More disruption ahead, warns KPMG China survey
As their spending power grows, Chinese millennials are set to disrupt the nation’s retail sector, says a joint survey by KPMG China and shopping platform Mei.com.
Already retailers are transforming their businesses in response with new strategies such as omnichannel platforms, says the fourth annual China’s Connected Consumers survey. It analyses responses from 3004 mainland consumers to understand their current and future shopping habits.
Online shopping has effectively become a national pastime in China, the research shows, with 77 per cent of respondents identifying it as their favourite leisure activity. This is reflected in the popularity of online shopping festivals such as Double 12 and Single’s Day.
Nearly nine in 10 millennials are shopping online more than once a week, and 80 per cent expect the frequency to increase in the year ahead. As well as this, 31 per cent of millennials say they are expecting a significant increase in income over the next five years.
“The modern retail industry is less about what companies can create, but more about what consumers want,” says KPMG China partner/head of consumer and retail Jessie Qian. “We’re living in an increasingly customer-centric world, and the strategic focus of businesses should be on how they can build customer engagement and product distribution based on immediate demands.”
With the rise of the experiential generation there has been a surge in demand for luxury and affordable-luxury products. In the next year, say 70 per cent of millennials, they plan to spend more on luxury goods and services, mainly clothing, shoes, cosmetics and perfume.
“It is increasingly difficult for a single brand to be able to fill multiple segments,” says Qian. “As China’s retail market continues to develop, more consumer groups such as millennials will rise to prominence. It is imperative for companies to diversify and maximise their relevance to different groups of consumers.”
Mei.com co-founder/chairman Thibault Villet says innovation in products and services as well as in the O2O customer experience is a new, key driver for retail in China. “Data analytics, artificial intelligence and customer engagement offer new opportunities for product co-creation and, ultimately, customisation.”
Businesses also need to ensure they have all major post-purchase feedback channels covered, as half of the millennials and 44 per cent of other respondents indicate online feedback as a key shopping influence.
“The constant connectivity to the internet creates plenty of opportunities for businesses to impact consumers’ attention and behaviours,” says Villet. “Massive amounts of contextual data can also be used to personalise interactions with greater precision.”
Two-thirds of respondents indicate they post comments on an online store following a purchase, while 59 per cent do so on WeChat or other social-media platforms. In last year’s survey, 51.6 per cent of respondents said they would share their post-purchase feedback online.
“Good customer-relationship management is key to succeeding in today’s consumer and retail market,” says KPMG China head of consumer and retail Anson Bailey. “Businesses now understand the importance of customer experience and are strengthening their use of data analytics to gain a deeper understanding of shopping behaviours and preferences. Many are also collaborating with online platforms to gain an even wider pool of customer data.”