Retail in Asia

In Shops

Taking Stock: Attracting the new generation of Asian shoppers

The buying power of Asian teenagers is huge. Anthony Freeling, research director of the Coca Cola Retailing Research Council Asia, talks to Retail in Asia about the shopping behaviour of the new generation in Asia. He also reveals some of the top secrets of how to win the new generation shoppers’ hearts ahead of the Council’s webinar "Attracting the Next Generation of Asian Shoppers" which will be online this Friday.

RIA: How has the bloom of the internet affected people’s lifestyle and their shopping habits, particularly in the grocery sector?

Anthony Freeling (AF): The internet is a very influential shaper of shopping behavior of today’s teenagers. Already, internet penetration is very high in many Asian countries and will rise above 90 percent in most by 2020. Moreover, the increasing availability of smartphones and other mobile devices such as tablets means many teenagers are already connected around the clock.

This connectivity is already affecting the way people shop, helping them to research and buy products and services. Our research shows that in certain product categories, the main source of product information for today’s teenagers is the internet, and mobile phones are frequently used both to conduct research and make purchases. For the time being, the internet is not significant for researching food in Asia, although in more developed Asian markets it is becoming critical in categories such as fashion and electronics. Between 25 and 50 percent of teenagers already research online for electronics and fashion items.

RIA: Do the new shopping habits of the Asian shoppers vary across the region? What are your findings?

AF: A very important finding was that in all countries studied, we found teenagers to be much more engaged in grocery shopping than one might expect. More go shopping for groceries than they do for music, videos, games, or films, for example, and they shop for food frequently: anywhere between three and 11 times a week. Given free rein, most teenagers said they would spend a quarter of any available money on food. Only apparel would take more of their budget.

However, there are differences. We found five clusters of countries in Asia, each with their own shopping patterns. These range from the small, highly urbanised, small population centres, typified by Singapore and Hong Kong; through the larger countries with advanced retail infrastructure such as Japan and Korea; fast growing emerging economies where adoption of new ways of shopping is fast, such as Thailand and Malaysia; the very rapidly modernising and urbanising tier-one China cities; and the large population countries with a more traditional trade such as India and Indonesia. We treated China tier-one, two and three cities in different clusters. The major differences amongst today’s teenagers, apart from the type of outlets where they can shop, were in the demand for a more engaging experience (more in the more advanced clusters), and in their concern around green issues, which were strongest in the Philippines, India and Indonesia and least in Korea.

RIA: What are the top-three demands of the new generation shoppers?

AF: The survey revealed two key customer needs. First was that shopping should be made easy – a demand for hyper-convenience. In every country studied, being able to buy everything required in a single shop was seen as one of the most important, if not the most important, shopping requirement. Only in India and Indonesia, where consumers felt the retailing basics were not being met in terms of product quality, store cleanliness, and pricing, was convenience less important.

Second was that shopping should be an experience, be it a means of meeting friends and family, relaxing, or learning something. Most teenagers felt socialising was an important aspect of a shopping trip. In China, it was more important than actually buying something! Again, the shopping experience was less important only in countries where consumers felt certain basic standards were still not being met. Different countries are in different places on a spectrum between hyper-convenience and experience.

Third, in all countries teenagers wanted to be engaged and communicated with through digital channels, as highlighted in the other answers.

RIA: How should retailers do to address these new demands? Is there any successful example in Asia?

AF: They will need to act on three fronts. All will need to provide what consumers in their market consider to be the basics, which in some cases might include environmentally sound business practices. They will also need to consider where their market stands on the ease-of-shopping to experience continuum, and innovate and offer diverse formats and offers accordingly. (We have developed a simple tool to help retailers assess this.) Finally, they will all need to engage in the digital world in order to interact and win the loyalty of Generation 2020 shoppers, whether or not they have a digital channel. While we have examples and case studies from around the world of different elements of how retailers are addressing these demands, no Asian retailer is yet doing all these things – but of course, nor do they yet need to.

RIA: How important is the role of digital and convergence marketing in the grocery sector?

