Department store group discusses e-commerce

At their first meeting in Bangkok, chief executives belonging to the International Association of Department Stores (IADS), who own major department stores in many markets around the world, yesterday voiced their opinions on how physical-store retailers can survive amid the emergence of new digital technology and online shopping.

Maarten de Groot van Embden, the IADS general secretary, said e-commerce was seen by retailers as both a threat and an opportunity.

“For the opportunity side, e-commerce can [allow] individual customers to look at what [products and services are on offer] and to apply data, analytics and rational thinking. However, by visiting physical department stores, shoppers can enjoy emotional and social experiences. They will be able to touch the merchandise, smell the foods, and talk with other people,” he said.

He added that retail operators could adopt e-commerce to support their physical-store business.

“Today retailers need to develop a great brand identity for their stores and communicate it to people in the right way. It is the way to differentiate their retail store from the others.”

De Groot van Embden added that in his point of view, the proportion of e-commerce contribution to individual modern retailers should not be higher than 30 per cent so that they can provide a good balance between on- and off-line shopping experiences.

Nicolas Houze, member of the executive board of the Galeries Lafayette Group, said it was a major challenge for today’s retailers to develop e-commerce on the one side and operate physical stores on the other .

“We have developed Lafayette.com as a way to adapt ourselves to e-commerce. As a retailer, we have been doing cross-activities and developing business from the two worlds. We need to provide a good mix of real and virtual businesses,” he said.

Houze said e-commerce currently contributed only 2 per cent of the annual turnover of Lafayette Group. However, the group expects that contribution to increase to 10 per cent by 2020.

De Groot van Embden said the contribution of e-commerce to annual sales of retailers around the world was averaging around 3 per cent. There are only three major markets – South Korea, the United Kingdom and the United States – with a high level of e-commerce by modern retailers.

“However, in my point of view, e-commerce contribution will increase significantly to between 10 and 20 per cent of annual retail sales achieved by individual modern retailers around the world in the next 10 years,” he said.

Ji Xiao’an chairman of the board of Beijing Hualian Group, which operates major modern department stores in China, said that since his first visit to Thailand in May 1997, he has seen a lot of changes in the country’s retail sector.

“Bangkok itself can become a capital of fashion and the ultimate destination of tourists in Asia. As retail operators, we can learn [from] all the things happening in Bangkok and apply them to our own markets, especially in terms of creativity and innovation, as well as providing excellent service and shopping experiences to customers and merchandise offerings,” he said.

Supaluck Umpujh, chairwoman of The Mall Group, said the Thai government should revise the import-tax structure, particularly for fashion and cosmetics brands, to make Bangkok the “Dubai of the East” and to raise the city’s competitiveness against other shopping destinations, especially Singapore and Hong Kong.