On the rise and online female consumers in asia

Perhaps most troubling for retailers focused on the brick-and-mortar business, nearly half—49%—of women polled agreed or strongly agreed that they preferred the experience of shopping on

Female consumers in Asia

An Economist Intelligence Unit report

Commissioned by

1 Changing demographics, control over purse strings 8

2 © The Economist Intelligence Unit Limited 2014

On the rise and online: Female consumers in Asia, is an Economist Intelligence Unit report,

commissioned by VIPSHOP The EIU conducted the survey and interviews independently and wrote the report Jonathan Hopfner and Liana Cafolla were the authors Laurel West was the editor

Gaddi Tam was responsible for layout

The findings and views expressed here are those

of The EIU alone and do not necessarily reflect the views of the commissioning organisation

We would like to thank all survey respondents and the following interviewees (listed alphabetically) for their time and insights:

l Maximilian Bittner, CEO, Lazada Group

l Hyon-Ju Cho, vice president and team leader, marketing service team, Samsung Electronics

l Elisabeth de Gramont, group account director, Jigsaw Communispace

l Jodie Ding, senior analyst, iResearch

l Linda Du, Shanghai managing director, APCO Worldwide

l Devangshu Dutta, chief executive, Third Eyesight

Preface

l Andreas Faahs, CMO and vice president, Amway Japan

l Leta Hong Fincher, author

l Andrew Keith, president, Lane Crawford

l Alice Lau, CEO, Le Saunda

l Kamal Nandi, executive vice president and business head, Godrej Appliances

l Roopa Purushothaman, managing director and head of research, Everstone Capital Advisors

l Arvind Singhal, chairman , Technopak Advisors

l Torsten Stocker, partner, consumer goods & retail, AT Kearney

l Lixia Tan, senior vice president and CFO, Haier

l Lavinia Tong, marketing director, Diageo China

l Tong-yi Mao, China general manager, GRI Group

l Iris Xuan, brand direction manager, SK-II China

Asia’s rapidly growing consumer markets are

the great hope of many companies across the

world In 2015, retail sales in Asia are forecast

to grow by an average 4.6% on a volume basis,

to US$7.6trn1) This compares with 2.5% in

North America and 0.8% in Europe, according to

Economist Intelligence Unit forecasts Behind

this broader trend is one that is rapidly coming

to the attention of brand owners and retailers:

the rising independence and economic power of

Asia’s women While controlling an increasing

amount of household purchasing decisions,

women are also showing a passion for online

shopping This report is aimed at providing

insights on how women’s purchasing power is

increasing, and in particular how women are

driving e-commerce in Asia It is based on an

extensive survey of 5,500 women across major

cities in Greater China, India, Japan, Singapore

and South Korea, as well as input from consumer

analysts and major retailers and brand owners

themselves

Among the key findings:

l Women in Asia’s major cities are increasingly

empowered Region-wide, 43% of the women

responding to our survey were in managerial,

executive or professional services jobs

Most were contributing to their household

income—8% described themselves as sole

breadwinners and 41% said they were joint

breadwinners The trend is particularly notable

in mainland China, where 62% described themselves as joint breadwinners

l Women are showing increasing independence in handling their finances

Just over two-thirds reported having their own bank accounts (this ranged from 76% in mainland China, to a low of 47% in Macau), and 48% held their own credit cards Most are

in charge of budgeting decisions on groceries, clothing and accessories, and children’s products, and are at least co-decision makers in most other product categories like electronics and travel services In terms of who pays, 35% of women said they paid for their own online purchases, while 15% said they paid for their partners’ purchases as well

l Women are driving the growth of online shopping in the region, with many preferring

it to offline Among survey respondents,

63% browse the Internet at least once a day for products and services, with nearly 30%

doing so twice or more per day Just under 80% of women regionally buy some groceries online (just over 20% buy the majority of their groceries online); the figure rises to 83%

for cosmetics and nearly 90% for clothing and accessories (29% of women make the majority of their cosmetics purchases online with the figure rising to 39% for clothing

