The emergence of new retail formats substantially impacts the traditional physical retail industry, with modern consumer behavior also experiencing drastic changes. In the face of dramatic changes in the world today, how can entrepreneurs adapt to the new needs of the increasingly sophisticated and discerning consumers today?
How can we target the Chinese market, as well as designing a performing and balanced multi-channel strategy? Nielson compiled “China’s New Retail Whitepaper” using online retail sales data analysis coupled with consumer insights study, to answer these questions.
Nielson China’s general manager Wei Shao mentioned: “In the early days of the e-commerce markets, purchase methods of online shoppers are very simple, firstly, search followed by comparing products, buying them, and lastly leaving feedback. However, in today’s new retail environment, the trend that we can observe are marketing contacts, sources of information, rapidly increasing channels”.
Internet shoppers tend to be richer, younger, and highly educated
Nearly 58% of Internet consumers’ household income in China is above 10,000 yuan, but only 21% of offline consumers meet this level of income. More than half of online consumers (64%) are aged between 18-35 years, but only around 45% of offline consumers fall in this range. In addition, 77% of China online shoppers have a bachelor’s degree or above – significantly higher than 41% of offline shoppers.
Online and offline consumers have different mentalities
China’s online shoppers value ‘quality products’ and ‘special discounts’ and care about whether the goods are affordable while offline consumers value service and experience. Nearly 24% of consumers mentioned they like online ‘leisure shopping’. Nearly 24% of consumers like online ‘casual shopping’, while 11% said they would buy special offer items during holiday seasons through online platforms.
Nearly 24% of consumers mentioned they like online ‘leisure shopping’. Nearly 24% of consumers like online ‘casual shopping’, while 11% said they would buy special offer items during holiday seasons through online platforms.
Most online shoppers (44%) will often visit more than 3 electronics business platforms, while offline shoppers are generally fixed to 2 physical retail stores (51%). Even if electronics business continues to grow, online shopping is still unable to give up the physical channels. Online and offline consumers are looking at different requirements. As a result, while online retailers are developing strategies, they pay attention to clear product differentiation, and offline retailers focus on the difference between service and experience, to avoid falling into price competition.
Online and offline Chinese consumers are looking at different requirements. As a result, while online retailers are developing strategies, they pay attention to clear product differentiation, and offline retailers focus on the difference between service and experience, to avoid falling into price competition.
More than 51% of the respondents will buy niche products online, while only 30% of consumers will go to the store to buy niche products.
Enhancing The Effectiveness of Marketing Channels
Retailers need to find the most effective combination of ads to accurately target consumers. According to Nielson Promotion Effectiveness Report, about 76% of the promotional activities are unbalanced. Most consumers will be in 3 exposure points to complete a purchase – and to advertisers, the most effective online contact number is 5.4.
Master the festive and rural markets’ huge business opportunities
Chinese consumers are more likely to be impressed by discounts and are extremely sensitive to promotional news. According to Nielson’s retail audits and online retail monitoring, it can be observed that last year’s New Year’s Day holiday and “Double 11” shopping festival along with FMCG sales growth, led to the growth of the whole channel.
In addition, in recent years the government announced the investment of 140 billion yuan to provide 98% of the rural areas with broadband by 2020, and electronics business giants Alibaba, Jingdong, Suning cloud business are actively developing the rural market, promoting the electronics business trend. For the online retail market, the purchasing power of the rural market will continue to act as another important growth engine.
Rethinking Positioning of The Physical Stores
According to Nielsen’s latest retail monitoring data and the Chinese consumer confidence survey, despite online FMCG driving the overall sales growth by 29%, the offline sales channel still accounts for 74% of the country’s FMCG sales.
At least in the near future, physical stores will not disappear. However, they will convert roles, and follow the vigorous development of the electronics business, and changes in modern consumer behavior.