From bricks to clicks: KPMG survey takeaways for luxury brands

A report from KPMG released yesterday offers a deep dive into the “seamless commerce” phenomenon transforming Asia-Pacific retail, with China at the epicenter. The study, based on a survey of 7,000 consumers across 14 regional markets, yields valuable data and direction for luxury brands operating in the Chinese market. Omnichannel omnivores The KPMG report reveals that Chinese consumers are at the forefront of the omnichannel shopping trend in Asia-Pacific. Nearly half (48%) of mainland Chinese consumers surveyed say they are comfortable purchasing through both online and offline channels, slightly above the regional average of 45%. China is identified as an outlier market where online shopping is more popular than offline, highlighting the strong preference for e-commerce among Chinese consumers. Just 12% of Chinese shoppers express a primary preference for brick-and-mortar stores — the lowest share among the other markets. These findings point to a strategy: seamless, integrated experiences across digital and physical touchpoints that cater to consumers’ fluid shopping habits, with an emphasis on online channels. Social and livestream commerce blurs boundaries As the boundaries blur between content and commerce, social media platforms have morphed into the virtual malls and marketplaces of China’s economy. The report reveals that social commerce ranks among the top five online retail channels in China, as well as in Hong Kong and Southeast Asian hotspots like Vietnam, Thailand, and Malaysia. Douyin, China’s homegrown version of TikTok, claims second place among Chinese online retail channels with a 14% share, challenging titans like JD.com and Alibaba’s Taobao. Interestingly, Douyin’s popularity peaks among Gen Z digital natives and over-55 silver surfers — two ends of the demographic spectrum driving luxury’s future. Livestream shopping is also gaining steam in China, making it one of the top five channels. Partnering with key opinion leaders (KOLs), creating immersive and interactive content, and integrating social selling into overall omnichannel ecosystems are ways to leverage these platforms for marketing, sales, and customer engagement. Sustainability — from peripheral to pivotal Environmental and ethical concerns that were once the province of a niche group of conscious consumers have catapulted into the mainstream in China. KPMG found that 95% of Chinese buyers actively seek out and support brands with authentic sustainability commitments, the highest proportion in Asia-Pacific. Even more tellingly, some two-thirds of shoppers in China are willing to pay a premium of up to 20% for eco-friendly and socially responsible products. On a regional basis, 53% of consumers across age groups say sustainability meaningfully impacts their purchase decisions. This suggests that integrating green principles into everything from raw materials sourcing and packaging to manufacturing and marketing is the optimal approach. AI reshapes retail at breakneck speed The artificial intelligence (AI) revolution that tech evangelists have long heralded is now an everyday reality for businesses and consumers alike. Per KPMG’s analysis, AI adoption is outpacing that of any previous technology, both in customer-facing and backend applications. Mainland China leads the charge, with 14% of consumers already using AI-powered tools like virtual try-on and voice shopping functions. Chatbots and machine learning are swiftly becoming a pillar of customer service, while AI is also enhancing merchandising and marketing through product recommendations and dynamic pricing. Non-implementation runs the risk of eroding competitive edge as the technology proliferates across modern retail. Gen Z upends luxury’s playbook KPMG’s data paints a vivid portrait of Gen Z as a cohort of digital-first, social-savvy, omnichannel shoppers who march to the beat of their own drum. Globally, Gen Zers are abandoning physical retail at twice the rate of Baby Boomers. In China, these consumers are gravitating towards social commerce, with 63% rating platforms like Xiaohongshu as important to their shopping experience. Livestream channels are also striking a chord, with 57% of Chinese Gen Z consumers citing them as key touchpoints. Digitally native consumers are most effectively engaged on their preferred platforms, and engaging them this way has escalated from a nice-to-have to an imperative for luxury brands operating in China. While the country’s consumers are at the vanguard of retail innovation, the trends they’re embracing — from AI to omnichannel engagement and values-driven consumption — are rapidly permeating the entire Asia-Pacific region. Brands that move swiftly to deliver channel-agnostic, hyperpersonalized and socially conscious experiences will be the ones that have the edge.

From bricks to clicks: KPMG survey takeaways for luxury brands

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Published June 07, 2024

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From bricks to clicks: KPMG survey takeaways for luxury brands