Executive summary

1 Based on nominal US$ sales

4 © The Economist Intelligence Unit Limited 2014

and accessories) Perhaps most troubling for retailers focused on the brick-and-mortar business, nearly half—49%—of women polled agreed or strongly agreed that they preferred the experience of shopping online to doing

so in stores The figure was as high as 69% in mainland China Notable outliers include Hong Kong, Singapore and especially Japan, where only 18% of women said they preferred online shopping to shopping in stores—the lowest rate in the region This no doubt reflects the highly developed retail markets in these places

l At least on the Internet, many Asian women don’t seem to be living up to the stereotype

of selfless, family-focused individuals Over

62% of women are buying for themselves most

of the time when shopping online; in mainland China that rate rises to 74%, and to 77%

among 18-29 year olds Women do, however, engage in guilt shopping; 41% said they would buy something for their partner, children or family when they feel they have bought too much for themselves That figure rises to 67%

among women in mainland China

l Women say online shops are cheaper, more reliably stocked, and offer a less stressful shopping environment Women have a variety

of reasons to prefer online shopping Most point to cost (62%) and time savings (60%), but they also feel that online retailers can be relied upon to have the products they want to buy (59%) and they appreciate the range of choice online shopping offers (56%) Online shopping is also more relaxing Across the region, nearly half (48%) of women say they feel pressured and stressed in traditional shops, and 27% feel store staff talk down to them because they are women

l The online shopping craze offers opportunities for cross-border trade for brands and retailers, but they need to work

on logistics Regionally 36% of women agreed

or strongly agreed that they shop online

specifically to get products from overseas, and 41% said they bought products from abroad because they were better than those produced domestically—with the figure rising to 45% among those aged 18-29 This perceived quality gap was especially pronounced in Macau and mainland China, where 53% and 63% of women respectively saw products from abroad as superior Analysts say this is partially a result of the safety problems that have plagued China’s supply chain at regular intervals in recent years, but also points

to the challenges faced by local brands in winning over increasingly demanding Chinese consumers However the taste for imports is not universal—South Korean and Japanese women remain highly loyal to local brands Moreover, regionally, 64% of women agreed

or strongly agreed that delivery times were a concern when making purchases from abroad, and 66% were concerned about delivery costs

l Mobility in online shopping also means women are increasingly shopping anywhere and everywhere, and online retailers will need to have a strong mobile interface

Perhaps of interest to some of the region’s employers, 28% of women say they shop online via PCs at work—with the figure rising

to 40% in mainland China, where 20% also use their smartphones to shop at work Just under 30% also say they shop online in bed

at night Home is still the favoured place to shop, with 78% using a PC at home, 45% using smartphones and 25% using tablets

l Women want personal service According to

our survey, women are attracted to retailers that build accurate customer profiles and target communications accordingly—64% of women found this appealing—as well as reward them for loyalty (61%) These are seen as far more effective ways for online retailers/brands

to attract traffic than traditional marketing tools such as advertisements and newsletters (45%)

l Getting the messaging right will be tricky

Given their rising economic power, one

might reasonably expect women to be more

attracted to messaging that appeals to their

rising independence The reality is more

complicated While messages that address

them as independent, intelligent consumers

were found to be appealing by 56% of women,

nearly the same percentage (54%) said they

found messages addressing them as wives,

mothers or girlfriends to be attractive

Successful messaging will no doubt be that

which somehow manages to marry the two,

and will depend on the product in question

l The future of online shopping looks mobile,

and impulsive Many of the trends identified

in our research are driven by younger women,

suggesting that the move toward online

shopping in general, the shift to shopping

on mobile devices and the preference for

being addressed on a personal level are likely

to intensify For example, the percentage who prefer shopping online climbed to 53%

among the youngest (18-29) demographic surveyed (compared to 49% overall) In this age range, 58% of women shop online with their smartphones at home, versus 38% of 40-49 year olds Similarly, 58% of women 18-29 found communications that respected them as independent, intelligent consumers appealing or strongly appealing, compared

to 53% of women 40-49 While overall some 43% reported spending more money online than they do in physical shops, again the rates among those 18-29 were even higher (56%) This may be connected to the typical lack of youthful restraint; over half of women 18-29 agreed that they were more likely to buy impulsively online, versus around 40% of older women But habits, once entrenched, usually

do not change much

6 © The Economist Intelligence Unit Limited 2014

Asia has produced no shortage of compelling growth stories over the past decade, and the region certainly has more in store Investors and companies are now looking to consumers

in the emerging economies of Southeast Asia as they seek to diversify beyond BRICS giants China and India But in the hunt for the continent’s next growth engines, they may do better not to think in terms of markets, but demographics—

specifically, Asia’s women Long an untapped resource in regional labour markets, women are increasingly employed, independent and prosperous, and they are poised to be one of the leading drivers of spending in the years ahead

