To mark the country’s Harbolnas, or National Online Shopping Day, Microsoft in Indonesia has laid out a five-point action plan to help brick-and-mortar retailers fight back.

Harbolnas earlier this month was expected to boost people’s purchasing power and move the wheels of the nation’s economy. But changes due to the pandemic has set new challenges and opportunities for retail industry players.

This is supported by the size of the global ecommerce market, which is valued at $2.3tn, along with current consumers behaviour of always being connected to their smart phones. In Indonesia, the ecommerce sector is one of the supporting industries for the digital economy.

The total value of the digital economy in Indonesia is estimated at $40bn, of which more than half comes from ecommerce platform transactions.

According to the Indonesia’s Coordinating Ministry for Economic Affairs, the value of ecommerce transactions continues to climb, starting from an increase of 152 per cent in 2018 and 88 per cent in 2019, to a doubling of ecommerce transactions in the first semester 2020 compared with the previous period.

Microsoft retail data reveal several facts and challenges that occur in the retail industry around the world, including in Indonesia, namely:

• 81% of buyers conduct online research before making a purchase online
• 80% of employees worldwide are first-line workers
• 50% of manufacturing companies will have the ability to make direct deliveries to consumers by the end of 2020
• 50% of department stores at malls will close and focus their business on ecommerce

These are becoming drivers for the retail industry to accelerate digital transformation and become an intelligent retailer.

In redesigning the industry to use intelligent retail, there are five important areas that require special attention: store efficiency, automation and safety; shopping without physical contact (contactless shopping); integrated physical store as part of an online shopping fulfilment centre; diversified shopping experiences; and in-store advertising.

In the digital transformation process, the use of appropriate and customer-focused technology such as cloud technology and artificial intelligence is key to helping retailers understand consumer behaviour and preferences so that businesses can survive and even thrive in a pandemic. This is called intelligent retail.

According to Raj Raguneethan, regional business leader for retail at Microsoft Asia, consumer preferences during the pandemic have shown an increase in demand for personalised online shopping experiences and last kilometre delivery, or direct delivery of goods to homes.

“Knowing your customer is key to your business,” said Raguneethan. “Identifying, adapting and serving evolving customer needs for deeper engagement across all your channels is vital. Enable to leverage AI to predict analytics and anticipate your customers evolving needs is very critical. That’s how you really can transform the way you deliver the experience to your customers.”

The digital transformation carried out by Kino, an FMCG (fast moving consumer goods) retail company in Indonesia, has covered all parts of the business line from front-end to back-end using technology. This technological adaptation ensures a high level of accuracy and can produce measurable and analytical data.

“FMCG has a high level of competition, thus we at Kino continue to make many innovations, especially in the distribution, communication and product development areas,” said Harry Sanusi, CEO of Kino Indonesia. “This of course requires a lot of data and accurate analysis in order to target consumers precisely and effectively. This is where we take advantage of technology. In fact, this crisis gives us the opportunity to make many developments and improvements so that, going forward, Kino will continue to grow and achieve high levels of productivity.”

Kalbe Farma, a retail player in the FMCG and pharmaceuticals industry, has also digitally transformed itself to implement intelligent retail. Kalbe Farma’s use of Microsoft Dynamics 365 business management software in marketing and its customer journeys aims to create a seamless relationship with consumers.

“Consumers play an important role in the retail industry, because our business is centred on meeting consumer needs,” said Vidjongtius Vidjongtius, president director of Kalbe Farma. “At Kalbe Farma, we aim to create a lifetime consumer for the sustainability of our business. Therefore, it is very important for us to be able to know, understand and properly analyse the customer journey in order to create an effective and efficient communication and marketing strategy, and to provide consumers with a more personalised shopping experience, thereby adding value to the products we offer and increase customer satisfaction.”

Intelligent retail is part of the digital transformation process carried out by various companies in Indonesia that embraced a culture of innovation, which focuses on innovations and a corporate culture that is responsive to change.

This is in line with the results of Microsoft’s study on the culture of innovation, released early this month, where the study found that 74% of organisations in Indonesia have accelerated digitisation to adapt to the new normal. Starting from launching digital products and introducing online payments, to embracing ecommerce and automation.