of e- commerce traffic in the Philippines, according to Statista. Retailers must invest in mobile apps and websites that are user-friendly and optimized for mobile devices to remain competitive.
While the digital transformation presents substantial opportunities for the retail industry in the Philippines, it is not without challenges. Some of these challenges include cybersecurity risks, infrastructure limitations, and the need for digital literacy.
But the future of retail in the Philippines will undoubtedly be shaped by its level of digital readiness. As the country continues to advance in this regard, several key trends and developments can be anticipated.
One is the integration of online and offline shopping experiences which will become increasingly important. Retailers will need to offer seamless omnichannel experiences, where customers can switch between physical stores and online platforms effortlessly.
Another is that retailers will rely more on data analytics to provide personalized shopping experiences. Tailored product recommendations, discounts, and marketing messages will become the norm.
Lastly, as consumers become more environmentally conscious, sustainable, and eco-friendly products will gain prominence. Retailers will need to adapt to this trend by offering sustainable options and transparent supply chains.
It is opportune that the Smart Digital Retail Philippines 2.0 will be held on November 30, 2023, at the Hilton Manila Hotel. Awarded as the “E-Commerce Event Series of the Year 2023” by The Southeast Asia Business Awards, Smart Digital Retail is an arena where thinkers, innovators, disruptors, and most importantly, decision-makers in the Philippine retail ecosystem converge and converse. This live, in-person event will be a gathering of business executives from retail, e-commerce, marketing, and technology solution providers across the entire country.
*** The author is the Founder and CEO of Hungry Workhorse, a digital, culture, and customer experience transformation consulting firm. He is a Fellow at the US-based Institute for Digital Transformation. He is the Chair of the Digital Transformation IT Governance Committee of FINEX Academy. He teaches strategic management and digital transformation in the MBA Program of De La Salle University. The author may be emailed at rey.lugtu@hungryworkhorse.com