Reinventing retail for the AI Generation in Asia

Transformative waves are underway in the Asian retail industry. Artificial Intelligence (AI) is reshaping the way retailers engage and create lasting relationships with consumers. The ability to analyse large volumes of data in real-time allows retailers to streamline operations and gain profound consumer insights.

Retailers are constantly seeking new ways to meet customer expectations. A key demographic that is commanding attention now is the AI Generation or Gen Alpha. For these digital natives, the concept of a world without digital technology is entirely foreign.

Used to having the world at their fingertips, this consumer group will hold the greatest spending power in the near future. Designing a unique shopping experience that is in tune with their values and appeals to their digital intuition has never been more important.

Getting to know the AI Generation in Asia

By 2025, Generation Alpha is expected to reach 2 billion, with the highest population in India, China and Indonesia. Born between 2010 until 2025, this group is commonly associated with high screen saturation. The amount of time spent glued to their phones or iPads is likely to increase as they grow older. They see screen time as a main way to interact and collaborate with peers.

The AI generation craves immediate access to communication and instant gratification. Online chat applications, e-commerce platforms and digital wallets reign supreme among youths in Asia. Apps such as WeChat in China, KakaoTalk in South Korea and WhatsApp in Southeast Asian countries are used for everyday interaction. E-commerce platforms namely JD.com, Lazada, Shopee, Tmall, Tokopedia and Zalora are very popular in this region where features like next-day delivery and buy-now-pay-later options are widely available.

Young consumers are drawn toward a shopping journey that is interactive and authentic. Growing up surrounded by social media, they have mastered the art of navigating through the algorithms of tech companies. Early exposure to online advertising and brand engagement have a great influence on their shopping decisions.

When retail meets AI in Asia

Asia is a treasure trove of data opportunities. Within a daunting sea of data, retailers can use AI to detect patterns, discover new information and provide informed recommendations. A study by Vogue Business and Google revealed that the integration of AI into the business has the power to elevate brand perception, increase customer loyalty, and boost consumer spending.

From the sales floor to the back-office, brands are increasingly using technology to boost customer offering. The LVMH Group, for instance, has partnered with Google Cloud to predict demand and optimise inventory. The group leverages new AI and machine learning tools to reach customers with a tailor-made touch.

Dior offers virtual try-on sessions and live online consultation service using AI and Augmented Reality. Comprising its beauty and fragrance product line including its coveted Dior Addict lipstick range, the brand provides an interactive experience for viewers to virtually try on makeup anywhere. Customers can select products that they like and find out how the colour would complement their features, without setting foot in the store.

Shiseido is celebrating its 150th anniversary with its #AliveWithBeauty campaign, featuring a collection of 150 exclusive AI-powered NFTs. The Japanese beauty brand has collaborated with a Web3 agency, Cult, to develop a co-creation tool using AI. The tool analyses beauty-related terms and Web3 concepts to create digital artwork, which are then given a human touch by the in-house creative team.

“Having an AI-driven brand is not simply about displaying the newest technology, but it is about connecting with your audience. The devil is in the details. By knowing the right information about your customer, you can cultivate lasting relationships and unwavering loyalty.” – Celine de Robillard, Omnichannel Director at VISEO APJ

Omnichannel leaves customers wanting more

According to Cegid’s Top 5 Challenges facing retailers in 2024, this year will see retail brands increasing omnichannel strategies to overcome concerns such as profitability in times of economic uncertainty. These strategies include simplifying orders, establishing additional channels, and reducing returns.

With their shorter attention span, the AI Generation has no patience for slow services or any inconvenience when they go shopping. Seeing their favourite items out of stock? That is an instant turn-off. To capture and retain their interest, they must be greeted with a smooth experience both online or in a brick-and-mortar store.

Longchamp understands the significance of having a unified commerce platform. With Cegid Retail, the brand gained access to a comprehensive real-time inventory system, customer and sales analysis, sale-boosting strategies and service improvement. Leveraging customer data, the innovative initiatives empower its salespersons to offer personalised advice and meet specific customer needs. This enables the brand to have a seamless customer journey even during the busiest sales periods.

L’Oréal is focused on enhancing the shopping experience at each point of contact. This is evident from its professional product division’s partnerships with e-commerce sites like Tmall in China and the expansion of its fragrance distribution via retailers such as Sephora. This creates fresh touchpoints for the brand, where it utilises the influence of stylists to enhance its omnichannel strategy, leading to a threefold increase of sales since 2019.

“These impactful brand examples underscore the need for well-executed omnichannel strategies to keep the AI Generation customers engaged.  AI adoption is a strategic move in meeting evolving customer expectations in Asia. Retailers that make enhancing omnichannel experiences a top priority will undoubtedly stand out in this competitive region.” – Celine de Robillard, Omnichannel Director at VISEO APJ

The new age of marketing

In the past, most fashion shows were exclusive and invite-only. But now more and more events have permeated mainstream culture, making luxury brands more approachable to consumers. At the heart of this evolution lies technology like AI.

Retailers are increasingly using AI to identify new trends and develop targeted marketing campaigns across multiple channels. Employing ChatGPT, Marc Jacobs utilised AI to generate show notes for its fashion show, demonstrating both the capabilities and limitations of the technology. Uploaded on TikTok, the event showcased 29 looks in 3 minutes, catering to the short attention span of this generation. The use of AI also served as a social commentary on the lack of emotional depth in machine-generated content.

Mainstream and metaverse: many brands have entered the metaverse world

In 2022, Bulgari opened an exclusive virtual world on Asia’s largest metaverse platform, Zepeto. The campaign included a pop-up store in South Korea, engaging customers both online and in-person. Bulgari’s entry into the metaverse mirrors the trend among luxury brands, with iconic names like Dior also making impactful moves by creating digital makeup looks on Zepeto.

Dior has taken its virtual reality journey to a new level in China, with its first-ever metaverse fashion show “On the Road”. The luxury house debuted its menswear collection in the “Meta Ziwu” virtual space created by a renowned Chinese architect Ma Yansong. The event was hosted on Baidu’s metaverse social application, XiRang in a futuristic simulation to attract tech-savvy young consumers.

Lancôme has also ventured into the beauty metaverse. The brand teamed up with the Jingdong Lingxi platform to release a customised gift box with exclusive NFTs for the Chinese Valentine’s Day. With game changing innovations like this, it is no wonder that the market share of L’Oreal, the parent company of Lancôme, is soaring in this region.

The future is now

From optimising inventory levels to hosting hyper-personalised experiences, AI has limitless opportunities for retailers. The future of retail lies at the intersection of technology, creativity, and consumer engagement. There are untapped potential in Asia, and with the right expertise and support, retailers can win the hearts of the AI Generation.