Report Recap - PwC China Consumer Insights Aug 2023
Guy Thompson
International Business Development | Insights, Research, Digital Marketing, Advertising, Cross-Border Ecommerce
Even with growth and post-pandemic recovery challenges for the wider economy, the Chinese consumer still has high demands and rapidly changing preferences.
In the China edition of its recent 2023 Global Consumer Insights Survey Report, PwC has observed a transformation in consumption preferences in China and compared them to global sentiment. These include uneven post-pandemic, retail recovery, brand loyalty, a luxury spending outlook, suggestions for ecommerce improvements, digital and metaverse engagement and sustainability insights.?
I've wrapped key takeaways below:
Uneven, but not broken retail recovery
Monthly sales are stable at around 3 trillion RMB, so while there has been some softness in growth, after an initial surge of activity, the consumption base is still solid, even if consumers are taking longer to mull over larger purchases like vehicles.
Unconcerned consumers
PwC has been collecting survey responses for years to evaluate global retail sentiment when taking into account cost of living concerns, and personal financial situation. In the latest data, 40% of Chinese consumers are somewhat concerned, compared to 35% globally. However a surprising 22% of global consumers surveyed are extremely concerned, yet only 6% of those surveyed in China are.
Even when looking through the lens of the increased global cost of living pressures, Chinese consumers appear to be less impacted. 33% of global consumers surveyed said that rising prices for household goods were the number one reason they were shopping online, compared to 22% for the global survey.
Local Speed, Local Preferences
The source-local trend continues to pick up steam as retailers work to shorten and diversify their supply chains, with the aim of minimising future disruptions. Foreign imported brands will need to aim for the same level of delivery speed and satisfaction that local brands can achieve.
The report emphasises that innovative supply chain solutions are needed that can address customer pain points and help to create a seamless shopping experience.
Easing ecommerce return pain
The headache of managing product return rates is a key area that can be improved with communications and policies, along with more detailed product information. The report included an excellent wrap-up of the Global survey data compared with the sentiment of Chinese consumers.
The two key standout points are accurate sizing information and the ability to read previous customer reviews. This is significantly higher in the China responses and underscores how important reviews are during purchase consideration.
Additionally, the classic three suggestions for ecommerce success all came through as top suggestions in the survey data - consumers want improved delivery times, personalised recommendations, and seamless payment processes.
Luxury promise
Revenge spending noted earlier in the year in China for products including jewellery and luxury goods was noticeably high, but has eased back now. The report included an updated global share of market estimate and an outlook to 2025. Europe currently holds an estimated 27% of the global luxury market, with the US taking 24% and China 22%. Looking forward to 2025, China is predicted to rise to a 25% share, overtaking the US and Europe.
Sustainable marketing and consumer engagement
The report covers some key categories including premium and luxury brands that have been performing well, leveraging sustainability as a point of difference, and a promotional opportunity. It will be interesting to track how consumers have received these and mentioned them on social media.
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Digital Pivot
Returning to retail locations has given many Chinese consumers frustrating experiences of overwhelmed stores and sold-out stock. Resulting in a pivot back to digital spaces to engage with brands and complete complete transactions. This includes exploring next-generation digital platforms, including generative AI, Web 3, and metaverse platforms.
Working with Generative AI
Much hyped Generative AI is starting to provide new tools and process flows for retailers. It is changing the way they interact with customers, showcase products, and manage their operations. Large language models (LLMs) can be leveraged to create personalised and engaging customer experiences and streamline operations. The report includes some use cases for customer services, it will be interesting to see how the big four are moving into more consulting for the Generative AI space.
Beyond Metaverse Hype
Although the metaverse hype has subsided, significant investment has resulted in an array of platforms and promotions for consumers to interact with. Survey data indicated that metaverse engagement (heard about, joined, or interacted with platforms) in China was on par with other global markets However 16% in China reported they had used a VR headset, compared to 11% globally.
I've included the rest of the report overview below. You can download it from PwC China here. Let me know your thoughts in the comments.
REPORT OVERVIEW
New trends in focus:
Trends that are here to stay:
Existing trends that are receding:
Successful brands and retailers will be those who can: