MILAN — China is a crystal ball for divining the future of consumer behavior worldwide, according to the PwC Total Retail Survey 2016, which was presented here Wednesday. The company surveyed 23,000 consumers in 25 countries about how they shop.
“China represents what will happen in the Western world and even Italy,” said Massimo Pellegrino, head of digital strategy for PwC.
In China, mobile devices have become the dominant channel for retail purchases. Sixty-nine percent of all retail purchases, excluding groceries, took place over the Internet — whether by desktop or mobile device — in 2015, Pellegrino said. Twenty percent of Chinese respondents said they made online purchases daily, compared to six percent in Italy and seven percent in the United States.
The digitization of commerce is taking off far faster in emerging markets than many established ones. China is followed closely by Hong Kong, Turkey and India in terms of daily online purchases, while the bottom rung is occupied by Canada at two percent. Australia and Denmark join Chile at three percent.
Shopping by smartphone could soon overwhelm other channels if, as PwC said, China’s so-called “Singles’ Day” is indeed a sign of things to come. Alibaba registered $14.3 billion in sales during the 24-hour shopping fest on Nov. 11, a
60 percent rise over 2014. Sixty-nine percent of those purchases took place on mobile devices, a 43 percent increase over Singles’ Day in 2014. That figure, however, was facilitated by Alibaba, which offered a discount only for mobile device purchases to encourage that channel. PwC’s point is that Alibaba and other big Chinese e-tailers invest in nudging consumer behavior, and that these investments — whether well-designed smartphone apps or discounts — are paying off.
The number of Chinese who said they had made any purchases on a mobile device leaped from 18 percent in 2014 to 43 percent in 2015. Meanwhile, the global average has gone from 12 to 20 percent.
In terms of encouraging online purchases for retail in general, loyalty programs and other membership systems are very effective, at least in Italy. For 75 percent of Italian respondents, the primary motivation for making an online purchase in the last 12 months was to access exclusive offers.
While social media, customer reviews and the power to make comments all substantially influenced purchasing decisions, PwC found advertising paled in comparison. Eighty-four percent of the global sample surveyed said their online purchasing had been influenced by social media in 2015, up 12 percent compared to 2014. Just 30 percent said the same for advertising.
PwC maintains that while foot traffic to physical stores may be diminishing in many areas, such as the United States, brick-and-mortar is still extremely important and assuming a new role for consumers: an experience in itself to be deeply integrated with the store’s digital incarnation. For example, 43 percent of global respondents said they would like to receive personalized, relevant offers in real-time while they are inside a store, preferably via e-mail as messaging is perceived as too invasive. Pellegrino said this trend was particularly true for price-sensitive Italian consumers.
“This gives an idea of how hybrid the relationship has become. There is no distinction between the physical and digital experience,” said Pellegrino. “In this case the desire of the consumer is to receive offers that are contextualized and personalized so that they conclude their purchases in a more effective way.”
Pellegrino sees two trends that are becoming particularly important to fashion. Retailers are developing “click-and-collect” services where the client may purchase a product in one place and then pick up the merchandise in the location of their choice. For example, they might buy something in an airport in London, and arrange pickup at a local store in Shenzhen. Pellegrino said the layout of major retailers will increasingly include areas dedicated to “collect” purchases.
The other digital trend, especially for very high-end fashion, is to use the Internet as a vehicle for customization of the product itself. “Very few do this yet,” he cautioned. Logistical barriers to personalization in production remain prohibitive for most brands.
Although Pellegrino said fashion, like groceries, follows enough rules of its own to merit a separate category from other retail sales, the PwC report found that online sales of clothing nearly tied with books, music and video games in terms of the percentage of consumers who said they bought half or a substantial portion (21 to 40 percent) of these kinds of items through the Internet in the last year — a higher percentage than for electronics, appliances, sports equipment or even toys.