They say they want a revolution

30 Pages·2016·2.19 MB·English

www.pwc.com/totalretail
They say they want
a revolution
Total Retail 2016
Online shoppers around the
world are fundamentally
disrupting retail—again.
Will your organization be
left behind?
February 2016
In PwC’s most comprehensive
Total Retail survey to date, we
asked nearly 23,000 online
shoppers around the world
about issues ranging from
mobile shopping to social
media influence to
innovation at retailers. Their
answers reveal the changing
behaviors that will drive the
next retail revolution.
2 | Total retail 2016
It’s nothing short of a revolution, and the stakes have never been higher for retailers and
consumer goods companies. Our Total Retail survey results, together with 2015 fourth-
quarter retail results around the world, point to 2016 as a watershed for many of the
trends that have been percolating over the past few years. From the unmistakable desire
to be a member of a specialized retail community to buying more on their mobile phones,
from becoming more reliant on social media to demanding a more service-focused and
knowledgeable store employee, global consumers are pushing the boundaries of what
shopping means.
PwC's Global Retail and Consumer practice, in conjunction with PwC's Research to Insight (r2i), administered a
global survey to understand and compare consumer shopping behaviors and the use of different retail channels
across 25 territories: Australia, Belgium, Brazil, Canada, Chile, China/Hong Kong, Denmark, France, Germany,
India, Italy, Japan, Malaysia, Mexico, Middle East, Poland, Russia, Singapore, South Africa, Spain, Switzerland,
Thailand, Turkey, the United Kingdom and the United States.1
5 continents, 25 territories, nearly 23,000 online shoppers surveyed
Russia
Canada
Denmark
UK Poland
Belgium Germany
France Switzerland
US Spain Italy Turkey
Japan
China
Mexico Middle East India Hong Kong
Thailand
Malaysia
Singapore
Brazil
Chile
Australia
South Africa
1Totals may not add up to 100% due to rounding. Total retail 2016 | 3
In this report, we 1. To understand future global 5. Mobile devices have turned
shopping behavior, look to the corner as purchasing
present and discuss
China. Our historical data tools. Mobile commerce is now
the findings of our
shows that what China was firmly on the march toward
global Total Retail doing several years ago, becoming the online shopping
today’s consumers across the tool of choice.
survey—together
globe are doing.
with additional PwC 6. Today’s consumers look to
2. We may live in the age of community. A deeper connection
analysis and third-
value—but price is still king. with retailers via customer
party research—to
Years of slow global economic “communities” is apparent as
uncover these eight growth have resulted in a value consumers pick up on the perks
dynamic, and affordability of membership.
insights of the next
is important in every income
retail revolution. bracket, in virtually every 7. Social media is the “great
country, across every age group. influencer.” Customers are
relying on social media—in
3. Store traffic doesn’t matter addition to their family’s
as much as overall customer opinions, advertising messages,
conversion across channels. and media coverage—to make
Customers are voting with their product decisions and gauge
feet as they shop more online, brand authenticity.
and for multi-channel retailers
that means the need for an 8. There is room for retailers to
increasingly focused, curated grab the “leading innovator”
and engaging brick-and-mortar mantle. While consumers see
store experience that creates plenty that is innovative about
maximum conversion—no their favorite retailer, very few
matter what channel ultimately retailers qualify as “leading
records the purchase. innovators” in shoppers’ minds.
4. Retail talent (finally) matters.
Ever-more sophisticated
customers want employees
who can enhance the brick-
and-mortar store experience:
associates with the product
knowledge, technology know-
how, and people skills.
4 | Total retail 2016
1: To understand future global shopping behavior,
look to China
The influential science fiction author Let’s start with some recent sales
and technology essayist William data. Chinese online sales in 2015
Gibson is credited with saying, “The massively shifted to mobile. Single’s
future is already here; it’s just not Day—the 24-hour shopping festival
widely distributed yet.” that now dwarfs Black Friday in
terms of sales—is often used as a
Gibson’s credo is certainly accurate bellwether for China’s e-commerce
when it comes to consumer market. This year, Alibaba's Single’s
behavior, the future of which is Day online sales came in at $14.3
squarely centered in China. Not only billion, a 60% increase over 2014.2
does our Total Retail survey data Most significant, however, was the
illustrate a continuing willingness shift to mobile. On Single’s Day
on the part of Chinese consumers 2015, 69% of all transactions were
to become early adopters of cutting- made on mobile devices, up from
edge shopping habits such as mobile 43% in 2014.3
Chinese consumers are also leading
“The future is here. It’s just not widely distributed yet.”
the way in their willingness to
leapfrog legacy technologies in
—William Gibson, science fiction author
favor of a “social” replacement.
For example, the Chinese smart
phone manufacturer Xiaomi,
buying but, in conjunction with now the fourth largest globally,
our studies from previous years, bypasses selling through telecoms
it suggests that Chinese shopping carriers and, instead, sells 70% of
behavior is a leading indicator for its products directly to consumers
global shopping behaviors. In other online. This is done through
words, what Chinese consumers are cultivating engagement on social
doing today, shoppers in the rest of platforms among a core group of
the world will be doing in the not- users (referred to as “Mi-fans”).
too-distant future. Xiaomi uses social engagement
tactics like contests, exclusive
events and flash sales to turn
new product releases into online
shopping festivals.
2 theatlantic.com, Alibaba Brought in $1 Billion During the First 8 Minutes of China's Black Friday, November 11, 2015.
3 Business Insider, November 14, 2015.
Total retail 2016 | 5
Our Total Retail data echoes what’s than the rest of the world has. But
happening in the Chinese market. the percentage of our global sample
In our China sample, 65% say they that shops online every day (7.1%)
shop online via their mobile at least has now overtaken where China was
monthly, and only 12% have never in 2012 (4.3%), and is increasing
done so. In our global sample, on steadily. When it comes to adopting
the other hand, just 28% say they mobile, our global sample is about
shop online via their mobile at least three years behind the Chinese.
once a month, and 46% have never
shopped online via their mobile.
Figure 1: Almost one in five of our surveyed Chinese consumers
There are several reasons that
shops online daily
explain why mobile is so advanced
in China. One is the relative lack of
Those who
personal computers compared to
the penetration of mobil e phones; 19.6%
another is that Chinese e-commerce shop
players such as Baidu, Alibaba, 18.7%
or Tencent are leaders in mobile
online daily
personalization through their huge
data analytics platforms. So Chinese
online shoppers are presented with
personalized information based on 13.8%
their income level, shopping habits
and location in a city, even if they
are walking or driving at the time.
But how do we know that other
7.1%
shoppers will adopt the behaviors of
Chinese online shoppers? Projecting
6.0%
from the relative trends in the 5.5%
past few years, we can expect the 4.3%
world to follow Chinese shopping
2.9%
behavior. As Figure 1 illustrates, in
the past four surveys we have asked
how often respondents shopped
online. The percentage of Chinese
shoppers who shop online every day BUY NOW BUY NOW
has increased at a much faster rate
China Global
Source: PwC, Total Retail Survey, 2016 2012 2013 2014 2015
6 | Total retail 2016
Compared to our survey one year China was in 2014. In terms of the
ago, we’ve also seen a massive statement “My mobile phone will
jump in the number of Chinese become my main tool through which
shoppers who say they have used to purchase items”, for example, the
their mobile/smartphone to pay for global results for those respondents
a purchase, from 18% to 43%. At agreeing with that statement in
the same time, our global sample this year’s survey (34%) is still far
jumped from 12% to 20%, just behind the percentage of Chinese
slightly higher than China last who agreed with the statement in
year. If online shoppers around the 2014 (55%).
world follow Chinese consumers
again in the next year, we’ll see a Figure 2: The mobile phone is getting more popular as a
major boom in the use of mobile purchasing tool
payments globally.
Q: Please indicate how strongly you agree or disagree with the
following statements.
For some shopping behaviors,
though, the rest of the world is far
60%
enough behind China that it will 56%
take years to catch up. Over the
I am willing to
past several years, for instance, we 30% 33% load credit onto my
have asked our survey respondents mobile phone to
to agree or disagree with a number provide payment
for products
of statements about the use of their
mobile device. In Figure 2, we
see that when it comes to trust (“I
am willing to load credit onto my
mobile phone to provide payment
for products”) and using a mobile
59%
55%
phone as a purchasing tool, the
China sample and global sample are
My mobile phone
increasing at the same rate—but it 30% 34% will become my
will likely take some time before the main tool
through which to
rest of the world catches up to where
purchase items
Global China
Base: 1,000

