Roles of online and offline channels are shifting as consumer behaviour changes in the Greater Bay Area become permanent, study finds.
The Covid-19 pandemic has reshaped the retail industry forever, forcing both retailers and consumers to embrace digital platforms, whether they were ready or not. New research from KPMG China, GS1 Hong Kong and HSBC suggests that the retailers who have best survived this rapid transition are those who have been able to cater to the growing level of digital engagement demanded by consumers.
The study, “Retail’s Realignment: The Road Ahead for Omnichannel in the Greater Bay Area,” explores how businesses and consumers in Hong Kong and the rest of the Greater Bay Area (GBA) are embracing the trends and technologies in a retail ecosystem challenged dramatically by the Covid-19 pandemic. A survey of 2,053 consumers and 400 senior retail executives across Hong Kong and nine Mainland China GBA cities and interviews with industry leaders identified the following trends:
1 Consumer shopping behaviour has changed for good
Among Hong Kong consumers surveyed, 50% said they felt more comfortable shopping online since the start of the pandemic, and of those in the nine Mainland China GBA cities, 59%. Around one in four consumers surveyed said they could live without physical stores, while about 60% said they better understand how to search for products online. Meanwhile, retailers interviewed for the study said that shoppers’ new habits will be hard to break, and the gains made by digital channels mean that many shoppers will not return to physical stores.
2 Consumers expect brands to offer an integrated online-to-offline (O2O) experience, with Generation Z leading the charge
respondents from Hong Kong and 85% from Mainland China GBA cities expect retailers to have a better connection between online and offline channels. Despite this, the survey revealed that only 39% of businesses were currently focusing on integration between their online and physical stores, suggesting a significant gap in retailers’ O2O propositions.
At the forefront of these expectations is Generation Z, those born from 1995 to 2010. Analysis of consumers aged 18-24 shows that 73% in Hong Kong and 86% in Mainland GBA cities expect a swift response to product enquiries logged on online chat, and expect brands to use tech including AI to help shortlist new products based on purchase history and style.
Consumers also expressed a desire to be able to engage with brands across social media and other digital mediums, and they expect brands to use technology to improve customer service, ease of payment, logistics and convenient product returns. This suggests that brands and retailers who forge comprehensive O2O strategies that encompass multiple digital points of engagement will enjoy a significant market advantage in the years ahead.
These strategies should take into account the changing roles of online and offline channels, reflecting when, where and how customers prefer to engage with brands and make purchases. For example, for some types of products, customers may prefer to experience and test products in-person at a retail store and then purchase online later; while for others, browsing and purchasing may happen entirely on a brand website, marketplace or social media channel.
3 Demonstrating authenticity and explaining purpose is more important than ever before to build trust with customers
The pandemic has sharpened consumers’ focus on health, sustainability and well-being. In the survey, authenticity was the number-one characteristic that attracted consumers to brands, out of a list of 10 other attributes. Since the beginning of the pandemic, 68% of Hong Kong consumers and 65% of those from Mainland China GBA cities say they are more conscious of a product’s origins.
4 Sourcing, upskilling and reskilling talent remains a key challenge for retailers, highlighting the need for education initiatives
For a majority of the retailers interviewed, sourcing talent with the right skills in digital and data analytics, along with training and upskilling existing staff to build a future-ready workforce, were identified as leading challenges. Executives mentioned IT and systems support, data analytics, and research and development as areas where they are facing the greatest talent shortages, while sales, marketing and communications was another key area of concern. This finding highlights the need for educational institutions to be more proactive in developing relevant digital skills training programmes that can better serve the retail industry.
5 Consumers expect brands to deploy technology to speed fulfilment and reduce costs
As consumers become more adept at searching, shopping and paying for goods online, they expect brands to step up their implementation of technologies to make the shopping process faster and more efficient. They are ready to embrace solutions which help them more easily search for items and recommend products based on their purchasing history, even if this means they have to share personal data. However, concerns remain among consumers about the security of that data – with 76% of respondents overall saying they believe companies provide a moderate, low or insufficient level of data security.
6 The need for comprehensive strategies for the GBA and Southeast Asia is more apparent
The survey reflects that 73% of retailers are implementing GBA-specific strategies across one or more of their business functions. However, where these strategies exist was less consistent: the most common business functions for which retailers are implementing a GBA strategy are sales, marketing and communications (43%). On the other hand, just 16% are developing GBA-specific strategies for finance or human resources and 10% for legal.
Given ongoing regulatory changes as well as tax and legal considerations for cross-border recruitment and capital flows, this suggests that a potential gap exists in how retailers are planning their back-office functions with relation to the GBA. At the same time, many retailers are looking to expand into Southeast Asia, a region that is experiencing rapid adoption of e-commerce, particularly on mobile channels. Industry executives interviewed for the study emphasised the need for adequate localisation of products, services and marketing approaches to appeal to this growing pool of digital-savvy consumers.
【Source: The Bulletin HKGCC , September, 2021】
【2021年9月，文章來源： 香港總商會工商月刊 】