How Mobile Is Changing Retail & What Europe Can Learn from China

Whether it’s in China or Europe, consumers are loathe to lay down their phones – even for a second. Therefore, it shouldn’t come as a surprise that retailers are aiming for an ever-increasing presence on consumers’ phones, devising a host of services, apps, and beneficial product offers just for this purpose. In this piece for RetailTechNews, Harald Kratel (pictured below), vice president global marketing, Smaato, discusses how a seamless omnichannel shopping experience applies to trade both in China and beyond.

The market is flooded with products and services by myriad players promising to effectively incorporate mobile devices in the purchasing process. Thus scores of retailers, omnichannel retailers, and pure players, as well as traditional brick-and-mortar retailers, are all vying for the chance to reach customers on mobile along the customer journey. That the masses can be expected to accept mobile payment at scale is something we’ve seen in China, where it is now the norm for customers to pay with their phones in brick-and-mortar shops.

Harald Kratel, VP Global Marketing, Smaato

As opposed to Europe, the mobile-first mindset has long since taken hold in China. There are over 700 million smartphones in the country that can be used for all sorts of transactions – from online shopping to redeeming gift certificates, paying for cabs, medical services, restaurants, utilities, and more. In return for this smart shopping utopia, Chinese consumers are willing to share more of their data. And, with this influx of data, artificial intelligence will be able to streamline the process even further. In numerous shops in China, for example, cameras scan the aisles in order to monitor what customers select and, thus, tell them how much their purchase will cost in real time.

How did China get ahead in mobile retail?

First off, it bears repeating that Chinese consumers were early adopters of the mobile-first mindset. The majority of consumers do not own a computer and switched over exclusively to mobile years ago. Secondly, Chinese consumers use either Alipay or the WeChat payment app for the vast majority of everything. Thirdly, heavy government regulation of the Chinese banking sector provides consumers with a trusted infrastructure, in which they feel safe adding sensitive information to their favourite app, like a credit card that works abroad.

How are retailers in China implementing the technology?

The most concrete examples of using the technology are in the collection of data and logistics. Thanks to the sheer amount of customer data available for collection, Chinese retailers are able to ascertain invaluable insights on their clientele. As the vast majority of rewards programmes and payments are made via WeChat, retailers have a distinct advantage over retailers in other countries. However, the data that Chinese retailers collect must be used to provide customers with relevant solutions – and not all retailers are equally skilled in retaining customers. Logistics, on the other hand, have profited greatly from the adoption of smart technologies. For example, it allows large retailers to provide clients with same-day delivery – a decisive factor in boosting the overall cross-channel shopping experience.

Omnichannel factors in China have changed consumer expectations – and behaviour

Chinese consumers are not just in favour of an omnichannel experience whenever and wherever they shop. They expect it. A McKinsey survey indicates that half of all consumers switch between online and offline shopping multiple times before they end up making a purchase. And the majority of consumers consult their phones at least once during the purchasing cycle. There is a clear link between retailers who provide a seamless omnichannel experience and successful Chinese retailers. Instrumental to meeting consumers ever-increasing expectations is a highly developed data-management system, combined with a clever mix of online and offline channels. The crux of this retail format of the future lies in creating a second layer of smart retail in order to take the behaviour of consumers on social and transfer it across the entire spectrum of consumer behaviour. Even if consumers go to a competitor’s shop, the industry as a whole can maintain a connection to users through the use of publicly provided data, like numbers correlated with users, and shopping guides in connection with users, as well as electronic membership cards.

What can European retailers learn from their Chinese counterparts?

Setting, content management, interactive operations, and system set-up are all integral components of the first step to improving your model for consumer interaction. The new generation of Chinese retail providers is experienced in content management and interactive operations. Furthermore, this new generation is relatively large and precise, thanks to content acquisition. By analysing data online and combining interactive operations with mobile payments, we can transform this data into offline traffic as visits by potential customers to brick-and-mortar shops. Such an incredible amount of data insights have been gained thanks to close collaboration between Chinese retailers and the country’s largest platforms (Tencent/Alibaba). Thus, user data can be modified in real time and retailers are able to react and adapt quickly and effectively – something European retailers can now only dream of.

European retailers are a bit behind China in this regard – through no fault of their own. Data management in Europe is nowhere near as developed, as Europeans are much more reluctant to share their data. In my view, this can and will change over time. Once European consumers see the benefits and exclusive offers that omnichannel shopping experiences provide, e.g. services tailored to individual users that represent clear added value, they will become increasingly willing to make their data available. In addition, there is room for improvement in Europe, and the rest of the world, when it comes to creating effective, personalised ads and customer incentives (relevant product suggestions, offers, etc.). Retailers who are able to provide their customers with a seamless omnichannel shopping experience will, in the end, be more successful than those who are not – and that will apply to trade both in China and beyond.