d by KPMG and YouGov in 2019, 77 per cent of mainland respondents described themselves as “tech savvy.” To cater to consumers with such high levels of digital fluency, it’s essential that retail industry professionals understand four key e-commerce trends that influence business throughout Hong Kong and the rest of the Greater Bay Area (GBA).   New consumers Gen Z (those born after 1997) is dramatically reshaping the consumer landscape in China and there are more than 300 million of them according to the latest census statistics. This generation is made up of digital natives, and their mindsets and expectations are hugely different from preceding generations. Gen Z consumers are not just looking for convenience; they want to buy brands that align with their values and that they feel an affinity with. In the digital retail survey, 82 per cent of consumers in mainland China GBA cities said they strongly or somewhat agree with the statement “I like to use brands that share my social values,” while in Hong Kong, that figure was 61 per cent. New brands  Homegrown brands such as Alibaba and Tencent continue to grow in popularity amongst the nation’s consumers. Trying to replicate their success, entrepreneurs in China are launching new brands at breakneck speed. Thwarting the stereotype that Chinese shoppers see foreign brands as superior, the new generation is eager to try fresh, local brands. New consumption habits Today’s Chinese retailing is all about digital connections — from shoppable livestreams to omnichannel engagement across numerous social networks. Companies in the country are continuously ramping up their marketing efforts, with 70 per cent of companies saying they are expanding their content marketing to reach consumers in a new and informed way.  New operations The meteoric rise in livestreamed e-commerce in China is one of the most interesting and exciting trends. The market size is currently worth about 1 trillion yuan, up from 433.8 billion yuan in 2019. (Statista, 2021) Competing to capture this market, video-sharing social networking services such as Douyin are investing heavily in their streaming capabilities.   While Mainland China has consistently embraced new and innovative technologies, Hong Kong has been a relative laggard. This may be because of the region’s compact size, which has fostered a deep culture of bricks-and-mortar retail. But change was inevitable, and Covid-19 has sharply shifted consumers’ attitudes. With more Hongkongers working from home and being wary of crowded spaces, there has been a big uptick online purchasing, especially of essentials. In a November 2020 report on the impact of Covid-19 on Hong Kong consumer attitudes, 73 per cent of consumers say they have used online channels “as frequently or more often than before” to buy groceries. More telling, 84 per cent say they are likely to continue using online channels for groceries in the future. Brand digitalisation As the mindset of the region’s consumers changes, so must the approach of retailers. With shoppers using apps to buy groceries and videos to buy clothes, it’s more essential than ever that businesses make technological adaptation a core pillar of their strategies. According to a recent white paper on the state of AI in Hong Kong, many retailers are still at the early stages of their digital journeys. More than half surveyed said they do not have dedicated AI strategy (53 per cent) and no dedicated AI leadership (62 per cent), citing costs and lack of know-how as the highest hurdles.  The brands that will lead tomorrow’s retail industry are those that make digital transformation a centerpiece of their strategies. This digitalisation must transform every part of the business ecosystem, from sourcing and logistics to sales and customer engagement. Covid spurred a rapid adoption of delivery-focused business models; the pandemic won’t be the last challenge that favors companies that have digitized their infrastructures.  Digital technologies can also open new opportunities. 3D body scanning and sampling is especially popular with fashion retailers who want to give customers the perfect fit. Other companies are using blockchain, next-generation data analytics and AI to enhance their global supply chains. In 2019, KPMG in Australia, China and Japan tapped into this then-nascent trend by introducing KPMG Origins, a blockchain-based track-and-trace platform to support a variety of industries, including manufacturing and resources. Trust and authenticity  Technology alone cannot address all the needs of today’s consumers. In November 2020, KPMG surveyed 75,000 global consumers (with a large number from Mainland China) to understand the far-reaching effects of Covid-19. One worrying trend that emerged was the erosion of trust between customers and brands. In particular, many non-grocery retail chains were perceived as not putting customer safety first. In the post-pandemic era, retailers must repair their reputations and demonstrate their total commitment to social safety. And they must do so in tangible ways — modern consumers are suspicious of marketing efforts. It will take much more than buzzwords and feel-good initiatives. Companies need to walk the talk to be seen as sincere and authentic. This authenticity needs to extend throughout a retailer’s business practices, as today’s Chinese consumers want more than just a transactional relationship. They want to connect with the company’s purpose and vision.  Along with this burgeoning demand for companies to focus on their purpose and corporate social responsibility, the Chinese public is ever more demanding about how companies manage consumer data. According to the digital retail survey, 77 per cent of polled executives said they are collecting data from their consumers. This includes information on their shopping habits, online browsing behaviour and location.  But with big data comes big responsibility. When collecting consumer data, the onus is on companies to ensure that this data is used responsibly and stored securely. Currently, only 44 per cent of consumers in the mainland GBA cities and 59 per cent of consumers in Hong Kong feel that the level of data privacy maintained by retailers was “moderate”. Brands and platforms need to do a much better job communicating what they are collecting and how they’re using it.  Companies are answerable to a whole gamut of stakeholders — from regulators and financiers to their own employees, shareholders and the media — and all are clamouring for a fresh approach to data. Soon, we might even see a barter deal, wherein brands somehow compensate customers for certain metrics.   A new era for retail The new era of retail is just beginning. China has had a head start on the “new normal,” but for many brands, there is still much work to be done. Consumer attitudes are changing as rapidly as the technology that’s transforming how they shop. So, companies should use this pivotal moment to reassess every aspect of their businesses. The winners will be those who can leverage data analytics to create cohesive and holistic strategies to serve the new consumers in the new reality. This article was originally published in the Asian Retail Outlook, sponsored by Salesforce. You can download the report here.