Asian Retail Markets Strongly Influenced by Generation Z Shopping
According to CBRE's new Asia Pacific Consumer Survey
, online shopping has overtaken bricks-and-mortar retail as the most popular method of purchase in certain Asian markets. Consumers aged 18-24--known as 'Generation Z'--are also set to play an influential role in the regional retail market in the coming years. As a result of factors such as these, landlords and retailers will need to be proactive in order to remain competitive.
Whilst 50% of Asia Pacific consumers still physically visit a shop to make a purchase, findings show that in emerging markets such as China and India, the majority of respondents--76% and 68% respectively--utilize online shopping as their most commonly used method of making purchases. This is also the case in more developed markets of South Korea and Taiwan where 73% and 55% of consumers respectively, also said their primary method of making purchases is online.
"For emerging markets, given the lack of quality retail space--particularly in lower tier cities--advances in technology and logistics networks mean that online retail is often the most efficient way for retailers to reach their customers," said Jonathan Hsu, Head of Occupier Markets Research, CBRE Asia Pacific.
Along with convenience, pricing ranks as one of the top reasons why consumers shop online--63% of the total number of respondents surveyed identified this as their key deciding factor. These correspond to the same deciding factors when shopping at physical stores.
"With 56% of Asia Pacific consumers using their desktop or laptop to check prices of products online, price transparency is an important aspect for retailers to consider. We recommend retailers review their regional pricing strategy, particularly in China and South Korea where more than two-thirds of consumers identified lower prices and better offers as the main reason behind their decision to shop online. In Asia Pacific, foreign brands--in particularly luxury--are often more expensive than other regions due to import duties, exchange rates and the franchise model impacting the price. This may encourage consumers to consider alternative sales channels, such as overseas online markets, in search of better deals," said Joel Stephen, Senior Director, Head of Retailer Representation, CBRE Asia.
The ability to compare products without having to physically visit individual stores is another key factor for the region's consumers when shopping online. This trend is more prominent in emerging markets such as Vietnam (64%), China (61%) and India (58%) where quality shopping centers or shops are often located far from each other.Generation Z: New Challenges for Retailers
Generation Z is expected to have significant influence over the retail market in the coming years as their income levels are set to increase rapidly upon joining the job market.
"Having spent most of their lives using the internet and other related technology, Generation Z's demographic of consumers has distinct shopping behaviors in comparison to other demographic segments. Key aspects of their online shopping habits include stronger trust in online information; more activity on social media; and needing a sense of differentiation. These factors demonstrate the increasingly important role of technology in shaping the decision-making process of consumers," comments Mr. Hsu.
In order to remain competitive in the digital age, retailers and landlords need to be proactive in reaching out and engaging with their consumers. Mobile shopping is most prevalent in emerging markets, and in many places, smartphones are the first--and sometimes only--point of internet access for many consumers, therefore, are playing a key role in driving the growth of online retail. Smartphone apps and social media can provide valuable information and insights into consumer behavior, for example, push notifications for smartphone apps or social media platforms based on consumers' shopping history, location and preferences can help personalize their shopping experience.
"Landlords and retailers need to be more digital-savvy, keeping pace with the latest trends in smartphone applications and social media so they can build a stronger relationship with consumers especially those from Generation Z. These digital platforms are two essential mediums of online retailing, which should be integrated into retailers' omni-channel strategies in order to capture Online-to-Offline (O2O) business opportunities," said Mr. Stephen.
With around 70% of consumers in Asia Pacific collecting their online orders in-store--and 90% of them purchasing additional items when picking up their online order--click-and-collect services are also an effective way to drive in-store sales, creating a synergy between both online and offline platforms. Landlords should thus collaborate with tenants to help merge their online and offline offering by providing the necessary facilities and regular renovations.