Consumers want new, they want it now and they want retail totally disrupted—again.
This year will be the turning point for retail because global consumers and their new ways are “pushing the boundaries of what shopping means,” according to PwC.
The report uncovered eight major insights of what’s being called the next retail revolution.
1. Look to China to understand future global shopping behavior
No one in the apparel industry ever really has their eyes off of China, but the powerhouse nation may be the spirit of things yet to come. Chinese consumers have become early adopters of new-age shopping habits like m-commerce and their buying patterns are leading global shopping behaviors.
“In other words, what Chinese consumers are doing today, shoppers in the rest of the world will be doing in the not-too-distant future,” according to the report.
Taking Singles’ Day—China’s one-day online shopping event that now outdoes Black Friday when it comes to sales—as a benchmark, consumers spent $14.3 billion on the day and 69 percent of the transactions were done on mobile, up from 43 percent in 2014.
Of the Chinese consumers surveyed, 65 percent said they shop online with mobile devices at least once a month and only 12 percent never purchased anything on an e-commerce channel. Of the global sample, however, 28 percent shop with a mobile device monthly and 46 percent have never done so.
“When it comes to adopting mobile, our global sample is about three years behind the Chinese,” PwC said.
There are two main reasons for this: there’s a relative lack of personal computers in China compared to mobile phones and the country’s major e-commerce players (Alibaba, Baidu, Tencent) are acing mobile personalization.
“Chinese online shoppers are presented with personalized information based on their income level, shopping habits and location in a city, even if they are walking or driving at the time,” the report noted.
The rest of the world may be behind in some of these practices and general adoption, but if trends continue as they have, the rest of the world will likely follow Chinese shopping behavior, PwC said.
2. Price is still king
Affordability is still a major driver in purchasing decisions, but perceived value is almost as important as price.
Convenience has also played into perceived value and that’s part of what’s driving e-commerce. Forty-seven percent of consumers surveyed cited convenience as the main driving factor behind their online buys, which was even more than the 43 percent who pointed to price.
When asked to say why they shop at their favorite retailer, however, 60 percent of consumers named price as the reason, followed by the item being in stock and trust in the brand.
“Not only are our respondents looking for deals, they’d even purchase outside their country of residence to get them,” the report noted. Fifty-one percent of shoppers said they would buy clothing and footwear overseas if they could get good deals.
Millennials, naturally, are the only outliers. Fifty-six percent of Millennials said price was why they frequented a favorite retailer, compared to 63 percent of everyone else. Brand affinity, superior online customer reviews and reliable delivery topped the list of other reasons Millennials favor certain retailers over others.
3. Store traffic doesn’t matter as much as overall customer conversion across channels
“First things first—the physical store is still operating from a position of strength, even as foot traffic slows,” the report noted. Consumers still want to interact with a product in person even if they’re doing their research online beforehand.
But how do retailers give consumers the kind of in-store experience that leads to conversion?
According to consumers, they want sales associates to have a “deep knowledge” of the product range, they want checkout to be easy, they want the ability to quickly check online stock, an inviting ambience and Wi-Fi.
“Those retailers who can target their customers with promotions and offers while in-store, ensure that loyalty program information is up-to-date on their mobile website and facilitate mobile payments will be meeting expectations around mobile use,” PwC said.
4. Retail talent (finally) matters
Sales associates still rank behind price, product, availability and return policy when consumers consider their favorite stores, but retail talent can become a differentiator and, according to PwC, now is the time to make that happen.
“The more sophisticated dimensions of customer service (personalized advice, special after-sales services and demonstrated deep product knowledge) could be a point of differentiation for retailers, particularly for retailers with a significant physical store footprint,” the report noted.
Thirty-one percent of consumers said better aftercare/aftersales service would increase patronage at a local retailer, followed by 29 percent who said helpful store personnel and 28 percent who want personalized service.
5. Mobile devices have turned the corner as purchasing tools
Pretty soon, using mobile devices just to research products or pull up coupons pre-purchase, will be passé. Consumers are increasingly using them to pay because the process keeps getting easier.
Savvy retailers like T. Hansen, a Danish auto-parts purveyor promises consumers who make purchases online that their goods will be ready in-store within 30 minutes. When the customer arrives, an associate scans their mobile device and they can skip the line to get their goods. If the item isn’t ready in the guaranteed time, the shopper gets it for free.
Mobile commerce, which grew 8 percent last year, looks set to become a hit among emerging markets in particular.
“Without the historical loyalty to the ‘High Street’ and with the rate of personal computer ownership far lower than in established countries, emerging markets’ consumers have leapfrogged to mobile phones and are settling on them as their shopping channel of choice,” the report noted.
Sixteen percent of consumers from emerging market countries said they buy products online at least weekly compared to 9 percent of consumers from established market countries.
But the march toward mobile is evident across the globe. Last year, 70 percent of respondents in the Total Retail Survey said they had never bought online and now that number has dropped to 46 percent.
“If we see the same percentage drop over the next three years, by the beginning of 2019 almost 80 percent would be shopping via a mobile phone for at least some of their purchases,” PwC said.
6. Today’s consumers look to community
Consumers want to be connected—and not only to their devices—but to the retailers they buy from.
Though 91 percent of respondents reported being members of loyalty/rewards programs, many of those programs have grown dull. Seventy percent of consumers called out members-only deals as the top rewards program benefit, with 61 percent citing rewards points and 58 percent being pleased with the free shipping.
While relevant, those benefits don’t tap into the potential for innovation and personalization that retailers could offer.
Nordstrom, for example, started highlighting product that was popular on social media site Pinterest by displaying it prominently in the store with the site’s recognizable red logo, creating what PwC calls “an informal ‘in the know’ community.”
Canadian sports apparel retailer Sport Chek made nine basketball mini-documentaries in nine different Toronto neighborhoods and featured the pieces in a #MyNorth campaign, which got 8,500 social media mentions and 38 million social media impressions.
7. Social media is the “great influencer”
More than just mobile, 2015 was the year of social media.
The platform may still be in the early stages of influencing online purchasing but, according to PwC, “Its growth in both pure social-driven retail sales and referral traffic is undeniable, outpacing all other online channels.”
Among the top 500 U.S. retailers, social shopping generated $3.3 billion in sales in 2014, a 26 percent jump over 2013 and faster than the 16 percent growth for the overall U.S. e-commerce market.
Product reviews, comments and feedback are the most influential in online shopping behavior for 45 percent of consumers. And, as PwC notes, “It’s not just consumers who are being influenced by customer reviews, comments and feedback. For retailers, this tsunami of volunteered customer information is an additional form of customer research, as there is a huge volume of data readily available—and in real time.”
8. There is room for retailers to grab the “leading innovator” mantle
Consumers tend to consider their favorite retailers at least somewhat innovative, either in terms of availability of products or stocking new/must-have products, but very few consider those retailers leading innovators—and that’s where opportunity lies.
Whether it’s in online presence, sustainability, delivery options or store experience—retailers will have to step their innovation game up.
“For those retailers with the wherewithal to invest, there’s plenty of room to become known as a leading innovator,” PwC said.