AF: It is very important. Not all retailers need a digital channel yet. However, those that choose to create one will need to respond to the fundamental shopper needs of ease-of-shop or experience at each step of the path to purchase. So, for example, someone planning a dinner party might appreciate recipe suggestions or online video demonstrations at the interaction stage (experience), have the shopping bill charged to a mobile phone account (ease-of-shop), receive delivery at a pre-agreed time (ease-of-shop), then tweet a friend to recommend the retailer’s dinner party-planning website (experience).

But although the digital sales channel is optional, digital engagement is not. Regardless of whether the final purchase is made online or off, digital technology will play a crucial role in the path to purchase, used to interact with, engage, and influence the Generation 2020 shopper. Grocery retailers will therefore need to plan strategically how to use various digital media at each step of the path to purchase. Retailers with physical stores will need to integrate seamlessly their physical and digital marketing activities, blurring the division between the two worlds. This is known as convergence marketing. Already a reality in several markets such as China, South Korea, and Japan, where young shoppers spend as much time online as they do offline, convergence marketing will become an essential component of every successful business, irrespective of the market in which it operates and the prevailing direction of development within it.

RIA: Can you talk us through the background of the Coca-Cola Retailing Research Council?

AF: The purpose of the Council is to provide a forum for retailers to undertake research on key topics critical to the Asian retail landscape. Our Studies aim to provide insights for immediate action and longer term strategic planning for all retailers. The Coca-Cola Company is committed to Retail industry research, focusing on the challenges of food retail management, operations, strategy and merchandising, researching into topics that impact the whole food retailing industry, conducted by independent consultancies, with the research findings shared broadly across the retailing industry. Through The Coca-Cola Retailing Research Council, The Coca-Cola Company has supported independent research on the issues facing food retailers for more than 30 years. 

Launched in the US in 1978, then in Europe, Latin America and Asia, the Councils have developed and published 38 studies investigating the most pressing issues facing food retailers. Taken together, the body of knowledge produced by the Councils is unrivalled in the food retail industry, and provides an important guide for any journey into the rich landscape of future food retail. Since its formation in 2004, The Coca-Cola Retailing Research Council Asia has become one of the region’s significant research bodies dedicated to in-depth investigation of food retailing issues. Members sign on for a four year term and work in a cooperative, non-competitive environment to identify topics of interest for research by a third party Consultant. Our members represent retailers across most key retail markets and formats.

The Council has previously published three landmark studies and has played a critical role in providing blueprints for Asia’s food retailer development and improved shopper satisfaction:

  • The Fresh Imperative: Creating excellence in Asian Fresh Food Retailing.
  • Food Retail Formats in Asia: Understanding Format Success.
  • Safer Fresh Food for Asia’s Shoppers.

For more information on the Council, please visit our website www.ccrrc.org. All past and present studies conducted by Councils globally can also be found on this site.

RIA: Can you talk us through your upcoming webinar "Attracting the Next Generation of Asian Shoppers"? What can retailers learn from it?

AF: The webinar is nothing else than a panel discussion, in which a professional moderator will ask the panelists questions on the topics we have touched upon in this report. The panel will be made of six members from the Council. There is also an opportunity for the "listeners" of the webinar to ask pertinent questions to the panel and some of the questions, time permitting, will be posed to and answered "live" by the panelists.

Retailers can learn answers to the following questions: Is retail dead? Are investments in brick and mortar shops worth it? Is grocery important to the next generation of shoppers? What should retailers do to cope with changes in people’s lifestyle. How can retailers keep pace with the changes while staying true to their brand and preserving the bottom line? This webinar will address these questions by presenting a range of viewpoints and case studies from some of the most respected leaders in the retailing community in Asia, including experts from Wal-Mart, 7-11, and Big Bazaar. Moderated by former New York Times reporter, Thomas Crampton, this session will discuss in particular:

  • New consumer demands re-defining the basics of retail
  • How hyper convenience will change the ways customers shop on & offline
  • The importance of the experience when shopping in 2020
  • The eco conscious consumer in marketing and point of sale
  • The role of digital and convergence marketing

 

The free webinar "Attracting the Next Generation of Asian Shoppers" will be online on 28 October. For registration, visit Coca Cola Research Council.

Taking Stock is Retail in Asia’s column dedicated to showcasing opinions and providing advice from experts in the retail industry.