Consumer expectations are evolving in the modern commerce landscape. Suffering from decision inertia and growing scepticism of branded content, today’s shoppers in Asia Pacific’s (Apac) digitally connected but heavily distracted markets want to define their own commerce engagement.
With greater choice and control, these tech-empowered consumers are now ready and able to steer their own retail journeys, triggering a shift away from transactional to authentic experiential engagement with brands. These dynamics are behind the shoppertainment retail phenomenon, which offers retailers a whole new arena to engage and attract digitally exhausted customers across the region.
Our analysis projects that shoppertainment could unlock a US$1 trillion ($1.4 trillion) opportunity by 2025 for brands in Apac, increasing from US$500 billion today and growing at a 63% CAGR in the most lucrative high-growth markets — Australia, Indonesia, Japan, South Korea, Thailand and Vietnam.
But with mainstream brands today barely skimming the surface of this rapidly emerging market value, we have unveiled a new study to help marketers understand the evolving language and desires of consumers, and to recognise how and when to reach out to them when they are actively considering new products and/ or most likely to switch brands.
Today’s consumer occupies six unique demand spaces
As opposed to traditional customer segmentation, with its temptation to impose internal expectations of consumers, a better approach is one that shifts the perspective from consumer segments to demand segments to genuinely identify consumer needs and aspirations. We have uncovered six very different demand spaces, each occupying a unique role in the consumer journey. While we can generally surmise that there are two demand spaces — functional and emotional — in truth, they are more intricate.
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Functional demand spaces, which make up approximately 60% of the entire e-commerce value ecosystem, contain three separate spaces where consumers transact out of habit, focusing on existing products and services without considering new options:
• Convenience (Easy for me), which is about simplifying routine purchases such as groceries.
• Improvement (Better for me), where consumers are looking for upgrade opportunities within routine purchases, such as discovering a superior detergent at a slightly higher price.
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• Validation (Confirm for me), which is about choosing correctly, and is especially relevant for products with higher involvement, such as switching to the latest mobile phone.
Emotional spaces are where the real magic happens. It’s where consumers are actively seeking new products or switching brands. We call these “moments of truth”. They comprise three spaces and account for approximately 40% of the e-commerce value ecosystem:
• Recommendation (Advise me), where purchases, often with some level of uncertainty, are informed through recommendation, for example, buying a trendy pair of sneakers.
• Indulgence (Spoil me), where consumers enjoy an opportunity to indulge in a new purchase such as a new shade from a favourite lipstick brand.
• Inspiration (Inspire me), which is about being inspired by new experiences and discoveries such as the latest seasonal fashion lines or new brands with trendy styles.
It’s within these emotional spaces that shoppertainment truly comes alive. Our analysis reveals that two out of every three transactions within emotional spaces are driven by new to-brand conversions! The emotional demand spaces are where brands can really get creative to engage consumers with content that ignites excitement, trust, knowledge and passion. It heightens their chances to inspire key switching behaviour and capture consumers in their functional demand spaces, which have the larger share of the e-commerce market.
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What’s the best shoppertainment strategy?
It’s important to understand that consumers switch seamlessly between these six demand spaces. And seeing as functional and emotional demand spaces have a gross market value of US$500 billion in Apac today, brands must learn to be seamless in each space too, with the right strategy at the right time.
This hunt for more aspirational and experiential connections demands an entertainment-first, commerce-second strategy that we call the “Four C’s” of shoppertainment. This calls for a campaign strategy with clear planning while focusing on entertainment, customer segmentation that identifies the right customers at the right time to inspire switching, channel management with dedicated resources to unlock opportunities, and a content playbook that operates a video-first approach to inspire and inform consumers.
It must be backed by a clear and informed consumer journey, and inspired by key enablers such as influencers, consumers and brand efforts. Shoppertainment should leverage storytelling and educational content, presenting a credible and authentic voice supported by trusted recommendations without forcing decision-making. This content can be delivered through a variety of content platforms, utilising trending social media and e-commerce platforms to rapidly amplify authentic brand messages.
What’s next for shoppertainment in Apac?
Shoppertainment is naturally suited to certain high-desire segments with significant influence on purchasing decisions. Fashion and accessories are categories where creativity and visual entertainment content drive up appeal. Beauty and personal care products are propelled by how-to videos and educational content, which naturally fits well with expert personalities and recommendations from trusted communities. Electronic devices rely on product reviews for trusted recommendations of new and exciting arrivals, in which an entertainment-first strategy can be a key differentiator. The F&B segment thrives on inspiration and visual content to drive consumer decisions.
Together, these categories contribute more than half (55%) of the projected total market value from shoppertainment.
Across Apac, differences in local consumer sentiments across these segments will impact shoppertainment adoption. Indonesia, Japan, and South Korea will contribute 67% of gross market value in shoppertainment by 2025, reflecting their large and established e-commerce bases. Indonesia, Vietnam and Thailand add to the mix of some of Apac’s most exciting growth markets and, alongside Australia, quadruple market value from US$24 billion to US$100 billion.
Each of these markets are unique and will require differentiated growth strategies. Vietnam and Thailand represent mainstay markets. Thai consumers are inspired by the joy of entertainment, with high trust in celebrities and key opinion leaders, and a passion for following community trends. In Indonesia, with huge commerce potential, brands should look to scaling up ongoing efforts in shoppertainment, leveraging the Indonesian preference for live format entertainment, with real-time interactions and engaging content.
Japan and Korea present high-potential markets where brands should look to invest in overcoming consumer barriers for shoppertainment adoption, with South Korean consumers demonstrating a particular appetite for the K-pop culture. Australia hints at a future growth market if efforts are successful to unlock consumer e-commerce adoption to drive growth, which should look to meet consumer desires for refined entertainment that leverages humour.
Shoppertainment is the future of commerce. Understanding how consumers in Apac traverse across the six demand spaces of commerce is key to unlocking its full potential. With the right strategies in place, brands and marketing leaders have a tangible opportunity to capture value in this lucrative and highly exciting commerce segment.
Aparna Bharadwaj is global head for the Centre for Customer Insights, and managing director and partner, at Boston Consulting Group. Mei Lee is partner and associate director at Boston Consulting Group
