|Key findings from The future is now: understanding the new Asian consumer report. In Singapore, 57% of respondents have bought something online in the past month.|
Consumer packaged goods (CPG) companies must fully embrace digital commerce or risk losing out to newer industry players in the battle for an estimated US$340 billion worth of market growth in Asia Pacific, according to Accenture.
In a new report, The future is now: understanding the new Asian consumer, Accenture estimates that the consumer goods and services industry will grow by as much as US$700 billion globally by 2020, with nearly 50%, or US$340 billion, of this growth coming from Asia—specifically China, Indonesia, India, Singapore and Thailand. China alone is expected to account for approximately US$200 billion, or 60%, of the growth in Asia.
“If CPG companies don't take action now, they risk losing out on the new generation of consumers. These companies must couple traditional models with new ones where consumer engagement is digital and one2one, social influence is perceived to be the trustworthy source and shopping is one click away,” said Fabio Vacirca, Senior MD in Accenture’s Products operating group in Asia Pacific. “The entire sales and marketing ecosystem is changing dramatically on the back of the new generation of consumers and pervasive digital technologies. In Asian markets, the change is faster and in many cases it means leapfrogging the traditional models.”
The report estimates that retail sales across Asia Pacific’s booming consumer markets are on course to top US$10 trillion by 2018, with approximately one-quarter of that amount coming from digital commerce. Yet despite the heavy influence from e-tailers and online marketplaces, the digital commerce market in Asia Pacific remains under-penetrated for CPG companies, particularly in the grocery-product category.
In addition, using knowledge of consumer preferences and their evolving demands, leading disruptors in the market, such as Alibaba, have been adapting by reinventing and tailoring offerings to redefine the value chain and make the consumer their focal point. The report identifies a number of steps that established CPG companies could take to seize growth opportunities and counter the threat of the new players:
- Partnering with e-commerce platforms to reach new consumers/markets
- Maximise value from cross-border e-commerce
- Investing in brand building, with integrated marketing initiatives spanning online/offline
- Adopting a ‘mobile first’ approach
- Integrating e-commerce initiatives with social platforms to engage consumers and build trust
- Investigating opportunities for product testing and product development through crowd-sourcing
- Leveraging insights from big data to enhance and finetune customer interactions across multiple touchpoints.
The digital commerce opportunity for CPG
"The new Asian consumer expects a seamless shopping experience that saves time and makes life easier," said Mohammed Sirajuddeen, MD - Digital, Products, ASEAN, Accenture. Accenture researchers lived with respondents in China, India, Singapore to delve deeper into their thought processes when they bought online.
Despite the market seeing some digital transformation by CPG companies, Accenture’s research shows that consumers are not satisfied with their purchase journeys. Today’s top ‘ask,’ according to the report, is for a single platform where they can enjoy unique experiences that delight and enable their impulse decisions, receive tailored product recommendations that meet their desires immediately and where they are always connected to their favourite brands. "Time is very precious," observed Sirajuddeen. "(They say) 'I want digital to make my life much easier'. These expectations create huge opportunities for CPG companies."
Attitudes will evolve from 'give me what I want, when I want it' in 2016 to 'give me what I want when I need it' in 2020, Accenture said, and thereafter to 'give me what I want before I need it'. "Shopping will be fully integrated into 'life's moments'. Respondents want a smart digital assistant," explained Sirajuddeen.
This represents an outstanding opportunity for traditional CPG companies to capture the next wave of growth. By focussing on providing stronger digital commerce they can bridge existing gaps in consumers’ purchase journeys and provide the seamless shopping experiences they’re looking for.
“Technology will continue to evolve and influence how consumers shop in the future,” said Vacirca. “By better using digital technologies, CPG companies can engage with consumers on a real-time basis, allowing the companies to provide the maximum value within the minimum time. This will, in turn, create opportunities for CPG companies to control the consumer buying experience of tomorrow.”
Accenture Internet of Things Centre of Excellence
The research was launched at the Accenture Internet of Things (IoT) Centre of Excellence in Singapore. Accenture has called Singapore a "living lab" for e-commerce in the region, with its extremely cosmopolitan population, excellent logistics and deep mobile connectivity. The Centre brings market expertise, industry-leading practices, leading-edge technologies, and consumer research together to create an experience that empowers businesses to think differently about the future, and had been set up to showcase consumer IoT use cases on the day of the launch.
Vacirca noted that consumers in Europe and America are still more comfortable with physical stores and showrooms, whereas digital channels are embraced in the Asia Pacific region. " It's very important to show to our clients how new technology will change the way they will engage with their consumers. Asia (has an edge) on the rest of world in e-commerce in terms of speed and scale," he said.
“The next generation of digital commerce is here, and consumer empowerment enabled by smarter technologies will change how we shop and make purchases,” said Vacirca. “From the virtual reality room to its next-generation experience space, the Accenture IoT Centre of Excellence in Singapore helps businesses take advantage of the unprecedented opportunities that exist in the rapidly evolving digital marketplace.”
Accenture has worked with customers to conceptualise various ways of providing customer delight. One possibility is an 'always on' artificially intelligent device that can understand different languages and accents without training. Such a device, placed in a home, could order groceries or favourite foods when spoken to. Intelligent voice-activated devices worn by the user or placed in a store could provide additional information on products. Smart assistants on websites can go beyond scripts to offer more contextual responses such as recipe suggestions.
'Micromoments' are one possibility, small touches that make the shopping experience more seamless. Micromoments can be realised through using a handheld device as a portable shopping list, interacting with barcodes to identify products and enable purchases. Alternatively, pictures of a product taken on a mobile device can link straight to stores which sell that product. Mobile apps can also be used to control equipment and forecast how much food or drink might be required for a party.
Yet another concept is about the immersive store experience and virtual commerce. Virtual reality goggles allow people to shop together remotely, for example. Gamification through virtual or augmented reality can provide interactivity that provides discount coupons, adding an element of excitement to the shopping experience.