November 28, 2018 – More than half (52 percent) of surveyed consumers in ten cities* in the Greater Bay Area (GBA) expect their online spending next year will exceed the amount they spend offline, illustrating the increased opportunities available to smart retailers, finds a joint survey by KPMG China and GS1 Hong Kong.
KPMG China and GS1 Hong Kong’s third annual report, titled “Tapping into Smart Retail”, provides an overview of the latest omni-channel commerce trends and developments in the GBA, both from a business and consumer perspective. YouGov was commissioned to conduct two surveys, the first one of 1,400 consumers across ten cities in the GBA, and second one of nearly 300 Hong Kong-based CEOs, assessing the current and future consumers’ habits as well as opportunities and challenges for adopting omni-channel business models.
The consumer survey finds that 96 percent of respondents in mainland China and 82 percent in Hong Kong plan to spend more online next year. Online shopping platforms are set to benefit from this increased spend. Taobao, Tmall and JD.com are among the top online shopping channels for GBA consumers. The survey also finds that a number of local and international integrated shopping platforms, including Amazon, HKTVmall, Rakuten, Pinduoduo and Yihaodian have secured considerable market share.
Meanwhile, 27 percent of surveyed CEOs said they only sell products and/or services via their own website/platform, while one-fifth highlighted e-commerce platforms are not applicable to their business. This indicates that potential opportunities exist for businesses that can offer goods and services on a wider variety of platforms.
Anson Bailey, Head of Consumer and Retail, ASPAC, KPMG China, says: “As we continue to see customer needs changing and digital platforms emerging, CEOs need to better understand the consumers across the GBA since they are more tech savvy than ever before and are looking for a better and more streamlined customer experience.”
The consumer survey also highlights a number of different drivers for smart city initiatives within the GBA. Almost half of mainland China respondents indicated smart environment (such as energy saving and sustainability), service robots (such as use of artificial intelligence, smart sensors, IoT devices) and smart transport (including autonomous vehicles/drones) as important drivers. In Hong Kong, 43 percent of surveyed consumers identified new payment methods; 53 percent of surveyed CEOs share the same view.
Among preferred growth strategies identified, 46 percent of surveyed CEOs highlighted “developing and applying innovative technologies to increase competitive edge”. This was followed by “developing more integrated O2O strategies” (28 percent), developing social media platforms (31 percent) and developing more mobile first strategies (20 percent).
Anna Lin, Chief Executive of GS1 Hong Kong, says: “Everything in the physical world has a digital twin. Technology like IoT bridges the gap between ‘online’ and ‘offline’, yet a common language is needed for different devices and systems to be able to communicate in an automated way and to understand data in the same way. Leveraging global standards, even ‘dumb’ products can be tracked by their unique identifiers, and it allows businesses to develop an integrated O2O strategy to engage consumers.”
In terms of challenges for implementing or enhancing omni-channel, 57 percent of surveyed CEOs highlighted the lack of talent, followed by integration of data (47 percent), and uncertainties regarding which technologies will deliver the greatest returns (45 percent). The survey also points to increased challenges from digitisation. A third of surveyed CEOs highlighted “consumers’ concerns over data privacy” as the main challenge for e-commerce in Hong Kong. From a consumer perspective, 11 percent of Hong Kong respondents believe companies offer a high level of data security. In contrast, consumers in the nine mainland cities surveyed in the GBA are relatively confident; 49 percent said the same.
The survey findings suggest that both CEOs and consumers agree that ensuring full traceability/origin of products and raw materials, authentication of products, and certification of products can help build consumer trust in brands. “It is important to give every product a unique identity which not only allows consumers to search, track and authenticate products, but also helps build consumer trust,” says Lin.
Bailey concludes: “Consumers in both mainland China and Hong Kong, especially Millennials and their successors, are looking for a more seamless and transparent shopping experience. They want payment to be fully integrated and delivery to be immediate. Companies in the GBA should consider combining newly available cost-effective technology with new ways of working. This is particularly important, considering the rapid economic growth and further collaboration across the cities within the GBA.”
*Note: The ten cities include Shenzhen, Guangzhou, Zhuhai, Foshan, Jiangmen, Zhaoqing, Huizhou, Dongguan, Zhongshan and Hong Kong. Data for Macau consumers is not available due to insufficient sample size.