MAY 2019 Tech Trends in Marketing and Consumer Life

[Pages:28]MAY 2019

Tech Trends in Marketing and Consumer Life

Copyright ? 2019 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Table of Contents

Technology Development Pace 3

Today's Consumers 5

Today's Businesses 8

Digitalization Barriers and Approaches 10 Technology in Marketing10

Differences in the Vision of Future 12

Three Technologies Businesses Focus On 13 Three Technologies Consumers Believe In 16 Reasons for Differences19

Technology Myths 20

Myth 1: Consumers are sensitive to personal data sharing21 Myth 2: Consumers will not be able to abandon offline shopping 22 Myth 3: Consumers distrust self-driving vehicles23

Take-away 24

Methodology25 Sources26

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Technology Development Pace

Technology Development Pace

Imagine a smart assistant helps you choose and order products. It knows perfectly well what you like best, knows how to pick up goods to stay within your monthly budget, and automatically tops up the stock of those products that you are running out. If you are going on a trip, it will hail a self-driving taxi for you, cancel the delivery of perishable goods for the duration of your trip, and instead can order everything you will need for the trip ? and all these will be immediately delivered by drones. You can rely on the assistant when you buy insurance and banking products, pay your bills and subscriptions, plan up activities and entertainment, as it is well aware of your interests, preferences and habits, and therefore it can anticipate your desires and analyze tons of offers and prices to come up with the most rational choice.

Such a visionary picture, which until recently looked like a science fiction abstract, is hardly capable of impressing anyone today. Future technologies are becoming a reality and are already beginning to conquer the mass market. They save us money and time, take care of our health and entertain us ? in other words, they become indispensable for modern people, completely changing the rules of the game in the consumer market.

It took telephony almost a century to spread throughout the whole world. It took digital technology only a few years to do the same. "Uberization" revolutionized the passenger transportation market in just three years. The car sharing market in Moscow alone has grown more than forty times in recent years: in 2018, the fleet was 15,000 cars, whereas in 2015 there were only 350 cars available. As for the food technology industry, it has actually doubled over the past three years?. The number of contactless payments has increased? from 2% to 42% over two years. The cloud service market may exceed the landmark of 80 billion rubles in 2019, the array of data stored in the clouds will increase? from 33 to 175 zettabytes* by 2025. Notably, half of this amount (90 zettabytes) will be generated by devices connected to the Internet of Things (IoT).

*A zettabyte is one trillion gigabytes

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Technology Development Pace

EXAMPLES OF TECHNOLOGY-AFFECTED MARKETS GROWTH

202 168 140 108 92

2015

2016

2017

2018

2019

Russia's ready-made food delivery market, billion rubles. Source: RBC

21000 15000

2650 350 1500

2015

2016

2017

2018

Russia's car sharing market, number of vehicles. Source: RBC

2019

2%

42%

2016

2018

Share of contactless payments among cashless transactions in Russia. Source: TASS

The affordability of mobile technologies ? the relatively low cost of smartphones, mobile communications and the Internet access ? largely contributed to the proliferation of digital services in Russia. This is still a driving factor for the technological development. The explosive growth of digital services, heightened consumer expectations and fierce market competition make businesses consider a change in strategic priorities. After all, things that looked like science fiction yesterday have become a reality today.

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Today's Consumers

Today's Consumers

As to the Russian consumers, today they are balancing between the two extremes. On the one side of the scale are poverty at 12.9% of the population, decline in real incomes for the fifth consecutive year and the per capita income of 31,500 rubles. On the other side is an advanced technological transformation: Russia's Internet penetration rate is about 70%, this is one of the highest rates in the world. Also, almost two thirds (59%) of Russians use smartphones, while the percentage of online banking and contactless payments remains one of the highest in Europe9. In Russia, more than 85% of retailers accept? Apple Pay, while in the US, where this technology originated, its penetration rate remains at 75%.

SHARE OF SMARTPHONE USERS IN RUSSIA

12%

18%

2013

2014

Source: Pew Research Center

37%

2015

42%

2016

52%

2017

59%

2018

We have conducted a survey to assess how the business and consumers are transforming in these conditions. The survey involved more than 50 CEOs and CMOs in the FMCG and retail industry, as well as more than 1000 online consumers (the survey's details are given in the Methodology section at the end of the report).

We wanted to know consumers' view on the role of technology in their lives, as well industry's views on the digital transformation of businesses, the technologies they focus on, and their vision of the future shopping

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Today's Consumers

The survey findings suggest that today the vast majority of consumers (81%) use online banking services, two thirds (67%) buy apparel, footwear and other goods on the Internet, one third (31%) regularly orders food online, and one in five consumers uses a fitness tracker or a smart watch (22% and 19%, respectively). These services and products are already perceived as commonplace, although all of them became available relatively recently. Their unavailability ? even temporary one ? causes noticeable discomfort to consumers.

The Russian consumer has noticeably changed along with the development of technology. Consumers expect a fast and seamless experience, as well as enhanced benefits from digital services, having a utilitarian point of view on the technological progress

SMART GADGETS RUSSIA'S CONSUMERS USE TODAY

Mobile banking app

Buying apparel, footwear and other goods online

Buying foods online

Device and/or app to track health status

(e.g., fitness tracker)

Smart watch

31% 22% 19%

Source: 2019 Nielsen survey `Tech Trends in Marketing and Consumer Life'

81% 67%

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Today's Consumers

The majority of respondents (89%) said first of all they expected from new technologies direct access to personalized discounts and promotions, which is not surprising: according to the Nielsen Promo Pressure, up to 50% of consumer goods in major categories are sold with discounts today, and this share keeps increasing.

The second most popular option is the possibility to automatically monitor health status and individual health parameters: 85% of online consumers in Russia expect this from digital technologies.

Finally, people hope that new technologies will help them get more from the commuting time: 82% of respondents expect to spend their to-work/ back-home trips in a more useful manner. The share of such respondents is even higher among the millennials, the most promising generation in terms of consumption in the next 10 years: 87% of them mentioned this need. Also, the study participants would like to save time they spend on their daily shopping (68%).

89%

of consumers said they expect direct access to exclusive prices and promos from technologies

WHAT CONSUMERS EXPECT FROM TECHNOLOGY

Exclusive prices and promos

Tracking their health status

Getting more from their commuting time

Shorter shopping time

Enjoying better content

46%

Source: 2019 Nielsen survey `Technological Trends in Marketing and Consumer Life'

89% 85% 82% 68%

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Today's Businesses

Today's Businesses

The expectations of the Russian consumer are logical and understandable. Consumers are open to new technologies and willing to introduce them in their daily life if technologies are obviously useful. However, are the Russian retail and FMCG businesses ready for consumer expectations as far as technology is concerned?

The research shows that a quarter of the surveyed CEOs and CMOs attribute their companies to the digitalization trailblazers: they are actively introducing or already using technologies that automate manual labor, the Internet of Things, Artificial Intelligence, augmented or virtual reality, robotization, and other technologies based on automated data and process management.

HOW RETAIL AND FMCG EXECUTIVES SEE digitalization OF THEIR COMPANIES?

2

25

47

24

2

Highest possible

High

Medium

Low

Very low

Source: 2019 Nielsen survey `TechTrends in Marketing and Consumer Life'

Half of the respondents rated themselves as "average", others see themselves above and below average

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