Source: PwC, Total Retail Survey, 2016 2014 2015
Total retail 2016 | 7
2: We may live in the age of value—but price is still king
Tepid economic growth in the
Figure 3: Online shoppers choose a favorite retailer because the
US and Europe over the past few
price is right
years has resulted in an economic
bifurcation of shoppers in these Q: Thinking of your favorite retailer, why do you shop here?
regions. In a recent PwC report
we have labelled consumers as
“survivalists” and “selectionists.” 4 Their prices are good 60%
For survivalists, affordability is
They usually have the items I want in stock 32%
at the core of future purchase
decisions. For these shoppers, I trust the brand 32%
discounts and deals are critical.
They sell things I cannot find anywhere else 25%
Selectionists, on the other hand,
maintain an appetite for brand and
They have a good returns policy 25%
a distinctive store experience.
They have fast/reliable delivery 24%
In this year’s survey, we asked
Their website/mobile site is easy to use 22%
several questions about price
I can check the in-store availability of
to gauge the extent of this 21%
a product online
phenomenon. We found that
They have a great loyalty program 20%
affordability is, indeed, a major
driver for shopping behavior around
Their store prices match prices online 17%
the world, across income bands and
across national borders. And yet, it’s Superior online customer reviews 14%
just part of the larger value story. Sales associates are knowledgeable
14%
and responsive
Just as important as the actual price
They provide me with personalized
is the perceived value of a purchase. 12%
offers/marketing
They provide advice or help me
11%
choose products
They have inspiring online content which
11%
catches my interest
They are a socially/environmentally
7%
responsible retailer
They are an independent retailer with
6%
a community feel
Base: 22,618

