Meet the Chinese Consumer of 2020

April 21, 2013

 

Most large consumer-facing companies realize that they will need China to power their growth in the next decade. But to keep pace, these companies will also need to understand the economic, societal, and demographic changes shaping the profiles of consumers and the way they spend. This is no easy task not only because of the fast pace of growth and subsequent changes in the Chinese way of life but also because of the vast economic and demographic differences across the country.

The preceding quote is from the latest “DFS Learning e-Blast” article, Meet the Chinese Consumer of 2020, by Yuval Atsmon and Max Magni.

In this March 2012 McKinsey Quarterly article, the authors discuss changing demographics, new spending patterns, and the implications on companies.  This is one of a series of articles we’re sharing on our growing PRC consumer.  It is important for us to understand the context of this critical consumer’s evolving needs, desires, and behaviors as we seek to effectively meet their shopping needs in the markets where we serve them.

More from the article:

Many of the changes taking place in China are common features of rapid industrialization:  rising incomes, urban living, better education, postponed life stages, and greater mobility.  Japan saw similar changes in the 1950s and 1960s, as did South Korea and Taiwan in the 1980s. 

But some unique factors are also at work, such as the government’s one-child policy and the marked economic imbalances among regions. Our analysis reveals important insights into the likely demographic and socio-demographic profiles of Chinese consumers at the end of this decade.

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

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The Service Manifesto

April 6, 2013

 

Never before in the history of business and marketing has customer service been as front and center as it is today. So much so that it is being transformed and reborn in front of our very eyes as arguably one of the most mission critical components that can make or break a business.

The Manifesto for Customer Service documents this sea change, introduces the 10 new rules of customer service and introduces a key hypothesis, namely that customer service needs to be elevated to the front office; to that of a strategic imperative which becomes a, if not the, key differentiator in the board room and beyond.”

The preceding quote is from the latest “DFS Learning e-Blast” article, The Service Manifesto, by Joseph Jaffe.

In this 2010 presentation on the site “Change This”, the author provides “10 New Rules of Customer Service” which focus on today’s international, inter-connected, increasingly virtual, rapidly evolving consumer reality. 

More from the article:

The rise of social media, social networks and word-of-mouth across a connected, digital and virtual expanse has given us a glimpse into the power and potential of the ability (or inability) to solve problems, address concerns head on, and on occasion, humble a mighty corporate behemoth and bring it to its knees. It all begins with what is perhaps the most important issue business and marketing execs will need to come to terms with in 2010 and beyond: how to create an organization that is mobilized, structured and empowered to be responsive, empathetic, accessible, connected and human in the hearts, minds, and wallets of their most prized assets—their customers and their employees.

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

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Top 10 Consumer Trends of China’s Wealthy

February 10, 2013

With fast rising wealth and money to spend, it’s no surprise the Chinese are in a buying frenzy. China’s consumer spending is growing at an average annual rate of 18 percent compared to 2.2 percent rise for the US, according to the National Bureau of Statistics.

While some of their purchases are just plain glitzy, studies and research from organizations like the United Nations, Eurmonitor and McKinsey & Co. show that Chinese consumers are displaying great consciousness for bettering themselves and their planets.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Top 10 Consumer Trends of China’s Wealthy, by Rajeshni Naidu-Ghelani.

In this July 28 2011 article on CNBC, the author discusses where the Chinese wealthy are focusing their purchases.

As a follow up to last week’s article which covered the more detailed McKinsey 2011 Chinese Consumer Spending Survey, today’s article provides headlines of the major consumer trends.

More from the article:

Some consumer trends in China are well known, such as the increasing demand for luxury goods, but others may surprise you. CNBC.com put together a list of 10 major consumer trends, including the companies and sectors they have the potential to profit from them. The list is based on studies and reports from international organizations such as the United Nations, the U.S. Department of Agriculture, and research firms including Euromonitor International and McKinsey & Co.”

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

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China’s Confident Consumers

January 3, 2013

China’s Confident Consumers

All:

 

The Chinese have taken to consumerism with ease, embracing thousands of new products, services, and brands. But the flipside is that the Chinese market changes at a speed capable of leaving all but the nimblest of companies breathless, as McKinsey’s 2011 survey of Chinese consumers highlights.1 Three findings stood out. Even in the face of rising inflation, Chinese consumers are more confident this year than in 2010 about their financial prospects. Among urban consumers, the number of first-time buyers—a group that has been a major driver of category growth in China—is declining. Finally, although brand awareness is rising, we see little sign that brand loyalty is following suit. In fact, more and more consumers choose among a growing number of favorite brands.”

 

The preceding quote is from the latest “DFS Learning e-Blast” article, China’s Confident Consumers, by Yuval Atsmon and Max Magni.

 

In this November 2011 article from McKinsey Quarterly, the authors discuss the recently published 2011 Annual Chinese Consumer Survey by McKinsey Insights China.

 

At a time when our PRC business is exploding in virtually all our retail locations, it is important for our leaders to understand the underlying factors influencing Chinese consumer behaviors.  By understanding the evolving Chinese consumer mindset we can make better decisions on how we serve this important client today and into the future.

 

More from the article:

 

The survey shows the extent to which consumers value brands more than price or channel, largely because they believe that branded products are safer, of higher quality, and more reliable than nonbranded ones. But faith in brands still does not translate into brand loyalty. In fact, both the number of consumers who always choose from among a relatively small set of brands—whom we refer to as “repertoire loyalists”—and the number of brands in their repertoire continue to rise. The average Chinese consumer now chooses among three to five brands in any given category, compared with two to three brands two years ago. In some categories, such as apparel, where luxury brands have grown hugely popular, the contrast is sharper still.”

 

Read the short article to learn more!  The full survey is available here as well.

 

Mike Osorio, your Dare to be Contagious™ strategist

www.OsorioGroup.com

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The New Japanese Consumer

January 1, 2013

DISCUSSION TOPIC

 

The New Japanese Consumer

November 18, 2011

 

All:

 

After decades of behaving differently, Japanese consumers suddenly look a lot like their counterparts in Europe and the United States. Celebrated for their willingness to pay for quality and convenience and usually uninterested in cheaper products, Japanese consumers are now flocking to discount and online retailers. Sales of relatively affordable private-label foods have increased dramatically, and many consumers, despite small living spaces, are buying in bulk. Instead of eating out, people are entertaining at home. Workers are even packing their own lunches, sparking the nickname bento-danshi, or “boxlunch man.”

 

The preceding quote is from the latest “DFS Learning e-Blast” article, The New Japanese Consumer, by Brian Salsberg.

 

In this 2nd quarter 2010 article from the McKinsey Quarterly, the author provides an interesting overview of the Japanese consumer’s changing domestic purchasing behaviors.

 

In previous e-Blast articles we’ve explored the changing dynamics of consumers in Korea and China.  Today, learn what factors are changing the way the Japanese consumer thinks about shopping and brands, and how this impacts their shopping behaviors.  By better understanding what drives today’s Japanese shopper, we can better serve our #2 customer nationality as they visit our locations throughout the world.

 

More from the article:

 

This fundamental shift in the attitudes and behavior of Japanese consumers seems likely to persist, irrespective of any economic recovery.  That’s because the change stems not just from the recent downturn but also from deep-seated factors ranging from the digital revolution to the emergence of a less materialistic younger generation.

 

Read the short article to learn more!

 

Mike Osorio, your Dare to be Contagious™ strategist

 

www.OsorioGroup.com

 

What do you think?  Please add your comments to join the discussion!

 

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Insights on Korea’s Luxury Market

October 8, 2011

DISCUSSION TOPIC

Korea’s Luxury Market – 10-04-2011

“…the performances of famous brands in Korea have been mixed. For example, LVMH and Ferragamo continued to do well, but others, like Gucci Group and Dior, saw sales drop in real terms in 2010.”

The preceding quote is from the latest “DFS Learning e-Blast” article, Korea’s luxury market: Demanding consumers, but room to grow, by Aimee Kim and Martine Shin.

Read about the changing Korean shopping landscape in this write-up of the results from McKinsey’s 2011 Korea luxury consumer survey, available on the McKinsey & Company Web site. The authors note that McKinsey research shows that South Koreans spend a higher percentage of their household incomes on luxury goods than the Japanese do, and the South Korean market looks to sustain strong growth for several years to come. But the country’s thing for bling is evolving: buyers are beginning to think more about brand differentiation than about ostentatiously displaying famous logos.

