KUALA LUMPUR, MALAYSIA — Malaysian consumers are among the world’s most discerning shoppers, having high expectations of personalized shopping experiences from their favorite retailers, according to The Adyen Malaysia Retail Report 2023. These expectations include having multiple options for payment, with 55% of shoppers saying that they will abandon their purchases if their preferred payment method is not available.
Loyalty rewards are also a major sticking point for consumers, with 68% of them feeling that existing loyalty programs offered by retailers are lackluster, and 83% hoping for better rewards programs for their continued loyalty. Malaysian retailers are feeling the weight of these expectations, with nearly half (49%) finding it hard to maintain customer loyalty amid the current business landscape. The majority (53%) of retailers also say they struggle to provide such personalized services as they find it difficult to categorize customers by their needs and preferences.
To conduct the report, Adyen commissioned Opinium LLP to poll 36,000 consumers and Censuswide to poll 12,000 businesses globally, including 1,000 consumers and 505 businesses in Malaysia.
Consumer habits evolve with omnichannel payments
Of the markets surveyed, Malaysian consumers were the most likely to value the ability to effortlessly navigate between in-store and online shopping. Two-thirds (66%) of consumers surveyed say they are more loyal to retailers that offer the flexibility to begin purchases in-store and complete them online. Additionally, 70% prefer retailers that allow online purchases with the convenience of in-store returns.
Malaysian consumers also value the convenience of technologies like mobile point of sales (POS) and self-checkout kiosks, with 44% saying these technologies made their shopping experience more fun. Among these technologies, mobile apps are favored by 56% of consumers, followed by omnichannel shopping (40%), and self-checkouts (39%).
This desire for flexibility is also reflected in how Malaysians are choosing to pay. While cash remains king for in-store purchases (79%), followed by debit or credit cards (66%), Malaysians also show a growing inclination towards alternative payment methods such as digital wallets (32%) and QR codes (24%). For online purchases, customers’ top preferred payment methods are debit or credit cards (62%), digital wallets (47%), and QR codes (20%).
Given this diversity in consumer preferences, the Malaysian retail industry is primed for unified commerce, where backend systems and customer-facing channels, from payment data to customer communications, are synced on a single platform. By consolidating cross-channel data all in one place, unified commerce offers retailers the chance to glean deeper insights into their customers and in turn, provide more personalized shopping experiences.
Although only 1 in 10 (12%) Malaysian merchants have already invested in unified commerce so far, current adoption rates belie merchants’ future intent. In the past year alone, 35% have begun investing in unified commerce, with an additional 46% considering doing so. Furthermore, nearly half of the merchants surveyed (49%) are planning to invest in connecting backend systems with customer-facing channels, a staggering 88% increase from 2022.
“The Malaysian retail industry has shown to be adaptable to evolving consumer patterns, and this has been no small feat considering the high expectations of Malaysian shoppers for seamless and omnichannel shopping experiences,” said Soon Yean Lee, Country Manager for Malaysia at Adyen. “Given local retailers’ openness to embracing technology as a growth driver, we are optimistic that more businesses in Malaysia will capitalize on these findings to meet the demand for more personalized services.”
Retailers foresee promising growth opportunities
In spite of ongoing concerns over inflation and rising costs of living, Malaysian businesses are optimistic about growth. 9 in 10 retailers anticipate revenue growth in 2023 compared with the previous year, with 40% expecting at least a two-fold increase in business revenue.
To reach a global audience market, Malaysian retailers are keen on expanding their business abroad. They are particularly interested in neighboring markets such as Singapore (50%), Indonesia (47%), and Thailand (41%). Additionally, retailers show interest in mature and emerging markets in the Asia Pacific region, including Australia (29%), Japan (27%), and China (25%). This eagerness to explore international markets demonstrates their ambition to broaden their reach and capitalize on opportunities beyond Malaysian borders.
While investing in digital channels, retailers recognize the brand value of brick-and-mortar stores, with 81% believing that stores will evolve to become more experiential to better engage consumers. These findings correspond with consumer sentiment as well. 56% of Malaysian consumers are more inclined to shop in person if retailers provide interesting experiences at their physical stores.
Fraud prevention as a business imperative
As cybercrime incidents dominated local news headlines over the past year, Malaysian consumers are understandably wary of online fraud. 84% believe that the risk of fraud makes online shopping less attractive. Additionally, almost 3 in 10 (29%) Malaysian consumers fell victim to online fraud in 2022, losing an average of RM673 (approximately USD144).
While Malaysian retailers (69%) are largely confident that their fraud prevention systems are effective, 36% still experienced losses due to fraud or chargebacks last year. Additionally, 30% reported experiencing cyber attacks and data leaks.
To this end, Malaysian retailers continue in making fraud prevention a business priority. At present, nearly 6 in 10 (58%) businesses are already deploying artificial intelligence to prevent fraudulent transactions, and more than half (55%) of retailers are planning to expand their fraud and risk teams in 2023.
