Jakarta, March 10, 2016 – Consumer packaged goods (CPG) companies must fully embrace digital commerce or risk losing out to newer industry players in the battle for an estimated US$340 billion worth of market growth in Asia Pacific over the next five years, according to Accenture.
In a new report, “The future is now: understanding the new Asian consumers” Accenture estimates that the consumer goods and services industry will grow by as much as US$700 billion globally by 2020, with nearly 50 percent, or US$340 billion, of this growth coming from Asia—specifically China, Indonesia, India, Thailand and Singapore. China alone is expected to account for approximately US$200 billion, or 60 percent, of the growth in Asia, and in Indonesia to be grow to US$ 7.9 billion from $1.3 billion in 2015.
“The consumer path to purchase is changing drastically on the back of emerging technologies and so to capitalize on the tremendous opportunities in the Asian market, CPG companies must identify exactly what consumers want and be ready to provide it,” said Mohammed Sirajuddeen, ASEAN managing director Accenture Digital. For Poducts “If CPG companies don't take action now, they risk losing out to the new generation of digital commerce players. Having enabled the upsurge in digital commerce, these same disruptive platforms have become fearsome competitors.”
The report estimates that 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. The report identifies a number of steps that established CPG companies could take to seize growth opportunities and counter the threat of the new players:
Partnering with e-commerce platforms to reach new consumers/markets
Maximise value from cross-border e-commerce
Investing in brand building, with integrated marketing initiatives spanning online/offline
Adopting a ‘mobile first’ approach
Integrating e-commerce initiatives with social platforms to engage consumers and build trust
Investigating opportunities for product testing and product development through crowd-sourcing
Leveraging insights from big data to enhance and fine-tune customer interactions across multiple touchpoints.
The digital commerce opportunity for CPG companies
Despite the market being transformed by digital technologies, it is still not enough for many consumers, with Accenture’s research showing that consumers are not satisfied with their purchase journeys. Today’s top ‘ask’, according to the report, is for a single platform where they can enjoy unique experiences that delight and enable their impulse decisions, receive tailored product recommendations that meet their desires immediately and where they are always connected to their favourite brands. This represents an outstanding opportunity for traditional CPG companies to capture the next wave of growth. By focusing on providing digital commerce they can bridge existing gaps in consumers’ purchase journeys and provide the seamless shopping experiences they’re looking for.
“Technology will continue to evolve and influence how consumers shop in the future,” said Prihadiyanto, managing director for Products in Indonesia. “By 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.”
This is more so important for Indonesia, since more consumers will be connected based on the growth of mobile internet penetration, which is to be expected at 56 percent in 2019 from 48% percent in 2015,” said Prihadiyanto. “This growth will complement with the growth of new consumers, whereas out of the 100 million of new consumers in ASEAN, Indonesia’s consuming class is to grow by 30 million to reach 78 million by 2020.
Accenture Internet of Things Centre of Excellence
The research was launched as part of the introduction to the Accenture Consumer Internet of Things Centre of Excellence in Singapore. The Centre brings market expertise, industry leading practices, leading-edge technologies, and consumer research together to create an experience that empowers businesses to think differently about the future – from digital transformation and corporate strategy, to IT, sales, and marketing reinvention.
“The next generation of digital commerce is here, and consumer empowerment enabled by smarter technologies will change how we shop and make purchases,” said Sirajuddeen. “The Accenture Internet of Things Centre of Excellence in Singapore helps businesses take advantage of the unprecedented opportunities that exist in the rapidly evolving digital marketplace.”
From its virtual reality room to its next-generation experience space, the Accenture Internet of Things Centre of Excellence helps clients imagine new digital possibilities in a variety of areas, including:
Micromoments: Seamless Retail, Hiku @ Coles program, & Smart Packaging
Future of eCommerce: Immersive Store Experience and Virtual Commerce
Direct-to-Consumer: Connected Beer and Smart Home
Smart Assistant and Artificial Intelligence: Home Digital Assistant
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Accenture carried out a range of qualitative and quantitative research for this report. It included the creation of “on-line consumer communities” across China, Indonesia, and Singapore to better understand e-commerce preferences, pain-points, and motivations in relation to consume goods and services purchases. The communities were active from December 2015 to January 2016. In addition, Accenture hosted interviews with a sample of senior level executives with a strong exposure to the CPG industry and desk research was used to complement this.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.