While DFS does not currently do business directly in Korea, the insights from the McKinsey story highlight the purchasing behaviors of Koreans who continue to travel in significant numbers to many of our destinations.

More from the article:

Thus, while the headline news is that the luxury market is still growing strongly, uncertainty is also mounting. In this year’s report, McKinsey addresses these concerns, which come in the form of three key questions: Can South Korea keep it up? What’s changing? And what do these trends mean for the players in the luxury industry?”

Read the short article to learn more!

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

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Service Lessons for Retailers from the Airlines

October 2, 2011

DISCUSSION TOPIC

Three Lessons Retailers Can Learn About Service From the Airlines – 09-16-2011

September 16, 2011

As a frequent flier with over 1.5 million Aadvantage miles (how about that!), it struck me on the way home from Shop.org that the retailing industry should use the airline industry as a cautionary tale. It’s a business that could do SO much better, but doesn’t, and has devolved into a commodity industry whereby the definition of success is safely transporting passengers from one place to another. And, God bless them for that! U.S. airlines, at least, have a stellar track record on safety.

But airlines have optimized the logistics end of the business to the point where it’s all about cramming as many passengers as possible onto as many flights as possible, moving them from point to point efficiently, and calling it a day.

Three Retail Lessons

1. Don’t promise what you can’t deliver. Simple enough, right? The old adage of under-promise and over-deliver applies, and yet the airlines do it in reverse 99 percent of the time. Returning from Shop.org, I traveled on a jetBlue flight that was delayed 90 minutes due to weather plus a slight (if there is such a thing) mechanical problem. Here’s the rub: jetBlue announced a 40-minute delay and delivered a 90-minute delay. Traveling for 30 years, as I have, this is almost always the case. Any ultimate delay will actually be worse than originally announced. Retail Lesson: When there is a problem, give your customers a realistic assessment of the issue right away, and then try to do better than that.

2. Don’t try to go from full-serve to self-serve. Since I hadn’t flown on jetBlue in 5+ years, I noticed the difference, so I’ll pick on them. When jetBlue first started flying, they had free snacks and free TV. While they still offer those two things (sort of), they have downgraded to an a la carte menu where you have to pay for movie channels on the “free” TV, pay for a headset, pay for “premium” snacks, pay for a pillow/blanket “kit,” pay for a few extra inches of leg room, etc. In short, they are now a regular airline and the TVs are in need of updating, too. Retail Lesson: When your business is founded on offering “free” extras, don’t start nickel and diming customers. If you are a full service retailer, be careful when you start trying to get your customers to check themselves out, use kiosks to find merchandise, help themselves at the meat case, etc.

3. You didn’t have me at hello! Does anybody but me remember the “good old days” of flying when flight attendants and gate and reservations counter attendants actually greeted you and maybe even spoke a complete sentence or asked how your day was going? It’s been well over a decade since I got more than a “good morning” from an airline employee. (Side note: I have had better luck on the phone and almost all airline employees have been civil if not friendly when asked a question). Retail lesson: Just think of the extra business you could garner if your associates were actually friendly and engaged each potential customer.

For retailers, commoditization could mean the industry degrades to the point where a handful of retailers successfully delivers products to consumers more or less on time, with an optimized supply chain, but with minimal to no service and differentiation. And, we don’t want retail to be like the airline industry, do we?

Discussion questions:  What’s the best way for chain retailers to motivate their employees to offer superior service? What’s your air travel tale of woe, and what can retailers learn from it?

My post:

The number of posts clearly indicates that the airline situation strikes a nerve with almost everyone.  For most routes, the choices are few and the airlines know it.  So in a financial model driven by high fuel and labor costs and meager profits dependent on pure price and supply chain efficiencies, it is no wonder that expecting anything other than arriving safely in your destination is futile.

On the retail side, the sobering reality is that a model built purely on supply chain and pricing efficiencies will deliver an awful experience over time.  And unlike the airlines, there are usually other options and the customer will go elsewhere.

It has always been this simple:  Retail interesting and innovative products in a compelling environment (virtual or physical), staffed by caring, knowledgeable people who love what they do.  Hire for these talents (merchants, store leaders and staff alike), pay well, invest in development, and authentically engage them in the business.  Unfortunately too many retailers over-complicate the formula and chase each other down the uninspiring product and price-driven path to boredom and irrelevance.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at Retailwire.com:  Three Lessons

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