Singapore’s rollout of vaccinations and the permission for more employees to return to their workplaces give cautious hope that a sense of normalcy may return. However, the accelerated pace of digital transformation and other changes wrought by the pandemic shows no sign of abating.
Reflecting this, DPM Heng has outlined that Singapore’s Budget 2021 is going beyond preservation and adaptation to safeguard lives, jobs, supply chains, and core economic capabilities, to Emerge Stronger into the post-COVID-19 economy of the future.
Digitalisation is a key part of these changes, and we should ensure that all businesses – both large enterprises and smaller SMEs – adapt, innovate and grow. A recent UOB study highlighted that 41% of SMEs who had implemented digitalisation initiatives in 2020 experienced stronger revenue growth than non-adopters, while 7 in 10 companies who had digitalised felt more confident and optimistic about their future prospects.
However, a lack of knowledge, capital and manpower can make it difficult for SMEs to adopt and adapt to new technologies.
SMEhorizon talks to Jack Phua, Manager of Ichiho, an F&B establishment specialising in contemporary Japanese cuisine, and Jun Ting, CEO Aimazing, whose plug-and-play solution helps businesses like Ichiho track their offline transaction data and run promotional campaigns. They share on the difficulties faced during COVID-19, the challenging task of digitalising for SMEs, the types of solutions that are suitable for SMEs, and strategies for promotional campaigns.
COVID-19 and the F&B Industry
Ichiho is an F&B establishment that specialises in contemporary Japanese cuisine, especially donburi (rice bowls) and sushi. Open since January 2020, they sought to differentiate themselves in this competitive market through constantly bringing new culinary creations and dining concepts to excite their customers
According to Phua, their previous marketing strategies included social media marketing, using platforms such as Facebook and Instagram. “We also partnered with our landlord at Aperia Mall, to offer a one-for-one promotion on every purchase last year. On top of that, we’ve worked with celebrity chef, Anna Phua, whose fans came down to support us as well,” he added.
However during the COVID-19 pandemic, their establishment, like many others experienced a very tough year. Besides having to close for a few months, Phua shared that they had to quickly find new ways to increase delivery and takeaway sales, as the physical sales from dine-in customers were no longer viable. Fortunately, they were able to leverage on online marketing, which, according to Phua, has led to more sales for Ichiho in the previous months.
Not all F&B businesses were able to pivot as Ichiho had done. Jun Ting notes that digitalisation’s positive effects are mainly seen in local businesses that are able to keep up. “Unfortunately, many businesses did not see the value of technology prior to the COVID-19 pandemic and were unable to jump on board during the time of crisis caused by an extreme lack of footfall.
“This saw the closure of many F&B outlets but businesses that picked up on digitisation despite difficult times have managed to understand how to utilise its benefits to understand customer behaviour, one of the key steps to be taking in order to get revenue to what it was before.”
Overcoming barriers to adoption
Despite the advantages, there are often barriers to adoption faced by SME retail owners. “Often when adopting new technology,” shares Jun Ting, “SME retail owners would have their doubts about their return on investment.
“Many SME owners also don’t see the value of implementing technological solutions yet and thus, don’t see the need to invest in it. Additionally, as they are not familiar with the technology, they would have the preconceived notion that lots of time and money will have to be spent on training staff, it might all seem a bit overwhelming.”
But even when thus hurdle is overcome, there is an issue with using technology effectively. As Jun Ting explains, “even with access to technology, SME owners might not be familiar with how to use it and what to do with it, so the idea of digitalisation would still seem complicated and confusing.
“When they do decide to integrate new technology into their system, results might not be what they expected immediately and it would lead to feelings of frustration towards digital solutions. While such solutions do provide insightful data, it is as important for the data to be used effectively to increase revenue.”
Given the importance of digitalisation to facing our post-pandemic future and the role of SMEs in the economy, companies providing solutions to this sector should proceed with their clients’ unique needs in mind. Says Jun Ting: “when creating a solution aimed at SMEs, it is important to ensure that the data we provide is actionable and easy to understand. We have found that merchants care more about the results and actionable insights as compared to the tech used.” He emphasises that prioritising the needs of their merchants by understanding their questions, needs and concerns is one of their core values at Aimazing.
Digitalisation’s benefits go beyond merely weathering the pandemic. Besides how it allows F&B proprietors to understand customer behaviour, Jun Ting shares that it “also allows for SME retailers and F&B outlets to be aware of their customer profiles, making it possible to streamline their marketing strategy and put out more effective campaigns.”
Digital loyalty programmes, states Jun Ting, have a proven track record at customer retention. His company’s solution is a technological tool that allows for merchants “to have direct access to their customer base and have more precise and targeted marketing initiatives.
“This allows businesses to have more top-of-mind awareness, making them stand out from the competition and bring more traffic back into stores.”
More generally, his advice for SMEs running promotional campaigns is to consider “the return on investment, the long-term sustainability of the campaigns, and their profit margins.
“After speaking to many merchants, we realised that targeting customers that are already spending and are loyal to the brand is an extremely efficient strategy. This is a strategy that we at Aimazing hope to implement for many SMEs moving forward.” Data is one way of optimising this process, and something that Aimazing hopes to assist F&B proprietors with.
Indeed, working with Aimazing has helped Ichiho both survive a difficult year and give new directions into the future. Phua shares that his business has received $8.53 as return on every $1 invested. To further develop their business, Ichiho has long term intentions to digitise their manpower management and operations systems, while stabilising their flagship restaurant’s business by introducing more options to attract various diner profiles.