China’s AI Retail Gap: Confidence Meets Caution
The retail future may be written in code, but not everyone is reading it the same way. A new joint survey by KPMG China and GS1 Hong Kong reveals a widening gap between Mainland China’s Greater Bay Area (GBA) and Hong Kong when it comes to embracing artificial intelligence in retail.
The report — Beyond Retail in the Age of AI — surveyed over 1,500 consumers across Hong Kong and GBA cities and interviewed C-suite leaders from top retailers to assess how AI is transforming shopping habits, operations, and customer expectations. The findings? While GBA consumers are charging ahead with AI-powered tools and experiences, Hong Kong shoppers remain notably reserved, signalling the need for brands to localize their AI playbooks.
AI Confidence Is Regional
In the GBA, consumers are comfortable letting algorithms help guide their wallets — 59% express trust in AI, compared to lower confidence in Hong Kong. About 51% of GBA shoppers are satisfied with chatbot experiences versus just 39% in Hong Kong. The difference speaks volumes about how cultural attitudes toward privacy, automation, and personalization shape retail adoption.
Even so, both regions are evolving. Hong Kong consumers show growing appreciation for AI-infused experiences such as gamified shopping (62% approval) and interactive product displays (70% approval). But interest in livestreaming and social commerce—hot trends in 2024—has cooled significantly this year, suggesting that shoppers are looking for more meaningful, hands-on engagement rather than fleeting digital spectacles.
Brands are adapting fast. From in-store cafés to immersive experience zones, retailers are reimagining stores not just as transaction hubs but as stages for engagement.
The Human Oversight Still Matters
KPMG China’s Anson Bailey notes that AI is driving a “speed of change” that could redefine how the industry operates—from hyper-personalized recommendations to supply chain optimization. But Bailey also issues a warning: without a strategic AI roadmap, retailers risk being “left behind.”
Yet even the most advanced algorithms can’t replicate human empathy. The study emphasizes the enduring value of knowledgeable, personable staff—particularly in Hong Kong, where emotional trust remains central to the shopping experience. AI may make checkout frictionless through photo search or facial recognition, but it still struggles to replicate the warmth of a good sales associate.
Trust, Transparency, and the ESG Imperative
The study also finds that sustainability has become a non-negotiable pillar of consumer loyalty. Shoppers across the GBA and Hong Kong now demand transparency in product sourcing, ethical labour practices, and even carbon footprint disclosures.
Interestingly, GBA consumers are willing to pay more for sustainability—42% say they’d spend up to 10% extra on eco-friendly goods, compared with 33% of Hong Kong respondents. It’s a shift from the 2022 mindset, when most buyers wanted incentives for green purchases; today, consumers are investing directly in brands that align with their values.
GS1 Hong Kong CEO Anna Lin sees this as a call for action: “Product transparency and traceability are now business imperatives.” She points to innovations like QR codes with global Digital Link standards, allowing brands to “tell the product’s story”—from sourcing and ESG credentials to recycling options and online availability.
Health, Wellness, and Cross-Border Shopping
The principle of “health is wealth” is becoming another powerful retail driver. In the GBA, 42% of consumers are increasing their spending on health and wellness products. In Hong Kong, where shoppers are traditionally price-sensitive, a quarter still plan to spend more in this category.
Cross-border spending is also gaining momentum, with Hong Kong consumers seeking both better deals and richer experiences across the border. Retailers that want to capture this demand must balance digital convenience, experiential design, and sustainability commitments—or risk falling behind in an era where AI increasingly defines competitiveness.
The Takeaway
The findings from KPMG and GS1 paint a nuanced picture: AI retail adoption isn’t just about technology—it’s about trust, culture, and purpose. Retailers who understand the emotional context behind consumer decisions will outpace those who only chase efficiency.
As Hong Kong cautiously watches its GBA neighbours speed into an AI-driven retail future, one thing is clear: success in this new landscape won’t just belong to those who deploy AI first—but to those who deploy it wisely.
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