Consumers in mainland China opt for enhanced digital interactions amid COVID-19, KPMG report finds
Value for money and trust become key drivers for purchase
Hong Kong amongst top four markets to record the highest increase in the use of online shopping services in the non-grocery space
HONG KONG, July 27, 2020 /PRNewswire/ -- Consumers in mainland China and Hong Kong markets have increasingly adapted to online shopping amidst the Covid-19 pandemic and see increased use of social or digital channels as their main means of communicating with organisations, while 'value for money' remains important, according to a KPMG global survey.
KPMG's Consumers and the new reality report examined the evolution of consumer behaviour across 12 countries and regions and territories based on a survey of more than 12,000 consumers, including 1,017 from Hong Kong and 1,027 from mainland China. The survey looked at how consumers' expectations and interactions with organisations across different sectors have changed since COVID-19 and how organsations should respond.
The convenience of shopping online is a key driver of increased use of digital channels, and consumers are placing a higher emphasis on home delivery and local convenience. Mainland China and Hong Kong are among the top four markets identified with the highest net increases in the use of large grocery retailers' online services. Hong Kong is also amongst the top four to record the highest increase in the use of online shopping services in the non-grocery space. At the same time, there is a rise in new online shopping formats in mainland China, such as influencer livestreams, self-built e-commerce and community commerce enabled through social media, demonstrating the importance and strength of e-commerce channels in the Chinese retail market.
"As consumers in China continue to adapt to the pandemic and its after-effects, it is clear that changes to their purchasing behaviours are here to stay," says Jessie Qian, Partner, Head of Consumer and Retail, KPMG China. "Physical retail will need to offer consumers new reasons to purchase offline. With price and convenience being key to consumers' decision making, retailers will need to develop their online and last mile logistics and delivery capability and manage the balance between home delivery and in-store product ranges."
'Being transparent with clear communications' is identified by the most respondents in mainland China (58%) as the trust-building factor that is more important to customer now compared with before the COVID-19 situation began, while in Hong Kong the top cited (62%) factor is whether the brand is 'responding quickly to feedback and queries'. The report also looked at the impact of COVID-19 in the banking and insurance sectors where trust is prevalent. Banking consumers In Hong Kong (49%) and mainland China (40%) identified "providing digital security to protect their accounts" as among the top proposition for banks, while insurance consumers in Mainland China (35%), where it has seen one of the highest policy acquisition rates since the pandemic, identified 'proactive communications regarding the effect of Coronavirus on their service offering' as the top priority.
Anson Bailey, Partner, Head of Consumer and Retail, ASPAC, KPMG China, says: "Across China and around the world, a new consumer is emerging -- one that is financially impacted, more advanced in their use of digital technologies, and more thoughtful and selective in their decision-making. Organisations have responded to COVID-19 with high levels of innovation, including greater digital access to purchasing and customer support, and they must continue to focus on the digital enablement of their customer."
Those most affected by the pandemic are less inclined to pay a premium for branded products or nice-to-have experiential factors and are deferring non-essential purchases. In mainland China, this has translated into higher demand for groceries, fast moving consumer goods, and other food and beverages, and less overall demand for apparel and jewellery. The survey found that consumers in Hong Kong and Mainland China have placed 'value for money' as the most important purchase driver arising since the COVID-19 outbreak. Seventy percent of respondents from Hong Kong indicated 'value for money' as important to them, compared to the 63% average across countries, while 51% in Mainland China agree with this sentiment.
Alice Yip, Partner, Head of Consumer and Industrial Markets, Hong Kong, KPMG China, says: "The consumer's search for value for money is a fundamental change in purchase priorities and will be prevalent for 12 months or more. Organisations can no longer protect their price positioning with experiential factors that now have less direct benefit to the consumer. They will need to rethink their business and operating models and be clear on where they need to win the customer's trust."
About KPMG China
KPMG member firms and its affiliates operating in mainland China, Hong Kong and Macau are collectively referred to as "KPMG China". KPMG China is based in 24 offices across 22 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Wuhan, Xiamen, Xi'an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG's appointment for multidisciplinary services (including audit, tax and advisory) by some of China's most prestigious companies.