Nowadays, online consumption is increasingly popular among consumers, and the rapidly developing online shopping channels have brought considerable pressure to traditional brick-and-mortar retailers. Will offline channels be replaced by online? What are the differences in consumer shopping habits between online and offline? What characteristics will future shopping trends present? Recently, Nielsen's "Nielsen Global E-commerce and New Retail Survey" surveyed 30,000 consumers from 60 countries, providing a comprehensive answer to the huge impact of electronic technology on the food retail industry and offering forward-looking advice for retailers and manufacturers' strategic adjustments.
E-commerce and physical stores go hand in hand
Nielsen's survey shows that physical stores will not be replaced by e-commerce in the short term. Although online shopping has many benefits, physical stores also have their unique advantages, especially for fast-moving consumer goods (FMCG) such as food. In fact, in China, the majority of respondents (69%) said that offline shopping is a pleasant family outing, and another 67% of respondents said they enjoy the pleasure and satisfaction of shopping in physical stores.
However, the report also points out that to a certain extent, e-commerce does have greater development advantages than physical stores. Therefore, for food retailers and manufacturers, they must attract consumers through more flexible means, and many key factors are crucial, such as using digital technology to help consumers find stores more easily, create shopping lists, check prices, search for related products, share shopping experiences and information, and ultimately make purchases.
"The era of business interaction has arrived," emphasized Fan Yijin, General Manager of Nielsen China. "Now, consumers no longer simply use a single online or offline shopping method, but choose the most suitable way according to their needs. Therefore, for retailers and manufacturers, those who can flexibly use both online and offline sales channels to meet customer desires anytime, anywhere are truly successful."
Digital technology triggers offline reform
Even in physical stores, retailers can use online services to increase sales. For example, through in-store digital applications such as online and mobile coupons, shopping lists, downloading retailer or membership apps, scanning QR codes for more information, and in-store Wi-Fi for online payment.
With the popularity of smartphones and broadband, online transactions in developing countries have entered a period of rapid development. Nielsen's report shows that the maturity of online shopping in China has already surpassed the world average. The report further points out that if more Chinese food retailers implement digital services in stores, such as online or mobile coupons, shopping lists, self-checkout, and in-store Wi-Fi, there will be greater growth potential in this area. The majority of Chinese respondents (46%) choose online shopping with home delivery, which is far higher than the global average (25%). 30% of Chinese respondents (global 14%) said they have used online customization services, while 23% of Chinese respondents (global 18%) said they have used online or mobile coupons. These three types of digital services in physical stores are the most widely used among Chinese consumers. In addition, more than half of the respondents said they are willing to try these services in the future.
The survey also shows that 18% of Chinese respondents said they would log into store Wi-Fi to obtain product information or prices, 17% would scan QR codes to get the information they need, and 16% would use in-store computers to check product information. 75%, 78%, and 79% of Chinese respondents respectively said they are willing to try these electronic methods for shopping in physical stores in the future.
Physical stores can provide consumers with a relaxed, convenient, and personalized experience through in-store online services. For food physical stores, providing convenient digital services is no longer optional, as it will greatly increase consumer dwell time, engagement, and foot traffic. In Nielsen's survey, consumers choosing to experience online services in physical stores are most popular in the Asia-Pacific, Africa, and the Middle East regions, which even exceed the global average.
"Currently, most consumers make a shopping list before shopping and buy all the items they need at once," said Fan Yijin. "In the fiercely competitive retail environment, retailers and manufacturers can fully use online auxiliary tools to help consumers improve their shopping experience, thereby standing out among many sales channels and achieving potential sales growth. In this process, smartphones play a decisive role, and using online tools in stores can often help consumers have a more pleasant shopping experience."
"Time-conscious consumers prefer to use technology to make shopping faster, simpler, and more efficient," Fan Yijin said. "Just as more mature and flexible methods like self-checkout are used by more people, more and more retailers are joining the ranks of providing in-store online services, and now more and more consumers are more willing to choose this shopping method."
Who shops online?