Source: PwC, Total Retail Survey, 2016
4 PwC, 2015 Holiday Outlook.
8 | Total retail 2016
For example, in many countries,
Figure 4: Depending on the country, price and convenience rule
convenience is as much a part of
value as price, as shown in Figure 4. Q: What has been your main influencer for buying online in the last 12 months?
Take South Africa. When we asked
South African online shoppers what I buy online because I buy online because I buy online for other
“has been your main influencer it is convenient it is cheaper reasons
for buying online in the last 12 Australia 40% 47% 13%
months,” 57% of our sample said Belgium 43% 39% 18%
that convenience was their main
Brazil 42% 54% 5%
influencer, compared to just 30% for
Canada 46% 37% 17%
price. And when we looked at the
Chile 24% 63% 13%
United States—58% of our sample
said that convenience was the main China 62% 36% 1%
influencer for buying online. For
Denmark 38% 50% 12%
our entire global sample in fact,
France 47% 47% 7%
convenience (47%) was a slightly
Germany 56% 35% 9%
bigger influencer than price (43%)
when buying online. Clearly there is Hong Kong* 47% 47% 7%
more to value than price. India 65% 31% 4%
Italy 49% 42% 9%
In our simplest and most straight-
Japan 49% 44% 7%
forward question on value, we
Malaysia 50% 42% 9%
asked, “Thinking of your favorite
retailer, why do you shop here?” Middle East** 42% 42% 15%
Price trumps all other reasons in Mexico 36% 48% 16%
this context: 60% of our global
Poland 51% 43% 6%
sample named price; the second-
Russia 47% 45% 8%
most named option at 32% was
Singapore 40% 55% 5%
“they usually have the items I want
in stock.” But even in this question, South Africa 57% 30% 13%
value had an intangible component. Spain 48% 43% 9%
The third most-named option out
Switzerland 54% 32% 14%
of the 18 options was “I trust the
Thailand 51% 38% 11%
brand,” at 32%.
Turkey 36% 56% 8%
United Kingdom 55% 37% 8%
United States 58% 32% 10%
Global 47% 43% 10%
* For Hong Kong, the base size was 100 survey respondents
**Middle East includes UAE, Egypt & Saudi Arabia
Base: 22,618

Source: PwC, Total Retail Survey, 2016
Total retail 2016 | 9
Not only are our respondents Even among high earners, finding
looking for deals, they’d even deals is a priority. If we combine
purchase outside their country of the two highest-earning brackets
residence to get them. This year we across three of our countries—
asked for the first time what would Brazil, Canada, and China—the
lead our global sample to purchase high earners in each country still
from an out-of-country online would shop out-of-country mostly
retailer in the next 12 months. because of price. For Brazil, 73% of
Price was king—56% of our global high earners say they would; while
sample said that “better prices 61% of high earners in Canada said
available” would convince them. they would; and in China, 61%
said they would look to an out-of-
country online retailer for a deal.
Figure 5: Even high earners will search far and wide for a good deal
On what products are these
shoppers looking for deals from
The two highest-earnings income brackets
an out-of-country retailer? Fifty-
one percent of our sample named
in each of our surveyed countries plan to purchase
clothing and footwear, 44%
from an out-of-country online retailer in said consumer electronics and
computers, 40% chose books, music,
the next 12 months for better prices movies and video games, and 31%
chose health and beauty products.
The only real dent in the armor
73%
65% of affordability comes from the
Millennials. When we look at
61% 61%
Millennials’ (ages 18-34) answers
to the question “Thinking of your
favorite retailer, why do you shop
here?” just 56% chose “their prices
are good,” compared to 63% for
everyone else. Millennials also shop
at their favorite retailer for brand
affinity (33%), superior online
customer reviews (17%), reliable
delivery (25%) and an easy-to-use
website or mobile site (23%).
Global Brazil Canada China
Base: 1,000

Source: PwC, Total Retail Survey, 2016
10 | Total retail 2016