As consumption habits change, what trends will drive the future of logistics real estate?

In 1760, world history experienced a major turning point. With the development of the Industrial Revolution and the transition from manual production methods to emerging machine manufacturing processes, People's Daily life has undergone earth-shaking changes, and living standards have been greatly improved.

With most brick-and-mortar stores forced to close or change their operating models amid COVID-19 restrictions, e-commerce has become more important for businesses seeking growth. Today, more than ever, it is important for owners, investors, users and operators of logistics real estate to recognize that technology is creating new types of consumers and impacting logistics real estate and all aspects of the supply chain.

Consumer habits and behaviors

Over the past decade, consumer expectations and behavior have changed dramatically. Empowered and driven by emerging technologies, a new generation of consumers is emerging who want to buy the services and products they need without leaving their homes. This new generation of consumers' desire for immersive brand experiences and virtual but better interactive services with merchants has significant implications for the entire value chain.

A deep understanding of changing consumer profiles and patterns of consumer behavior is critical to building future-ready logistics real estate, as these factors will increasingly influence the location, design, and technology infrastructure of properties. Consumers are increasingly moving to a digital world. Affected by the recent epidemic, the number of online shopping households around the world has reached a new high.

It is expected that by 2023, retail e-commerce sales will account for more than 20% of total global retail sales; In the global market, China's e-commerce penetration rate is the highest, reaching 37%.

01 What are the characteristics of the new generation of consumers?

1.1 Pursue instant gratification

Consumers are becoming more discerning and demanding immediacy and flexibility. They want to be able to buy any product from any merchant, anywhere, and decide how and when to pay. The pursuit of instant gratification is particularly prevalent among millennials, and this demand is bolstered by the growing popularity of "buy now pay later", through Internet credit payment products such as JD.com Baitiao, which allows consumers to buy products first and pay later.

1.2 Ability to compare prices

With a wealth of information now at their fingertips, consumers are able to make more informed purchasing decisions. 65% of consumers use smartphones to compare prices. Consumers' increasing ability to compare prices also makes them increasingly ignore brands.

1.3 Flexible shopping time

The development of digital and mobile technologies has gradually evolved the traditional offline purchase path into an intricate web of activity. Consumers can now buy goods through any channel they choose - they can buy in a physical or online store, or they can buy online through a mobile device or social media. Retailers are following changes in consumer spending habits, with people increasingly shopping on social media platforms, adding shopping tags to pictures or videos and promoting in-app payments.

1.4 Good at digital technology

Consumers' increasing digital literacy is reflected in their online shopping behavior, with an increasing number of consumers using their mobile phones to make online purchases. According to data released by Alibaba, since 2017, the proportion of Double Eleven transactions has exceeded 90%, and it continues to grow every year.

1.5 Want a seamless consumption experience

Throughout the purchase lifecycle, consumers increasingly expect "speed and convenience," and they expect retailers to provide them with a seamless experience. From online consumption, to product delivery, to product return process, they want a convenient and fast consumer experience. Timely and convenient delivery has become an important consideration for online consumers. Increasingly, they want online products to be shipped where and when it works best for them, and to be able to track shipments in real time.

02 How should enterprises respond?

Retailers employ a variety of strategies to cater to modern consumers and their new shopping patterns.

2.1 Adopt an omnichannel approach

The growth of the e-commerce industry means that the retail landscape needs to be adaptable. More and more brick-and-mortar stores continue to build integration between offline and online. In recent years, Walmart has become a shareholder in JD.com, and Suning has bought Carrefour and RT-Mart and sold it to Alibaba. These partnerships or acquisitions further reflect that consumers still want in-store shopping options and that a seamless, multi-channel approach is the best way to continue to grow market share. Retailers have enhanced the traditional in-store experience by introducing digital experiences such as "online shopping, offline pickup." Consumers can buy products from these traditional retailers through any channel they choose. They can visit physical stores, they can shop online, they can also use the online selection and offline pickup model.