Rising female labour participation and incomes have coincided with a profound transformation of the retail landscape Online shopping is gaining traction worldwide, but in Asia its rise has been

Introduction

nothing short of meteoric; the region is set to displace North America as the world’s largest e-commerce market this year There are multiple reasons for online shopping’s success First, it is convenient, frequently bringing goods to even remote doorsteps Second, it increases choice, giving consumers access to products beyond national borders And third, as our research and this paper will show, e-commerce has struck a chord with Asia’s female consumers Despite their diversity in terms of income levels, habits and cultural preferences, overall women throughout Asia are enthusiastic proponents of online retail, with many preferring it to traditional brick-and-mortar stores for a variety of reasons

For many traditional retailers, this will present challenges and require shifts in strategy

Connections with female shoppers will increasingly have to be forged in the online environment, and consumers will have more options than ever At the same time, online shopping also represents a major opportunity Constant generation of data will allow vendors unprecedented visibility into the behaviour and tastes of their customer base; online platforms will provide a possible way around some of the costs and space limitations associated with physical storefronts

Based on an extensive survey of 5,500 women throughout the region, as well as input from

Retail sales (US$trn), volume growth

Latin America

Asia and Australasia

Western Europe

North America

Middle East and africa

Asia as number one

4.3 3.2

7.6 1.5

consumer analysts and major retailers and brand

owners themselves, this paper provides insights

into women’s preferences and aspirations

and how these could evolve It suggests how

companies will need to respond to the emergence

of more empowered female consumers, particularly in the online environment

8 © The Economist Intelligence Unit Limited 2014

Much of the rise in women’s spending power can

be traced back to a common cause: more Asian women joining the workforce, and at more senior levels While women have traditionally been underrepresented in the Asian workplace, recent trends have been encouraging Women held 29%

of senior management positions in Asia by 2013,

a higher rate than in North America and Europe2

In mainland China alone, women’s average

Changing demographics, control over purse strings

in select Asian countries* in 2014 in terms of age, marital status, number of children and income.4

2 Grant Thornton, Women in

business, from classroom to

boardroom, March 2014

3 Nielsen, A Battle of the

Sexes Plays Out in Shopping

Aisles, March 2014

4 The survey covered

mainland China (Beijing,

Changsha, Chengdu,

Guangzhou and Shanghai),

India (Bangalore, Chennai,

Delhi, Kolkata, Mumbai,

Pune), Hong Kong, Japan

(Kanto, Kinki), Macau,

Singapore, South Korea

(Gyeonggi, Seoul) and

Taiwan Respondents were

also screened to exclude

those who do not have an

Internet connection

Breadwinners, not bakers

Overall, 83% of urban adult women contribute

to household income

(% respondents)

Women’s rising economic power in Asia

Partner is sole breadwinner

Live with family and share expenses

Sole breadwinners

Partner is main breadwinner

Joint breadwinners Other

Earn, but partner

is main breadwinner

Joint breadwinners Other

Live with family and share expenses

Sole breadwinners

Earn, but partner is main breadwinner

Joint breadwinners Other

Region-wide, 43% of the women responding

were in managerial, executive or professional

services jobs Most were contributing to their

household income—8% described themselves as

sole breadwinners and 41% said they were joint

breadwinners, while another 19% reported that

they had some income, though their partner was

the main breadwinner

More importantly, beyond simply contributing to

the family kitty, women are showing increasing

independence in handling their finances Just

over two-thirds reported having their own bank accounts (this ranged from 76% in mainland China, to a low of 47% in Macau), and 48% held their own credit cards Most are in charge of budgeting decisions on groceries, clothing and accessories, cosmetics and children’s products, and are at least co-decision makers in most other product categories like electronics and travel services Women in mainland China seem to have

a particularly large say in household spending

a majority also control household budgets for electronics and travel purchases

10 © The Economist Intelligence Unit Limited 2014

Who is in charge of the household budget for?

