Consumer tech – the future of the retail industryIn-store and e-commerce retail are now converging, not competing. This comes from digital transformation during the COVID-19 context, called consumer tech, which provides significant opportunities for retail enterprises to convert online shoppers into customers and promote economic growth.
What is consumer tech?
Consumer technology (consumer tech) comes in a variety of different forms. It offers a wide range of technological capabilities, encompassing many of the most commonly seen items people utilize daily.
Consumer tech platform leverages technology to offer personalized experiences and increase the efficiency of the entire value chain. For example, consumer tech will supply a new shopping experience and customer-friendly digital services.
In the post-COVID period, many industries have rapidly transformed to adapt to the new context, especially the consumer sector. Along with that, people's consumption habits and perspectives are changing, and it's time for the rise of consumer tech.
Why are digital transformation and consumer tech changing the future of retail?
Vietnam's GDP grew by 7.72% in the second quarter of 2022, the highest in over a decade. The six-month GDP also increased by 6.42%. In addition, nominal retail sales figures have recovered beyond pre-COVID-19 levels. This result is a testament to a brighter economic picture with a strong recovery in many sectors. When the broader Vietnamese economy recovers, the consumer spending growth will continue to uptick over 2022.
The consumer sector accounts for about two-thirds of Vietnam's GDP, and its recovery plays an essential role in the economy's recovery. Moreover, significant corporations in several sectors are investing increasingly in information technology and digital transformation to strengthen business sustainability and exploit new growth opportunities. Over the past seven years, with the development of the internet, the online shopper base has increased 10 times and 20 times in FMCG. This enormous development is fueled mainly by e-commerce sites and modern trade retailers.
According to a report by the Ministry of Information and Communications (MIC), in the first quarter of 2022, at the National Committee on Digital Transformation, Vietnam's digital economy revenue reached US$ 53 billion.
Regarding e-government, The National Public Service Portal integrated 3,552 online public services to create favorable conditions for people and businesses. Sector-wide tech adoption will continue to leapfrog businesses' opportunities in the consumer market, and the development of consumer tech will be dynamic in Vietnam.
Consumer tech is making massive shifts in consumption trends. As digital transformation takes root across the consumer ecosystem, businesses must expand and deepen their relationships with consumers to understand their wants, needs, and aspirations. And consumer enterprises need to think about how these shifts will impact their future offerings, then better align their products, services, and business strategies with a rapidly evolving consumer audience.
Will consumer tech become the successful key in Vietnam’s retail ecosystem?
Vietnam’s retail and consumer industry might be booming, but only a few large-scale consumer corporations possess impressive growth potential and strategies. In 2021, Masan became Vietnam's most powerful consumer platform in market capitalization ($7.78 billion). This growth has mainly come from The CrownX (TCX), the retail-consumer platform that has delivered over $2.54 billion in the past year.
As the largest modern retail chain in Vietnam, WinCommerce also synergies with super apps and e-commerce platforms through digital transformation. According to HSBC Global Research, Masan's transformation will be “a journey of a retail giant to a super app.” Masan also owns a large consumer base and the retail ecosystem is known as Point of Life. The Point of Life ecosystem is a concept that pairs basic needs with financial and lifestyle needs in a single, convenient destination.
The pandemic has also pushed consumers to move from traditional to online shopping. Masan is the only integrated off-to-online retail consumer ecosystem in Vietnam that owns manufacturing facilities for FMCG products and distributes directly to consumers via WinCommerce.
“We believe that technology will disrupt the entire consumer market and at Masan we are prioritizing technology as a strategic pillar. The only difference is we do not view technology as a standalone business model, but rather as a powerful tool to personalize our product offerings and consumer experience. Leveraging technology to solve big consumer unmet needs is how we can deliver growth and profit, and more importantly, uplift our consumers’ daily lives,” said Dr. Nguyen Dang Quang, Chairman of Masan Group.
In 2022, Masan will digitalize this platform into an integrated system from manufacturing, logistics, and distribution to 100 million consumers. Masan has transformed from a retail consumer group to a digital platform to satisfy customers' unmet demands and promotes their consumer tech journey. The move not only cuts 10 percent of operating costs but also makes use of AI and ML to improve operations. In accelerating digital transformation, Masan aims for $4.33 billion in revenue in 2022 and to grow 10,000 owned stores and 20,000 franchised ones to serve 30-50 million consumers by 2025.
With artificial intelligence and machine learning technology, Masan can understand its consumers and smarten its loyalty program to better engage with them. The cornerstone of Masan’s loyalty program is Reddi. In addition, Masan has piloted the launch of telecommunication data plans under the eponymous brand at supermarkets and mini-marts WinMart+.
Customer databases, both online and offline, are a ‘goldmine’ for businesses that understand the power of data analytics. This is a point wh ere Masan digitizes its consumers by onboarding them onto a loyalty program when they shop within Masan’s consumer tech ecosystem.
Masan Group is fulfilling its ambition to change how Vietnamese people shop and consume food. The application of technology to the retail chain is expected to reduce the cost of goods for consumers by 5% and increase profits for sellers by 5% and manufacturers. Masan also accelerates digital transformation to improve performance across the consumer value chain. At the same time, promote loyalty programs and multi-utility store models to properly and sufficiently meet the needs of modern consumers.
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