The retail landscape is undergoing a seismic shift as the phenomenon of the pragmatic consumer takes centre stage. This shift has been precipitated by ongoing inflationary pressures, which have resulted in rising prices that consumers are struggling to keep up with while wages remain stagnant. In its latest report, "Retail Tech Forecast 2025 – Empowering Customers Decode", SmartOSC provides insights into the attributes of this new consumer class and offers strategies for retailers aiming to adapt.
Pragmatic consumers are defined by their discerning approach to spending. As highlighted in SmartOSC's findings, these individuals exhibit intentionality in their purchasing decisions, prioritising quality and long-term value over mere brand prestige. Their approach to shopping is further enhanced by technology, which they leverage to remain well-informed; they utilise smartphones and social media to collect insights and reviews, making them astute decision-makers who evaluate options comprehensively before committing to purchases.
A notable shift in consumer behaviour is their selective spending habits. These pragmatic consumers favour investments that enhance their quality of life, such as travel and technology, while steering clear of non-essential purchases. As a result, traditional luxury items, like designer handbags, are being sidelined in favour of more pragmatic choices, reflecting a deep-seated change in consumer priorities.
The report outlines three pivotal strategies that retailers must embrace to effectively engage this new consumer demographic.
Firstly, social commerce is positioned as a game-changer, with 91% of retailers in the Asia-Pacific region planning to invest in or sustain their social commerce channels. Social platforms have become essential in the discovery and assessment of brands, with a significant majority of consumers relying on social media for brand interaction and product reviews. However, the challenges in this domain are notable, as 77% of retailers experience fragmented communication, and concerns regarding customer privacy on third-party platforms loom large.
Simultaneously, the report emphasises the importance of an omni-channel approach, which integrates both digital and physical shopping avenues to create a seamless consumer experience. Effective omni-channel capabilities are becoming pivotal in accommodating the increasingly complex consumer shopping journey. Simon Torring, co-founder of Cube Asia, underscored that “operating eCommerce in a silo is no longer an option,” signalling the need for retailers to align their online and offline experiences adeptly.
Thirdly, artificial intelligence (AI) represents a frontier that is poised to revolutionise retail operations. According to SmartOSC, 20% of leading retailers in the Asia-Pacific region will employ distributed AI systems by 2025. The applications of AI are vast, providing enhancements in personalisation, marketing, supply chain management, and more. However, the industry faces challenges in talent acquisition, with 74% of executives indicating skill shortages as a significant barrier to effective AI integration.
The challenges and opportunities presented by the emerging trends in AI automation signal a transformative period for businesses within the retail sector. As companies gear up to pivot in response to the demands of pragmatic consumers, understanding these dynamics will be critical in navigating the complex landscape of 2025 and beyond.
Source: Noah Wire Services