(% respondents)

Household buying decisions

My partner/family decides

Other

I decide

My partner/family and I decide together

My partner/family and I decide together

Other

I decide

My partner/family and I decide together

10%

7% 81% My partner/family

decides Other I decide

My partner/family and I decide together

Other

I decide

My partner/family and I decide together

10%

35%

50% My partner/family

decides Other I decide

My partner/family and I decide together

Other

I decide

My partner/family and I decide together

10%

51%

33% My partner/family

decides Other I decide

My partner/family and I decide together

Especially in mainland China’s upper-tier

cities, women tend to contribute to household

finances “with their own disposable income,

which they have control over,” says Elisabeth de

Gramont, group account director at

Shanghai-based consumer insights company Jigsaw

Communispace Even women in smaller cities,

“although they might be earning less than their

husbands, are spending on their own expenses.”

Some, however, caution that financial

independence among women in mainland China

does not necessarily equate to financial security,

pointing out that Chinese women’s control over

some aspects of household spending may be

influenced by cultural factors, and more apparent

than actual

“There’s this norm that men are supposed to own

the home … (while) women and women’s families

are supposed to be responsible for renovating the

home,” says Leta Hong Fincher, author of Leftover

Women: The Resurgence of Gender Inequality in

China “That means purchasing all of the furniture

and fixtures for the house So certainly from that

perspective, yes, women are generally going to be

the ones who are going to the stores and choosing

things like curtains and lighting fixtures,

appliances, for the home That does not mean that they’re empowered—on the contrary, their money

is being frittered away on all of these things that depreciate in value over time, while the men’s money is invested in an appreciating asset.”

In Macau, Singapore and India, women reported having a comparatively smaller role in household budgeting decisions than their counterparts

in other countries, but were still the clear authorities in areas like clothes and cosmetics

According to Roopa Purushothaman, managing director and head of research for India-focused investment manager Everstone Capital Advisors,

“Definitely for household (items) including food, it goes to the women on that front … if you look at bigger one-ticket items, like cars, those decisions are typically made by the male head of the household.”

Even in areas where women say budgeting decisions are made jointly with, or controlled by, their partners, their impact may be understated

Just 30% of women in India, for example, say they are in charge of the household budget for electronics, but domestic appliance retailers like Godrej say they still strive to communicate equally to both male and female customers

% of women who make purchasing decisions, by category

Furniture

Cosmetics Clothing and accessories

Groceries

Home products and furnishings

Maternity and children’s products

Travel and leisure

12 © The Economist Intelligence Unit Limited 2014

“It is still the woman of the household who initiates the purchase process by identifying the need for an appliance,” says Kamal Nandi, business head and executive vice president of Godrej Appliances “Hence, the role of a woman

is critical … Their role is as vital as that of a male

in the family in the decision-making process.”

Our survey data confirm this point In electronics purchases, for example, only 36% of women say they have control of the budget, but another 54%

say they are involved in decision-making in this category In other words, 90% of women have influence over purchases of electronics by the household

Retailers, especially in consumer goods and apparel, have been quick to recognise, and benefit from, an increasingly prosperous and assertive

Asian female consumer Andreas Faahs, CMO and vice president at Amway Japan, says around 73% of customers are female, as well as a similar percentage of its independent ‘business owners’

or distributors—who in turn contribute to family finances and fuel more purchases “The 35 years since Amway first arrived in Japan have seen many women entrepreneurs born via Amway business.”

