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Recharging retail in the Greater Bay Area: four trends to watch

(Source: Supplied.)

As consumers across Hong Kong (SAR) and Chinese Mainland cities within the Greater Bay Area (GBA) continue to adjust to life nearly three years since the onset of the Covid-19 pandemic, retailers and brands are discovering that many shopping habits that changed during the pandemic are enduring in the ‘New Normal’ environment.

Online shoppers’ expectations have grown to expect more services, more convenience and more payment options – without a price premium to match. At the same time, consumers expect retailers to be more respectful of the environment and adopt ESG values that align with their own.

Below are four trends to watch identified by our recently released ‘Retail Recharged’ survey of 2065 consumers and 342 senior retail industry executives in the GBA (excluding Macau SAR) co-sponsored by GS1 Hong Kong and HSBC. 

Consumers are more confident shopping digitally, with Gen Z leading the adoption of immersive technologies

An overwhelming majority of consumers surveyed feel comfortable and confident about using new technologies to search, compare and purchase goods. In addition, younger generations – especially Gen Z– expect brands to use artificial intelligence (AI) Augmented Reality (AR) and other new technologies to enhance the customer experience and enable greater connection with brands. In particular, Chinese Mainland GBA consumers are increasingly interested in the opportunities the metaverse may offer in terms of connecting with brands, with 45 per cent polled saying they would use the medium to view or virtually try on products prior to purchase.

Purpose-driven consumers are expecting greater commitment from brands on sustainability, but want to be incentivised to make sustainable purchasing decisions

A majority of consumers surveyed said they wanted evidence that brands were acting to reduce their climate impact. However, consumers also want to be incentivised to make more sustainable purchasing decisions through discounts and other rewards. 81 per cent of Chinese Mainland GBA respondents and 69 per cent of Hong Kong respondents said they would be interested in being rewarded for making a more sustainable purchase.

Trust in KOLs is falling as consumers pay more attention to friends, family members and brands’ own websites

Consumers are becoming wary of product endorsements by Key Opinion Leaders (KOLs), live-streaming celebrities and bloggers – and user-generated reviews and product ratings. This is particularly evident among Hong Kong consumers surveyed, where trust in live streamers and bloggers is down from 34 per cent in our 2021 survey to 28 per cent this year, and is now the least relied-upon source of product information. This change is creating opportunities for brands and retailers to tailor their loyalty programs to encourage their customers to share purchasing decisions on social media and encourage referrals to family and friends.

Confidence in digital payments continues to rise, with growing interest in embedded finance options

Our research suggests that the use of digital payments continues to accelerate. Seventy-six per cent of Chinese Mainland GBA respondents surveyed for our study felt more comfortable using digital payments along with 68 per cent of Hong Kong respondents. Meanwhile, the results also suggest growing consumer interest in a number of different embedded finance options. For example, In Chinese Mainland GBA cities, 70 per cent of respondents said they’d purchased goods using Buy Now Pay Later, including 57 per cent within the past year and planning to continue. Hong Kong consumers polled are also expressing interest, with 31 per cent of respondents saying they had used BNPL during the past year and a further 20 per cent saying they were aware of it and intended to use it in the future.

To download the full report including case studies from leading retail industry players, please visit https://home.kpmg/cn/en/home/insights/2022/11/retail-recharged.html