China's retail journey starts with digital

The majority of Chinese consumers chose a digital channel as the first step in researching retail products, a new report from PwC shows. PwC's latest report Delivering on O2O: How Chinese retailers can respond to the blurring of online and offline, surveyed more than 19,000 online shoppers across 19 territories, including 906 from China as part of a global study to understand purchasing preferences.The report shows that China’s online shopping segment continues to grow at the expense of in-store visits as the customer journey starts with a digital discovery.Search engines, brand websites or social media sites were found to be the first port of call for consumers, prior to making the in-store journey. Some 86% of Chinese consumers had intentionally browsed products at a physical store before purchasing it online with lower prices cited as the key driver, in comparison to 68% of global respondents.“With the lines between digital and physical becoming irrelevant to consumers, retailers need to offer brand-defining engagement, such as real-time personalised offers in order to create differentiated services that entice customers to come back,” said Michael Cheng, PwC Asia Pacific and Hong Kong/China retail and consumer leader.Meanwhile, Chinese consumers showed the strongest preference for in-store digital engagement.“To prevent stores being used as showrooms, retailers can adopt in-store technology that uses customer data to design a customised and enriched shopping experience that keeps them in the store,” said Colin Light, PwC China and Hong Kong digital consulting leader.“This integrated retail model aligns the customer journey from discovery to fulfillment.”The report also indicates that 90% of Chinese consumers said interactions with their favourite retailers on social media have driven them to buy more, compared to 62% from global. “Social media is the daily fabric of shopping in China, with the power to influence purchase decisions more than in any other country,” added Light.“As consumers trust the information shared on social channels, retailers should invest money where the customer is, and turn social engagement into retail action.”“To stay relevant in the O2O world, retailers must meet consumers’ appetite for innovation.”Despite global security concerns, 63% of Chinese consumers are significantly more willing to store private payment and delivery information in an app on their mobile – almost double the rate of their global peers (33%).To support the rapid growth of digital commerce, China’s State Council established the country’s first cross-border e-Commerce Integration Pilot Zone in Hangzhou this year.This has attracted over 15 digital commerce platforms and registered over 300 overseas e-Commerce companies.“With more tax support policies being planned, the zone is expected to attract more foreign online retailers looking to be stationed in China. This should help them bridge an O2O model that meets Chinese consumers’ retail needs,” said Rebecca Wong, PwC’s China tax and business advisory partner.To stimulate domestic consumption, China’s Ministry of Finance (MOF) has announced to cut taxes on importing consumer goods into the country, effective from June 1.This includes slashing duty on suits, fur garments and shoes by half on average, as well as lowering tariff on cosmetics from 5% to 2% and on diapers from 7.5% to 2%.