“Women are driving our business,” says Andrew Keith, president of department store operator Lane Crawford, which has properties in its home base of Hong Kong and mainland China Keith estimates women account for almost 80% of Lane Crawford’s customer base, and says segments like women’s wear are outperforming the overall market with double-digit annual growth rates

The shifting nature of retail

2

As the regional retail industry adjusts to

reflect women’s increased buying power, it is

simultaneously undergoing a more profound shift

from the traditional to the online environment—

and indeed one change may be supporting the

other Asia-Pacific will leapfrog North America to

become the world’s largest e-commerce market

this year, according to digital marketing research

firm eMarketer, with online business to consumer

(B2C) sales likely to top US$525bn Vast online

marketplaces such as Japan’s Rakuten and South

Korea’s Coupang have emerged that are tempting

shoppers with a dazzling array of goods in every

category and piquing the interest of investors

Traditional retailers are also busily expanding

their Internet storefronts, sometimes gaining

customers in far-off markets where they lack a

physical presence

Given the enthusiasm with which Asian women

have taken to shopping online, this may be a case

of the retail industry adapting or dying Among

survey respondents, 63% browse the Internet

at least every day for products and services,

with nearly 30% doing so twice or more per day

Just under 80% of women regionally buy some

groceries online (just over 20% buy the majority

of their groceries online); the figure rises to

83% for cosmetics and nearly 90% for clothing

and accessories (29% buy the majority of their

cosmetics online, while 39% do the same for

clothing and accessories online) Perhaps most

troubling for retailers focused on the

brick-and-mortar business, nearly half—49%—of

women polled agreed or strongly agreed that

they preferred the experience of shopping

online to doing so in stores The rate climbed to 53% among the youngest (18-29) demographic surveyed Some 43% reported spending more money online than they do in physical shops;

again the rates among those 18-29 and 30-39 were even higher This may be connected to the typical lack of youthful restraint; over half of women 18-29 agreed that they were more likely

to buy impulsively online, versus around 40% of older women Younger women were also more likely to agree they spent too much online

And at least on the Internet, Asian women don’t seem to be living up to the stereotype of selfless, family-focused housewives Over 62% of women are buying for themselves most of the time when shopping online; in mainland China that rate rises to 74%, and to 77% among 18-29 year olds

In South Korea and India, however, women said they were almost as likely to be buying for their children or family Buying for friends or peers

is not as popular as family members—women in India were most likely to do so, with 15% saying that they most often buy for friends, while only 6% of women in mainland China said they bought the most for their friends

These trends are requiring many retailers to pursue what Mr Keith of Lane Crawford terms a

“connected commerce” strategy, simultaneously investing in physical properties in major

regional hubs and building out digital flagship stores capable of catering to customers across borders “This is essential going forward because our customers are highly mobile, travelling around a very large, diverse region We need

14 © The Economist Intelligence Unit Limited 2014

Regionally, 63% of women browse for products and services at least once per day

(% respondents)

Japan Mainland China South Korea India

Hong Kong Singapore Taiwan Macau

Online habits

77% 65%

South Korea Singapore Hong Kong Japan

69% 57%

us online.” Around 10% of the firm’s Hong Kong online orders come from mainland China

customers who arrange to collect their shipments when they visit the city, attracted by a wider selection and sometimes lower prices

“You see more and more consumers who are looking for an ‘omni-channel experience’—more and more women are in stores and are actually checking on their mobile what the better price

is that they can get elsewhere … or looking for different styles (and sizes),” says Ms de Gramont The appetite for online shopping transcends nationality But unsurprisingly given the region’s diversity, it takes varying shapes Asia’s largest

economy, mainland China, is also the region’s

online shopping champion Mainland China

displaced the United States as the world’s largest

online shopping market last year, nearing

US$300bn in value, and will more than double

by 2016, according to China-based iResearch

“Online shopping in [mainland] China has already

partly replaced offline shopping (It’s) become a

part of daily life,” says iResearch senior analyst

Jodie Ding Among Chinese women surveyed,

69% preferred online to offline shopping, and

63% classed online shopping among their

favourite past times—both the highest rates in

the region Consumers in Taiwan and Macau were

similarly enthusiastic

Analysts like iResearch say e-commerce’s

exceptional trajectory in mainland China is a

function of convenience—thanks to the explosion

of the mobile Internet—quick, effective delivery

networks and the user-friendly payment systems

set up by local web giants Cost is also a major

contributor “In lower-tier cities, you can buy

stuff cheaper online than at stores in town,” says

Ms Ding

Jigsaw’s Ms de Gramont also credits the range

of choice that vast online marketplaces have

ushered in “Online shopping in [Mainland] China

is very important because in big cities you have

a huge selection of premium products and a lot

of cheaper quality stuff, but not much mid-range

choice They have access to every luxury brand

in the world now, but they’re more expensive So

if you’re looking for luxury products, people buy online because they’re much better value Also for more mid-range apparel, there is much more variety online compared to what they can find in the shopping malls.”

