CBK White Paper Series: Retail Marketing in the Digital Era

Professor Hao Shen, Department of Marketing, CUHK Business School

HONG KONG SAR - Media OutReach - 13 June 2023 - COVID-19 has done much to change the purchase habits of consumers around the world, especially by significantly accelerating the adoption of online commerce.

Around the world, retail stores shut down as countries entered lockdowns to prevent the spread of the virus during the start of the pandemic. Online commerce boomed as consumers flocked online to purchase a wide array of goods.

Two years on, in the new normal that has emerged, it is becoming increasingly apparent that the rise in ecommerce is here to stay. According to figures released by the United Nations Conference on Trade and Development (UNCTAD), the online retail sales of seven countries that altogether made up for around half the world's total GDP jumped from US$2 trillion in 2019, immediately before the pandemic began. This rose to around US$2.5 trillion in 2020 at the height of the pandemic, and its rise was sustained into 2021 at US$2.9 trillion, with China making up for over half of online retail sales across these markets.

Customers are becoming increasingly savvy in their digital shopping experiences. To ensure businesses stay on top of trends in the post-pandemic world, they must build an effective strategy that takes into account the rapid evolution of consumer preferences that have been brought on by the pandemic.

In this CUHK Business School Research White Paper, we shall examine some of the questions that companies and marketing professionals must deal with to succeed in this new digital age.

Capturing Consumer Attention in the Smartphone Era

First of all, customers now more than ever expect e-ecommerce websites to be clear, informative and highlight the wide variety of products available to them. In light of this, how can companies most effectively capture the attention of consumers in a digital age where the majority of purchase decisions are increasingly being conducted in front of mobile devices such as smartphones?

One of the studies found that in viewing images of potential products on a digital screen, the direction of a person's eye movement can affect how favourably they evaluated it. For example, the product evaluations are more favourable if eye movement direction matched the direction of travel of other bodily appendages, such as a finger.

As consumers have switched their purchase habits away from physical retail stores, so too has payments now shifted to being dominated by an array of region-specific digital formats, from bank transfers to e-wallets and credit cards and even short-term financing (Buy Now Pay Later) solutions. But can the use of digital payments affect how customers make purchase choices?

In one study, we sought to look at whether making payments in credit cards or cash could lead consumers to think about their purchase decisions in a more abstract versus concrete manner. What we found was that if people paid for purchases with a credit card, as is the case in an online transaction, then it would cause them to activate a more abstract mindset that causes them to focus on the main features of the product or service they are considering purchasing. On the other hand, paying with cash can cause consumers to activate a more concrete mindset and to focus on the minor details of a product or experience.

Embrace The Use of Audio and Visual Elements

Social media has also become a crucial part of any e-commerce plan, with the popularity of platforms such as Instagram, Tiktok to China's WeChat all surging as people sought to maintain social contact at the height of the pandemic. Many of the current generation now use social media as their main conduit with which to learn more about the world around them, including where to shop and what to buy. In this age of the rise of social media, how can companies leverage off new and exciting ways to communicate to their customers and spread the word of mouth, and how can they shape consumer feedback to their advantage?

What we found was that speaking about a brand tends to increase a person's connection to it, as opposed to writing about it. That's why marketing professionals should consider encouraging consumers to utilise channels where they can offer feedback in verbal or spoken forms. By encouraging consumers to provide spoken feedback on their products on social media platforms through video or audio, we found that at least popular brands stand to reap benefits associated with a strengthened consumer connection, whether that be increased resistance to criticism against the brand, or a stronger willingness to wait for products to become available again in cases of stock-out.

The Surprising Impact of Touchscreen Menus

Finally, physical retail itself has been transformed as customers have gradually make their way back to brick and mortar stores, with more and more businesses making use of touch interfaces to communicate and interact with customers. Do their use affect consumer choice and what could be potential implications for consumers and policymakers?

In our research into how restaurants and other food and beverage outlets make use of self-service kiosks, we find that when customers use a touchscreen menu to order food, it makes them more likely choose food which make feel better, such as a piece of cheesecake, rather than something which they know is healthier for them, like a salad.

The two-prong challenge of the arrival of the digital age and the spread of the global pandemic has done much to change how people make purchases. Consumers are continuing their shift into digital shopping and increasing numbers of consumers around the world are shopping online for the first time, likely drawn by its convenience and access to a potentially wide variety of goods. As brands venture into this post-pandemic world that is increasingly driven by e-commerce, they need to adjust their strategies to take advantage of changing habits in order to thrive.

Like most industries, retail will find a way to thrive in the digital age. But it will only be able to do so if marketers possess a deep understanding of how customer habits and behaviours continue to evolve as a result of new technological improvements. At CUHK Business School, we look forward to exploring these ongoing developments as they happen and sharing how they will impact on brands and marketing professionals alike.

Read more: https://cbk.bschool.cuhk.edu.hk/research-whitepapers/retail-marketing-in-the-digital-era/

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