When out shopping these days, consumers are ever more likely to turn to their personal computers (PCs), smartphones and tablet PCs to find gifts, check recommendations, compare prices, access online coupons, and ultimately pay for their purchases, according to the results from KPMG International’s 5th Annual Consumers and Convergence survey.
KPMG’s latest survey* reveals both consistencies and anomalies in consumer preferences year over year—in online shopping, content, device use and mobile payments—all of which hint at new directions for the future of digital commerce and those who compete in the space, according to KPMG authors of the report.
“Five years running, our global Consumers and Convergence survey shows that the pace of change continues to accelerate,” said Sean Collins, Global Head, KPMG Communications and Media. “Consumers worldwide are increasingly willing to adopt new technologies and digital business models, and that spells big opportunities and risks for service providers, retailers, media companies, banks and the host of other players vying for a piece of the digital value chain.”
Increasing Pace of Adoption
Consumers again showed an increasing appetite to adopt new technologies and business models. In KPMG’s 2008 survey, half of respondents said that they were very uncomfortable with mobile banking and today, that position has completely reversed with 66 percent willing to use their mobile phone as a wallet. Another example is a fivefold increase in respondents who prefer to use their mobile devices for web browsing, news and shopping. Television viewing also saw a decline with 51 percent of respondents now preferring to watch TV and movies online on their computers and 24 percent on their smartphones.
Mr. Collins notes: “The appetite of consumers to adopt new technologies means that a digital strategy should be a core component of any business in the retail, media, banking and service provider sectors.”
Price and Quality of Service still Reign but the Opportunity Lies in Personal Data
While consumers are happy to adopt new technologies, they are increasingly resistant to paying for the associated online content and service. Having grown used to ‘free’ models, 73 percent of people said they would not be willing to pay for access to online content, up from 57 percent last year. Of note is that nearly half of consumers in Asia Pacific (AsPac) were the most likely to pay for access to a website if the information was important and unavailable elsewhere, nearly double those in the Americas and Europe.
A significant opportunity exists however, around personal and usage data as consumers surprisingly show an increasing willingness to allow their data to be tracked.
“This holiday season, when consumers are online or using their mobile devices, over two-thirds would allow their online usage and location to be tracked, providing they get a deal,” commented Mark Larson, KPMG’s global head of Retail and a partner in the US firm. “That increases to over 75 percent for 16 to 24 year olds.”
Mr. Larson added, “I think these findings send an important message to retailers—providing compelling reasons for consumers to share information about themselves is going to determine the winners and the losers in digital commerce. The more targeted and tailored the interaction is with the consumer, the more effective it will be.”
AsPac consumers are marginally more willing to be monitored, followed second by those in the Americas and then third, Europe. Most consumers from all regions prefer personalized advertising.
Tudor Aw, KPMG’s European head of Technology and a partner in the UK firm adds: “Those companies that can accurately track and manage their customer information are increasingly looking to monetize their data assets by sharing their findings with others. It will be interesting to see what the bigger players will do with the masses of customer information at their disposal–this is potentially a significant new revenue source.”
For mobile, internet and telecom service providers, the message continues to be very clear: the overriding factors in choosing or switching providers is price (77 percent) and quality of service (78 percent), as opposed to device selection (54 percent) and exclusive content or services (49 percent).
Future of Retail On and Off-line
Across the three regions, online purchases seem to be far outpacing those in retail outlets for certain goods and services.
Seventy-six percent of consumers in the Americas were more likely to purchase CDs, DVDs, books and video games online rather than in a store; AsPac region (67 percent) and Europe (55 percent).
Over 70 percent of consumers in the Americas and Asia Pacific are more likely to purchase flights and vacations online compared to Europeans (61 percent).
Luxury goods were the least likely to be purchased online (28 percent) and 41 percent said they would not purchase groceries online.
The rapid adoption of the smartphone is also playing a big role in the changing customer experience in the retail space. Over 38 percent of consumers used their smartphones at retail outlets to access coupons, while 20 percent used one to scan quick response (QR) codes.
According to Mr. Larson: “Retailers need to consider and implement strategies that will allow them to interact with the same customer across all sales platforms, ensuring a consistent customer experience regardless of what that consumer is shopping for and whether it’s online or in-store.”
Also of note is the role that online information plays in influencing buying decisions. When making purchases, consumers cited being “significantly influenced” by online information sources such as customer feedback/ratings (82 percent), comparison sites (76 percent), online discount vouchers (73 percent) and blogs (64 percent).
“Monitoring and managing third-party online information sources will be key to any marketing and sales strategy,” noted Mr. Aw.
The Trust Paradigm Continues
Despite the readiness to adopt new technologies, as well as the surprising willingness by consumers to have their personal data tracked, the survey showed that yet again, the most significant barrier to new digital models continues to be concerns over data privacy and security. The number of people concerned about these issues has increased from 75 percent to 90 percent.
“I am astonished when I see that data privacy and security is not only the most critical issue among consumers worldwide, but that year-over-year those concerns increase,” said Tudor Aw. “This is a key issue that should have been addressed by now. Whoever can master the privacy challenge will gain a significant competitive edge. Consumers themselves point to the potential solutions with 76 percent citing better disclosure of security measures taken and 72 percent wanting to see third-party audits/certifications.
Interestingly, too, the survey showed a notable shift in which companies consumers trust to manage their online payments, suggesting that the ‘trust factor’ plays a much more critical role than ever before for the future of e-commerce and payment transactions.
When asked who they trusted most with their payment data, 56 percent of consumers said their financial services institution, 30 percent trusted secure payment sites such as PayPal, seven percent trusted their retailers and six percent, their mobile/internet service providers (ISPs).
“Mobile commerce is evolving toward a whole new distribution model with all to play for,” Mr. Collins said. “Telcos, media companies, retailers, financial institutions and other service providers cannot assume that their previous reputation is enough to gain the consumer’s trust when handling financial and personal data. There will be new winners and new losers, but the winners will be those who get the trust element right.”
*Note to Editors:
Consumers and Convergence V: The Converged Lifestyle, KPMG’s survey of consumer trends in digital technology, communications and e-commerce was conducted in late summer of 2011 and surveyed 9,600 consumers ranging in age from 16 to over 65, in 31 countries. The surveys were conducted online, except in Nigeria and Saudi Arabia where telephone interviews were conducted. All respondents had to own either a laptop/notebook computer, tablet computer, smartphone or mobile phone. Data was weighted against mobile phone subscribers in each country to provide a more relevant population sample. Results have been compared across regions and age groups, and to prior year surveys where applicable.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 150 countries and have 138,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.