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Winning one billion consumers in China

Accenture’s latest study reveals consumer insights and strategies that can help accelerate growth for consumer packaged goods (CPG) companies and retailers in China.

Overview

China’s ecosystem is evolving quickly in terms of demographic changes, rapid pace of urbanization, and fluctuating buyer preferences and behaviors.

China’s consumer market today is actually a collection of many different consumer archetypes—groups of consumers with different preferences and behaviors. Companies need to adapt their value proposition and target these unique preferences of each archetype.

To do that, you need to understand the complexity of these consumer archetypes leveraging insights to customize offers and experiences. To win in China’s digital market, companies need to understand and engage consumers in new and dynamic ways. View the Infographic.

Background

Accenture launched our China Consumer Study in 2013 surveying 3,500 consumers in 27 cities across China.

For the purpose of this study, we focused exclusively on the urban consumer as China’s urban areas already comprise 70 percent of China’s consumer market. We also focused specifically on consumers in 27 Tier 1, Tier 2, Tier 3 and Tier 4 cities, with populations ranging from 1 million to more than 20 million. Survey respondents were aged 18 to 55, with household income levels below ¥600,000 (US$97,500) and above the income level attained by the top 70 percent of residents in a given city, or approximately ¥45,000 (US$7,400).

Through detailed analysis of responses to our comprehensive survey of mainstream Chinese consumers, we have produced insights that we believe accurately reflect the complexities of the Chinese market.

Key Findings

The rules are changing in the vast China consumer market. Our research identifies four learnings to help inform CPG companies and retailers.

  • A “me” culture is prevailing: These consumers are aware of what their purchasing power represents. They increasingly set themselves apart and assert their social status through what they buy. Read more.

  • Life is digital: Digital channels are pervasive in China and digital consumption continues to grow in popularity. Creating smarter, seamless and secure experiences at every point of interaction is what defines expectations in the digital world. Read more.

  • It is difficult to drive loyalty: More than two-thirds of respondents indicate they are willing to try new products. This is good news for companies leveraging digital technologies to offer new products, services and experiences. Read more.

  • Pragmatism still rules: China’s urban consumers remain very pragmatic shoppers, leveraging multiple channels before purchasing and they expect an omni-channel experience. Read more.

A “Me” Culture is Prevailing

Chinese urban consumers are aware of what their purchasing power represents. They increasingly set themselves apart through what they buy.

With rising levels of income, more and more urban Chinese consumers have embraced the consumption patterns that a middle-class lifestyle affords. This includes spending money on things and experiences that not long ago would have been considered luxuries. It also means spending more on goods that are perceived to be of higher quality.

Life is Digital

Whereas insights into the “me” and curious consumers can be used to better understand what urban Chinese people buy and the thinking behind their purchasing decisions, our analysis also sheds light on how urban consumers engage with consumer packaged goods companies and retailers. Not surprisingly, digitization has taken hold in a pivotal way. Digital channels are pervasive and digital consumption continues to grow in popularity.

What does the emergence of digital as a way of life mean for consumer packaged goods companies and retailers? It means that growth is no longer simply a matter of moving consumers and customers through linear purchasing processes. Creating smarter, seamless and secure experiences at every point of interaction is what defines expectations in the digital world. Experiences today must be non-stop, customized and cross-channel.

It is Difficult to Drive Loyalty

In Accenture’s 2011 Global Consumer Pulse Research, we observed that Chinese consumers are extraordinarily curious. That finding was confirmed in our most recent research. More than two-thirds of survey respondents expressed their willingness to try new products; only 10 percent of respondents claimed to be unwilling to try new brands or products.

This bodes well for consumer packaged goods companies and retailers that are able to take advantage of industry convergence to offer entirely new products, services, and experiences to consumers. It also presents opportunities for companies looking to accelerate the pace of your go-to-market strategies with new products.

Pragmatism Still Rules

Despite all indications that online channels are gaining ground, China’s urban consumers are still, at their core, pragmatic shoppers. This means they frequent both brick-and-mortar and online shops to make their purchases, and increasingly expect a seamless experience when navigating these two worlds.

The growth in online shopping is phenomenal, but traditional supermarkets and department stores still reign supreme. Citing convenience, comfort, and a wide selection, 84 percent and 62 percent of respondents rank supermarkets and department stores, respectively, as their primary shopping destinations.

Analysis

Accenture’s research revealed eight distinct middle-income segments among urban Chinese consumers:

  • Fashion-Forward Consumers: The digital generation, focused on fashion trends and high quality, are keen on the Internet and digital technology.

  • Young Urban Professionals: This bourgeois group of consumers seeks self-esteem in their pursuit of quality and personalized services that represent social status.

  • Exclusive Service Buyers: Demanding, high-income, urban-dwelling white-collar workers; seek service excellence, personalized experience, performance and efficiency.

  • Conservative Middle-Income Shoppers: Well-off group with satisfactory living standard in their pursuit of comfort and decent quality.

  • Internet Civilians: A young, motivated group with general spending power, enthusiastic for digital technology, typically associated with the Internet.

  • Thrifty Householders: The middle-aged, home-focused group, cautious and conservative in their pursuit of practical and economical goods and services. Focused on children’s expenditure and lifestyle, save up to support children’s expenditure.

  • Aspirational Wage Earners: Wage earners who lack strong spending power but pursue convenience and enjoyment, are progressive and open-minded in their consumption.

  • Price-Sensitive Families: Cost-conscious men and women seeking affordability for their families.

Recommendations

To win consumers in a changing digital marketplace in China, CPG companies and retailers must leverage digital channels to drive growth.

  • Invest in technology platforms to increase visibility and responsiveness

  • Build analytics capabilities to understand high-value consumer archetypes

  • Develop a consumer engagement blueprint to deliver personalized shopping experiences

  • Identify opportunities for unconventional growth


CPG companies can differentiate themselves further:

  • Pursuing consumer-driven innovation by engaging consumers, encouraging collaborative design or crowd-sourcing.

  • Eliminating the complexity, cost and time inherent in analog processes and channels.

  • Building new marketing and sales capabilities based on a digital foundation.

  • Rethinking and adapting to a new digital operating model.


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