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.
The Asian marketplace is an enormously attractive proposition. Crucially, it’s affluent and becoming more so. By 2030, 85% of predicted growth in the middle-class worldwide will come from Asia, and the region will account for more than 50% of global middle-class consumption. In step with this explosive growth, and empowered by the proliferation of new digital technologies and connected devices, the highly evolved consumer has emphatically arrived in Asia. In the last decade, consumer dynamics in Asia have deeply changed and today’s customers are better connected, better informed and more digitally savvy, making them more prone to switching and harder to please.
Across the region, digital is transforming the path to purchase, giving consumers more choice, more insights and, crucially, more power. Fast-growing consumer awareness and sophistication in online environments is a feature in all core markets and this will only increase from now on.
However, if CPG companies don't take action now, they risk losing out on this new generation of consumers. These companies must couple traditional models with new ones where consumer engagement is digital and one-one, social influence is perceived to be the trustworthy source and shopping is just one click away. 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 leap frogging the traditional models.
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.
Technological advances are derailing traditional CPG ways of thinking. The shift to how consumers will shop and buy in the future has already begun and, driven by early adopters in this space, its gathering momentum. Companies such as Amazon, FedEx and Google are using drones to speed delivery times way beyond their competitors. With augmented reality, Ikea’s customers can see products in their homes before they buy them. Consumers can watch the “Hilfiger Collection” runway via 360-degree 3D virtual reality before shopping the collection online, and Mondelez stores can display products on smart shelves with sensors that analyze faces and behavioral characteristics for consumer profiling.
However, as rapidly as the market’s being transformed by digital, today’s consumers are still not satisfied with their purchase journeys. Consumers are looking for a single platform where they can search, buy, share experiences and be rewarded. In other words, seamless shopping experiences are still in short supply.Purchase journeys are getting shorter and consumers seek solutions to real-life moments almost instantaneously – i.e. decisions are being made in micro-moments (when they are on the go; when they get home from work; when they are talking to friends; etc.). Companies that are present in these micro-moments where decisions are made will be able to capture “consumer’s basket.” In order to best target micro-moments, companies can analyze the likes of Google, Amazon, or Alibaba a little more to see how they are able to sense micro-moments before consumers expressly ask for it.
This represents an outstanding opportunity for traditional CPG companies. The objective? Focus on using digital commerce technologies to bridge existing gaps in consumers’ purchase journeys and provide the seamless shopping experience they’re looking for. We know that the battle for consumers is already being fought in the micro-moments that make up each purchase journey. The priority for CPG companies is to expand their view of digital channels beyond the “buy” button so they can begin to harness new opportunities for driving sales and measuring success in as many of these situations as possible.
Technology will continue to evolve and influence how consumers shop in the future. 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.