Dec 19, 2013

    Game has changed for 'offline' stores

    LAST week, singer-songwriter Beyonce Knowles unleashed her fifth album on an unsuspecting world.

    Unsuspecting because there was no pre-promotion publicity and no mention beforehand that she had a 14-track album to release this year. The news generated 1.2 million tweets on the social-media platform within 12 hours. In the United States, 80,000 copies were sold in the first three hours and 430,000 on the first day.

    The twist, as most people know by now, is that Beyonce released the album exclusively on iTunes. In fact, the first physical copy of her album, simply titled Beyonce, will be made available in stores only seven days later, tomorrow.

    So what does it say when a star decides to snub the very stores that helped sell her first four albums, so that she could create a bigger and more powerful impact online?

    She is not the first singer to have done so, but she is arguably one of the biggest. And if her fellow singers opt to go on this route, how long will it be before someone else of her stature decides to release a digital-only album?

    In this world of online and digital sales, this practice is not unheard of. Some video games are available only in digital form, while some fashion brands have been known to stock designs for clothes and accessories for sale only in online stores.

    But this article is not another piece about the rising power of online and digital sales. Instead, it is to highlight that, no matter what the future holds, the game has changed for brick-and-mortar stores. Forever.

    Singapore is a prime example of how consumers have changed and are continuing to change their shopping habits.

    Despite the opening of mall after mall here, online sales have been increasing rapidly.

    According to PayPal, there was a 12 per cent year-on-year increase in purchases from overseas sellers by Singapore buyers between October and December last year, compared with the same period in 2011.

    The online payment company does not have numbers for this year's recent Black Friday and Cyber Monday sales, but last year's Black Friday weekend saw a 24 per cent increase in sales to Singapore buyers over the weekend before.

    On Cyber Monday last year, buyers here were shopping at a rate of 10 transactions per minute on overseas websites.

    Off the top of my head, I cannot say if all online stores offer better selections or prices, though I suspect that many do. But I can tell you why local malls are increasingly unable to compete with their online counterparts.

    In terms of retail mix, the major malls contain the same shops peddling the same brands and the same things. Chances are, everyone will know what you paid for the gift that you bought for the Christmas gift exchange at your office.

    High rents lead to higher prices. And these higher prices tend to be passed on to consumers. Crowded buses, trains and malls, and snaking taxi lines can transform the joy of buying a gift for a special person into a three-hour trial of one's patience and sanity.

    One great example of a company doing it right with an online store here is Apple. There are no physical Apple stores here, but you can order the latest iPad or MacBook Pro, or even an upgraded iMac online and have it sent to your home.

    No fuss, no waiting, no queue.

    Brands such as Apple, as well as singers such as Beyonce, are, in effect, telling consumers that it is fine to stay home and enjoy shopping from the comfort of your couch.

    One almost expects traditional stores to fight back by showing us how being in a store can be a much better experience. But their lack of a response seems to indicate that even they do not know how to win this fight.