OREANDA-NEWS. May 25, 2015. As e-commerce further develops to the disadvantage of the customer traffic of brick-and-mortar stores, sales channels that are able to provide brand-specific and unique consumer experiences will, in future, gain an advantage, inducing customers to return to e-shops over and over again. Thus, the ultimate format of a channel will be of no importance.

PwC Russia presents the results of its Annual Global Survey on multichannel retail and consumer behaviour patterns — “Total Retail, 2015. Retailers and Current Challenges.” Participating in this survey were over 19,000 on-line shoppers from 19 countries, including 1,004 respondents from Russia.

Martijn Peeters, Partner at PwC Russia, Consulting Leader for the Retail & Consumer practice, comments:

“Whereas last year was a time when the traditional (off-line) retailers experienced, for the first time ever, both fall-out from shifting of sales towards on-line space and the impact of the competition from the on-line players, this year, the traditional retailers are facing a dual challenge: the continuing shift towards e-commerce that puts pressure on brick-and-mortar stores' sales, which is aggravated by both a decline in household disposable income and a reduction in total retail sales, which, in turn, is clearly demonstrated by statistics from the first quarter. Given these negative economic factors, it is crucial, like never before, to track customers at a time when they shift between on-line and off-line channels, while exercising great caution in the management of retail chains and costs.”

According to PwC experts, despite the fact that the saturation level of the Russian retail market has not yet approached that of the USA, it is noteworthy that the USA experienced a 50%-decline in retail store traffic over the recent 4-5 years while huge shopping centres in many West European countries are also losing customers over time. That said, Russian retailers will have to reassess the role of the existing shops and develop plans for further development of their retail chains.

The new PwC report, “Total Retail, 2015. Retailers and Current Challenges”, presents a detailed analysis of four key challenges faced by retailers today. The first challenge, i.e. the changing role of the shop, can, to a greater extent, be viewed as business model development. The second and third challenges, i.e. mobile technologies and social networking, are of a technical nature. The fourth challenge, i.e. demographic shifts, is more related to social and economic issues.

The key findings and conclusions from the survey are presented below:

  • Coinciding with the views of the global survey’s respondents, 58% of the Russian respondents say that the main reason for going to an online store is “lower prices” (global respondents —56%). “No need of walking to a store” scored second place among respondents (55%), which is the highest level across the countries where the survey was conducted (global indicator — 40%).
  • At the global level, the second position among most popular reasons for going to an online store (46% of the respondents) is an opportunity to do shopping on a round-the-clock basis, and on any weekday. In regards to Russia, such an opportunity is of lower value — as was stated by only 30% of respondents.
  • “I can buy certain goods only in an online store”: the number of Russian respondents who stated their reason for going online is consistent to that of the global respondents, but it also demonstrates a sharp rise from 4% last year, up to 23% in the latest survey.
  • Core reasons for shopping in a brick-and-mortar store voiced by both Russian and international respondents are as follows: customers wish to “see, touch, and test” their products before buying (70%), or they wish to buy it on the spot (64%).
  • Brick-and-mortar stores are still very important for those people who go to an e-store in Russia. For instance, 80% of the Russian respondents have made at least one purchase over the Internet after selecting a product in a brick-and-mortar store, which is one of the highest rates globally (in this respect, Russia only lags behind China and Brazil, which scored the highest rate of 86%).
  • Most of the Russian respondents have, at least once, done “window-shopping” in an e-shop, but, ultimately, decided to make purchase in a brick-and-mortar store (70%). But it was the other way around for even more respondents who selected a product in a traditional store to later buy it on-line (80%).
Martijn Peeters comments:
"Pressures experienced by on-line players are, to some extent, driven by ever increasing competition on the part of traditional retailers. However, there is also the so-called “multichannel advantage”, which is attributable to arranging sales through all possible channels. For that reason, on-line players will have either to expand across off-line formats, or try and stand out among their competitors, demonstrating remarkable service levels (e.g., prompt delivery of goods or more flexible terms of delivery) or offering more attractive prices (e.g., cheaper goods). One way or another, the years to come are going to be challenging and will require considerable investment in the development of their business-models.”
  • According to the 2014 report from the Pew Research Center, levels of mobile phone use in a number of emerging economies is approaching or even outpacing (which is the case in China) the corresponding level in the USA. According to the findings from our Total Retail survey, just two years ago, purchases through use of a mobile phone or a smartphone were made by 30% of our respondents, whereas this year, this indicator hit 47%.
  • In Russia, the proportion of households using mobile phones for making purchases increased to 46% in 2014 versus 28% in 2012.
  • Only 18% of Russian respondents stated that they use their mobiles as a key means of shopping, which is close to corresponding levels of developed countries (21%) and much lower than that of emerging markets (45%).
  • Russian respondents use their mobile phones for shopping in the same way as other consumers do globally: 50% of the respondents rely on mobiles to conduct product research, 43% compare prices against competitor prices while 35% search for store addresses. That said, there are certain differences. For instance, only 7% of the Russian respondents received offers through mobile phones from stores located in immediate proximity to them, whereas the global indicator for this stands at 12%.
  • Global respondents say that they do not use mobile phones for shopping purposes for security reasons (33%) or mention that such a form of shopping is hindered by the size of mobile display screens (32%).
  • Russian respondents say that a key problem is the fact that mobile sites are not user friendly (53%). Russia definitely takes a lead by number of such responses, inasmuch as only 16% of global respondents gave the same answer.
  • Russian buyers are traditionally more conservative in terms of choosing a preferable payment method. The most popular is payment by a debit card (40% in Russia versus 28% globally). Credit cards are much less popular as compared to other countries (40%): only 17% of Russian respondents use credit cards.
  • The percentage of payments in cash in Russia is 36%, which is one of the highest rates among the countries presented in the survey. This rate is higher only in Middle East countries (47%) and in Germany (39%).
  • In Russia, 70% of the respondents rely on social networks in the process of their purchases, which stands in between developed (55%) and developing (89%) countries.
  • 45% of Russian consumers make more purchases after exchanging information in social networks. This indicator of consumer promotion stands at a relatively low level as compared to global average level (62%).
  • Russian consumers tend, to a great extent, to seek feedback about goods via social networks (36%), whereas global consumers prefer to subscribe to a group for certain brands (34%).

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