Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Essential Retail Magazine, you agree to our use of cookies.

Okay, I understand Learn more

Building consumer trust overseas

We have all witnessed how UK consumers are driving unprecedented change in the retail sector, but when it comes to expanding overseas, should retailers expect more of the same? 

We recently launched a retail paper, Create a ‘Connection’ with your Customer, based on research across four major overseas markets – China, Japan, South Africa and Nigeria.

The research found that more than 60% of early adopters in the four countries surveyed choose a retail store because it has quick ways to check out. This jumps to 80% in China. Half of these same early adopters choose a retailer because shopping can be completed quickly, leaving them time for other things. 

Also, we found that Chinese consumers, in particular, are embracing technology faster than other parts of the world. For instance, 81% choose a retail store because they can pay with an app.

In fact, we’re also seeing this on the ground in China with Florent Courau of JD.com recently revealing in an interview that 80% of JD’s online orders now come from mobile, and about 25% of first-time purchases come from social media platforms.

Building trust is critical
Our research also found that while e-commerce, m-commerce and social media buzz, has allowed new brands to be brought to market more quickly, trust has become increasingly important, and in China, 81% of consumers think it is important to trust retailers, and 64% do.
 
However, to build trust retailers expanding overseas must go further to promote transparency and traceability throughout their supply chains, and consider locally-sourced, sustainable goods and produce.

Today’s customers want to ensure they understand where and how products are made along the entire supply chain. They want to understand the sustainability of raw materials and the working conditions and labour standards to produce the goods. This is why our research found that over three-quarters of the consumers we surveyed in the Chinese market (77%) will scan the QR code to access additional product information or pricing before buying. 

There are four ways that retailers need to respond to these trends: 

  • Open communication about product traceability and transparency: Some retailers are already responding to this trend, with clothing and accessories store Everlane promoting ‘radical transparency’ - where the cost of each material used to make the final product is completely transparent to buyers, and the production cost is used to justify the sales price.
  • Develop traceability technologies - Consumers are looking for end-to-end traceability, to ensure compliance with ethical sourcing and to understand the delivery processes. Technology such as RFID and blockchain will allow retailers to have confidence in their sourcing, whilst apps can support a much more customer-friendly delivery process, including in-flight adjustments to location and real-time status updates.
  • Reassure retail buyers to choose to stock more local products. This carries a more subjective appeal for the customer. More than 50% of early adopters in China, Japan and South Africa prefer buying products made by a local artisan. This may require simplification and decentralisation of sourcing processes by the retailer, so you can register a new vendor in a few days, rather than weeks. Also, consider complementary distribution models such as franchises or co-operatives, to meet the need of consumers who favour a stronger local presence.
  • Prescriptive analytics - With 71% of Chinese early adopters wanting their stores to provide personalised recommendations – the next step is to move from predictive to prescriptive analytics to influence customer decision-making, such as the ability to push relevant information to the consumer when they are present in a physical or virtual store. Innovative tools such as Tiny Clues, Dynamic Yield, Relevant and LuckyCart should be considered.

In particular our research has demonstrated how China represents an interesting ‘test case’, given its growing and increasingly affluent middle class, its rapidly changing retail environment, and the stimulus of actors who focus on new technologies and new models of retail.

With around 10% of the store density of the US market, it is a still relatively blank page in terms of the evolution of the sector, so perhaps it’s the optimum time to consider moving into this market. Only time will tell.