the rise of the connected consumers “innovate or...

The Rise of the Connected Consumers “Innovate or Die”

Anson BaileyPartner, Business DevelopmentKPMG China

Global Footwear Retail ConferenceMarch 31, 2016

Mega Trends

INNOVATION

IoT

ROBOTICSARTIFICIAL

INTELLIGENCE

2© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. Printed in Hong Kong. 2

Five trends consumers are drawn to:

Imperfection and

authenticity

2Creativity

Mindfulness

4Accessibility

Convenience

51 3

2


Retailing isn’t facing disruption…it’s already disrupted

There’s no longer any doubt about the role digital isplaying to reinvent retailing’s ecosystem.

Retailers are navigating an increasingly competitiveenvironment that demands innovation and technological

transformation at every turn.Retailing success today means much more than just a

positive transactional experience. Today’s consumers – many of them ‘digital natives’ – expect a lasting impact from their favored brands, one that they can relate to, engage more

deeply with and share on social media.In response, smart retailers are forging a distinct ‘brand

persona’ – an integrated platform that reaches consumers ona personalized level while providing a seamless experience

across diverse content channels.

3


Emerging Trends Mapping Timing & Impact

Impa

ct o

f Tre

nd

Hig

h (G

loba

l + M

acro

)

Mod

erat

e (V

aria

ble

by

Indu

stry

)Lim

ited

Monitor (5+ years) Prepare (2-5 years) Act (0-2 years)

CollabEconomyPlatforms

P2P

Smart Home

Consumer3D Printing

EnterpriseWearables

Big Data & Analytics

Personal Health APIs

MobileWallets

Mobile & Real Time

Care

Connected Consumer

Goods

Patient Mgmt Tools

Timing to Impact

Market TrendLegend

ConsumerWearables

MobileCommerce

MobilePOS

Internet of Things

Mobile Payments

Digital Health

Wearables

3DPrinting

CollaborativeEconomy

D&A Automation

Cognitive Technology

Cognitive Technology

Self-Driving

Cars

Smart City

D&A Automation

Enterprise IoT Enterprise

3D Printing

Preliminary


$8 T

$2.5 T

$6 T

$7 T$1.1 T

$0.4 T

$1.1 T

Household consumptionUS$ trillion

Shifting global landscape Global consumption in 2000


$18 T

$11 T

$16 T

$33 T$4.5 T

$2.1 T

$7 T

ASIA

Asia’s market is almost twice that of Europe and the U.S.

SUB-SAHARAN AFRICA

Remains relatively small in spite of young populationLATIN AMERICA

Not as big as Asia, but growing in relative importance.

Household consumptionUS$ trillion

Shifting global landscape Global consumption in 2030


$14.3 bn

$9.3 bn


“Price is becoming less of a driver, but value remains important as customers are well informed about global prices, since most of them travel physically or digitally.”

Thibault Villet, CEO of Mei.com

China’s Connected Consumers report….15x case studies

“Traditional business still think ecommerce is a

business model. It is not, it is a lifestyle!”

Jack Ma, Chairman & CEO of Alibaba


668million users

178million users

60%eComm


m-Commerce is the New Norm!


Distributed commerce

It’s being called a ‘buy here and now’ approach. And it’s here.Now.

Typical e-commerce is giving way to a more universal and agile ‘distributed commerce’ ecosystem that capitalizes on the capabilitiesof mobile devices, social media and the endless stream of content

being shared on popular social channels.

In essence, e-commerce now means instantaneously reaching out to consumers - via social sites, tweets, text, blogs, flyers or articles -

wherever they work, live or play in today’s mobile, content-richecosystem.


The Rising Chinese Consumers of Today

Tier 1 versus Tier 4

Older vs. younger

generationsMale vs.

female

Emerging needs states

beyond status

Page 12

70kSuper-rich

1.09millionaires

54%Upper

Middle-class


Cost of Access

Ease of Access

IndustryBlur

Needto

Innovate


SHOWROOMING

THIS PAIR IS SO PERFECT, I CAN’T WAIT TO BUY THEM CHEAPER ONLINE OR NEXT

MONTH IN HONG KONG. 62%


50

0

40

30

20

10

Billionsof

Devices

2010 2015 2020

15B

Rapid Adoption rate of digital

infrastructure:5X faster than electricity and

telephony

50B

Everything Will Be Connected to Everything


Predictive analytics

Connected consumers now enjoy endless instant access to digital content offering product reviews, comparison shopping, easy purchases and convenient delivery options.

Retailers are responding with predictive analytics designed to: Optimize pricing;

Accelerate the speed products are delivered to stores;

Personalize customer service; Improve the bottom line.

Analytics are providing ‘markdown optimization’ insights that suggest the best time to cut the price of a particular item in a particular store. Many retailers are thus discovering that sooner is better than later for pricing: Analytics can predict the advantages of selling a popular item at a discount today rather than waiting for the next seasonal promotion. Analytics can also deliver

customer data on buying habits, allowing sales staff to make smarter product recommendations.

Sometimes sooner really is better than

later

17


Retailer spotlight: Predictive analytics

Clothing and accessories retailer StitchFix has a unique sales model, asking users to take astyle survey, then using predictive analytics to match customers with clothing or accessoriesthat they might like.

What happens whenever customers don’t like a product they’ve received? Simple - they cansend back any item using free return shipping.

Source: https://www.stitchfix.com/

18

https://www.stitchfix.com/


Today, most purchases begin with an online search.

In response, retailers are turning to ‘digital shopping assistants’ or‘virtual personal shoppers’ – intelligent computer programs designed to

interact with consumers by conversing, answering queries or posingquestions in order to make purchasing recommendations.

In a typical month, about a third of shoppers with smartphones arealready interacting with digital assistants and predictions are that $2

billion or more in sales in the next year will be conducted exclusively withdigital assistants.

19

Artificial intelligence


Retailer spotlight: Artificial intelligence

Specialty outdoor retailer The North Face launched online shopping tool XPS – Expert Personal Shopper – to help customers find

everything from ski jackets to winter hats.Built using IBM’s Watson cognitive computing technology and aimed at boosting e-commerce,

XPS quizzes shoppers to determine their specific needs and tastes before recommending a

product.The goal is to prompt a ‘conversation’ that customers typically have with in-store staff.The North Face reports positive results since the beta project launched on its e-commerce site and most customers say they would use XPS again.

Image source: https://www.thenorthface.com/XPS

https://www.thenorthface.com/XPS


More Innovation coming….The MILLS Project


Philip Kotler on Trend Prediction….“the most important thing is to forecast where customers

are moving and be in front of them.”

With new tools like Data Analytics and trend intelligence…we shall have much

deeper insights into the future consumer and trends before they

become obvious….we are going to see a new era of machine learning!


Everything is changing…KPMG Insights Centre


WE ARE GOING TO SEE A RAPIDLY CHANGING LANDSCAPE IN THE RETAIL AND IT’S RELATIONSHIP WITH TECHNOLOGY BEING THE

KEY DRIVER!

Welcome to the Future – Robotics & AI


Pace of Change disrupt or be disrupted…


Anson BaileyPartner, Business DevelopmentKPMG ChinaTel: +852 2978 [email protected]

mailto:[email protected]

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