The presence of bargains is one of the main motivators for online shopping not only in mainland China, but also throughout Asia Across the region 62% strongly or somewhat agreed that shopping online gets them the best prices

The rates of agreement were highest—around 70%—in mainland China and South Korea, both relatively large and well-developed e-commerce markets

Women—58%—cited saving time as another key benefit of shopping online, especially

in mainland China and India, where traffic congestion and infrastructure-related delays are common even in leading cities This was less of a factor for women in high-efficiency Japan and Hong Kong, where only 40% and 49% of women said they shopped online to save time, respectively Time was a more important motivator for married women and working women, with around 60% of each group agreeing

or strongly agreeing they shopped online to save time, versus 54% of single women

For the convenience of having

gifts sent

To get products from abroad

Why they shop online

16 © The Economist Intelligence Unit Limited 2014

Availability and choice of products also contributes

to online retail’s allure, again for Chinese and Indian women in particular Seventy-six per cent of Chinese women, and 62% of Indian women, agreed or strongly agreed that they shopped online because they knew the goods they wanted would

be available A majority

of women in mainland China, Taiwan, Macau, India and South Korea also agreed there were more choices of products online than in shops where they lived

In India, “online shopping brings you options and availability of items that you can’t get locally That’s the big thing that I think people are attracted to,” explains Ms Purushothaman

“We’ve heard anecdotally that for some businesses, it’s Tier 2 and Tier 3 towns where we’re seeing a huge amount of interest because people have income and they want to dress a certain kind of way, but they’re not able to find those kinds of things; they have to find them online So all of a sudden some of these groups have to quickly work out how to supply these semi-urban areas.”

The shift to online shopping may also have to

do with what a number of women see as the less pleasant aspects of the traditional retail environment Regionally almost half of those polled said they felt pressured to buy goods in stores, but not online, and a quarter agreed or strongly agreed that staff “talked down” to them because of their gender when they bought some products in physical shops Sales pressure is felt most keenly in Macau, India and South Korea, and Macau and India also had the highest proportions

of women who felt patronised in the traditional retail environment at 47% and 42%, respectively

According to Arvind Singhal, chairman of Indian retail consulting firm Technopak Advisors, the relatively high number of women feeling uncomfortable in stores there may have less to do with inherent cultural issues than the country’s size and heterogeneous nature, as well as the relatively recent emergence of a more organised retail environment This, he believes, has created

a significant e-commerce opportunity

“Online shopping is a great leveler For those consumers who may feel uncomfortable, overwhelmed or ‘out of place’ in brick-and-mortar formats, online shopping can provide comfort, confidence and empowerment,” he says “Of course, brick and mortar retailers also need to wake up and address these softer issues by closely monitoring their store staff behavior across different consumer profiles and imparting adequate training to ensure all types of consumers are made to feel comfortable in their shopping environment.”

While online shopping has clearly taken off throughout the region, women in some markets seem to be embracing it less than those in others Notable outliers include Hong Kong, Singapore and especially Japan, where only 18% of women said they preferred online shopping to shopping

in stores—the lowest rate in the region This may

be partly explained by the physical density of these markets, which ensures retail experiences are within relatively easy reach, as well as their sophistication in terms of the range of goods on offer Only 38% of Hong Kong women and 30%

of Japanese women felt there was more choice

of products online than in the stores where they live, for example

“I think that since the retail market in Japan

is hugely developed it is so easy to just go pick things up, and so online shopping isn’t so popular,” says Torsten Stocker, partner, Consumer Goods & Retail at A.T Kearney

54%

39%

Safety

of women with children

at home say shopping online enables

them to buy safe products for their children

of women with children in India

and China agree