Digital innovation wins Chinese shoppers

Warc, 11 September 2014

TIANJIN: Spending by lower income Chinese consumers is set to double between 2013 and 2020, according to a new analysis which sees significant opportunities for those brands that can create value through digital innovation.

Accenture, the consulting firm, said that Chinese urban consumers in the low- and middle- income segments represented 70% of nationwide urban consumers and accounted for nearly two thirds of all mass urban consumer expenditure. These groups had spent around $2 trillion in 2013 and were projected to be spending in the region of $4 trillion by 2020.

"Online shopping is popular among lower-income Chinese consumers in small and medium-sized cities, as they can shop as conveniently as the high-end consumers in China's biggest cities", said Gianfranco Casati, Accenture's Group Chief Executive for Growth Markets.

This trend was being driven by the falling price of mobile devices which was leading to their increased penetration and in turn removing the barrier that had previously existed as these consumers had been unable to access physical stores.

"Successfully capturing these opportunities requires companies to place digital at the heart of their strategies, and understand and embrace the demands of the different segments of China's digital consumer," Casati added.

The lower-end segment, for example, tends to be both frugal and concerned with quality while being less brand aware or brand loyal.

Gong Li, chairman of Accenture Greater China, also warned businesses of the practical difficulties they faced looking for growth here, including a lack of business infrastructure and logistics to deliver products and services and the difficulty of generating scale and efficiency in scattered smaller cities near rural areas.

Accenture highlighted four key actions companies should take, starting by putting consumer insights at the core of business processes and refocusing sales platforms towards digital channels.

Personalising and improving the customer experience will help build loyalty, it said, while an omnichannel digital approach would connect businesses externally to customers and internally across business units.

Finally, companies needed to fully understand the new consumer market ecosystem based on big data and m-commerce platforms. That way they would be able to keep up with the growing customer demand for services, while using customer data and insights to create innovative business models.

Data sourced from Accenture; additional content by Warc staff