Young people aged 15-34, who have grown up with digital technology, are the main force of online consumption. These consumers are enthusiastic about and proficient in new technologies. According to the survey, the demand for online consumption among the youth group (21-34 years old) not only drives the growth of online sales but also promotes the maturity of this industry. Globally, young people born in the 80s, 90s, and even 00s are the main force of online shopping, and China is no exception. These consumers have unprecedented enthusiasm for the use of digital technology. For them, online shopping is not only a habit but also gradually becoming a new lifestyle. Currently, the six commonly used online shopping forms, namely online shopping with home delivery, online ordering with in-store pickup, drive-through pickup, designated station pickup, virtual supermarkets, and automatic customization, are most popular among young consumers, and they are also the generation most willing to fully use online shopping in the future. The survey shows that 9% of seniors (65+), 17% of middle-aged (50-64), 22% of middle-aged (35-49), 30% of youth (21-34), and 28% of teenagers (15-20) have already used the online shopping with home delivery service. Among them, young respondents said they are willing to use various online shopping methods in the future.
"The post-80s and post-90s, who are at the beginning of their careers, are starting families, while the post-95s and some post-00s will soon graduate from school and enter the workforce," added Fan Yijin. "This generation will determine the future economic trend. Therefore, it is crucial for retailers and manufacturers to understand the shopping methods preferred by these consumers."
In the Asia-Pacific region, more than half (60%) of respondents said they are willing to use online shopping in the future, exceeding the global average. Especially in China, online ordering with home delivery has become universal. More than one-third (37%) of Asia-Pacific respondents (46% in China) said they have had online shopping experience; the online automatic customization function is also more popular in this region than the global level (22% vs. 14%), and the proportion in China is as high as 30%.
What do we buy online and offline?
Not everything suitable for online is suitable for offline, and sometimes the opposite is true. For example, in the U.S. market, among offline consumer goods, the ratio of food to non-food is 60% vs. 40%, while online is exactly the opposite (40% vs. 60%).
"Consumers have their own subjective preferences for buying goods online, but certain categories are better adapted to the characteristics of online transactions," said Fan Yijin. "E-commerce can choose fast-moving products to open online sales channels, and the market will be determined by user demand. By better understanding consumers' online and offline purchasing situations and optimizing digital services, it helps physical stores accurately target potential consumers."
Nielsen's data shows that physical stores undoubtedly lead in food and beverage with 62% of sales, followed by grocery stores with 32%, while online transactions account for 6%. But the survey also shows that food and beverage products have huge growth potential in online transactions. About 36% of Chinese respondents said they plan to buy milk and nuts online in the next 6 months, and more than 20% said they would buy beer, yogurt, and coffee online. In addition, between 2013 and 2014, online sales of liquid milk and chocolate increased by 91% and 59%, respectively.
Why is the online sales growth rate of FMCG in Asian countries far higher than in other countries? Nielsen's report points out: First, the urbanization development and higher population density in Asian countries provide a market foundation for the circulation of online FMCG, making express delivery more economical and labor costs lower; second, the rapid popularization of smartphones provides a hardware foundation for consumers; third, the high attention to food safety issues also prompts consumers to prefer buying high-quality food online, especially in China.
Which physical stores do we shop at?
Among the three product categories included in this study (food and beverage, household products, and personal care products), the fastest-growing channels did not occupy the largest sales share, indicating that global trade share has become increasingly fragmented. In the food and beverage category, traditional stores grew the fastest (+5%). Supermarkets and hypermarkets remain important channels for this category, but street shops and small community stores are increasingly favored by consumers because they meet consumers' needs for convenience and speed. The situation for household products and personal care products is similar to food and beverage: hypermarkets still occupy the largest sales share, but convenience store sales are also growing rapidly.
Taking liquid milk as an example, although large hypermarkets and supermarkets still dominate the sales channels of this category with a total sales share of 60%, the growth of online channels and traditional grocery stores has also reached 91% and 17%, respectively.
"Large supermarkets and hypermarkets remain important players in the global retail landscape, and this situation will continue for a long time," said Fan Yijin. "But small-scale stores and e-commerce channels also occupy a considerable share in certain categories and are increasing. Therefore, when formulating sales plans, it is necessary to comprehensively consider the online and offline situations of large supermarkets and small-scale stores, and deeply understand where consumers shop and what categories they buy, which will provide operators with clearer ideas and more market-appropriate distribution strategies."
Although the digital era has arrived, even if consumers' shopping channels have changed, most consumers will continue to shop in physical stores. Convenience, comfort, and more reasonable prices will remain important dimensions for consumers to consider when choosing shopping methods. Therefore, for food retailers and manufacturers, leveraging the advantages of online and offline, optimizing the shopping experience, and allowing consumers to enjoy a better shopping experience are the top priorities.
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