MALAYSIA, 15 June 2022 – Despite challenges posed by the pandemic, the Malaysian retail industry proved its resilience in 2021, with 71% of Malaysian businesses across the retail, food and beverage, and hospitality sectors growing their revenue by 20%. According to new data released by Adyen (AMS:ADYEN), the global financial platform of choice for leading companies, Malaysian companies that outperform competition are those reaping the benefits of investing in digital transformation – an opportunity now worth MYR 334 billion.
The Adyen Malaysia Retail Report 2022, commissioned by Adyen and sponsored by KPMG, interviewed over 40,000 consumers across 26 markets, including 1,000 from Malaysia, to understand how they feel about the state of retail. It also surveyed 11,500 businesses across 23 countries, including 500 from Malaysia, to learn about their concerns, aspirations, strategies, and investments for 2022 and beyond.
One key finding from the report was that over 1 in 4 businesses connected payment systems to other parts of the organization, such as inventory management and supply chain, to improve operations and break down silos in backend processes. As a result, 60% of businesses are now in a better position. This is 11% above the global average and the highest in APAC. Specifically, companies that connect payment systems with other sections of their business grow 18% more than those that do not.
This shift has given Malaysian consumers a real taste for technology. 80% of consumers believe retailers used technology well to make their products available during the pandemic. The majority believe that retailers should deliver the same cross-channel flexibility they provided during the pandemic (77%) and use technology to improve loyalty/rewards schemes (90%). These figures are both 16% above the APAC average. Falling short of these expectations could spell trouble, as 81% of consumers will not shop with businesses that have a bad shopping experience, either online or in store, 11% above the global average.
Businesses intend on continuing to ride the digital wave, with 97% planning to invest in business improvement over the next year. The acceleration of digital transformation will contribute an additional 5.6% to the total growth of Malaysia’s retail sector over the next five years.
“Malaysian businesses have proven their resilience and adaptability during the pandemic, and their future is bright. Malaysian consumers’ love for tech-enabled, seamless shopping experiences stands out on a global level and the time is ripe for retailers to capitalize on the MYR 334 billion opportunity in digital transformation. Many retail players have unlocked the promise of unified commerce as a strategic growth driver and we’re excited to see the retail industry in Malaysia reach greater heights in 2022,” said Priyanka Gargav, Head of Commercial, Southeast Asia & Hong Kong, Adyen.
Physical stores will stay — but the role of the store is changing
More than any other market surveyed, Malaysian consumers believe online shopping is about convenience, but physical stores are for shopping for pleasure (76%). One way to meet their expectations is through melding online and offline realms to create new customer experiences. In fact, 87% of consumers are more likely to shop with retailers that use technology to enhance the customer experience, 32% above the global average.
The report also uncovered an area for growth: 74% of consumers would be more loyal to retailers that enabled them to buy things online and return them in store, though only 30% offer this service. While Malaysia is ahead of the global and APAC averages in offering this functionality, there is room for improvement.
The untapped potential in real time payments data
In line with Malaysians’ preference for digitized shopping experiences, they are above the average in wanting more tailored and personalized interactions. 67% prefer retailers who remember preferences and previous shopping behaviors to create a more tailored shopping experience and 66% like personalized adverts or suggestions. This is 20% and 21% above the global average respectively.
Fortunately, Malaysian businesses are among the best at using data to inform decision making and engage customers. Currently, 39% of businesses use payments data to build a better picture of their customers, 12% above the global average.
When doing so, businesses must prioritize safeguards to protect customer data and address consumer concerns around privacy. Half of Malaysian consumers will only allow their data to be stored and used by retailers if there are assurances around security and privacy, while almost half of them (45%) believe retailers shouldn’t be able to use their data/purchase behavior information unless they give permission.
With more businesses looking to embrace digitalization and Malaysian consumers’ preference for technology to permeate the in-store experience, businesses in 2022 are optimistic about the future. The impressive resilience and adaptability of Malaysia’s retail industry will likely be key themes even beyond the pandemic.
