Three things retailers must do to appeal to shoppers in 2020 and beyond.
Customers have never been more demanding or better informed. The rapid growth of eCommerce means they’re shopping around the clock. When making buying decisions, they are impatient and driven by their personal values. They rely less on brand loyalty and more on trusted peer reviews.
So what does this mean for retailers looking to not just match but stay ahead of their competitors?
Based on data and research we’ve gathered through our partner retailers and our customers in 19 markets, here are three traits about shoppers in 2020 that retailers need to understand to gain an edge …
1. Instant gratification
Humans are inherently hardwired to chase immediate gratification. We want it ‘right here, right now’.
That’s only been magnified by the relentless rise of personal devices. I’m a huge Liverpool fan, so when I’m not watching games, I’m continually refreshing Twitter at #LFC. I want to see updates as soon as they happen – even if I get it 30 seconds earlier than I would have anyway.
These days, customers want instant gratification across their entire brand journey. They want it from when they first discover your brand to when they’re doing their browsing and research all the way through to their post-purchase experience. That’s already quite a challenge for retailers but, in this hyperactive environment, customers expect the same kind of online experience they receive in other sectors, such as on their gaming or social media sites.
It’s now about understanding the ‘attention economy’. Human attention is a scarce commodity – a person only has so much of it. When it comes to grabbing the attention of customers, retailers are not only competing with those with similar products, they’re competing with social media, live sports streaming and all the other distractions available on our smartphones.
2. A need to connect
Customers are certainly more empowered than ever before. They have unprecedented access to information, and they’re smarter at navigating through channels – especially social media – to understand what retailers are doing and if their values line up with theirs. They’re almost like internet sleuths – finding holes in any brand story.
That’s why I think it’s as important now for brands to be authentic as it is for them to be right. Think about an issue that means a lot to customers, such as sustainability. Even if your brand isn’t 100 per cent sustainable or ethically sourced right now, you have to engage with your customers by telling them what you’re actually doing.
Values-led consumerism is coming to the fore. Customers care deeply and they’re making purchase decisions based on the values of one brand versus another. Think of it like fair trade on steroids.
While a lot of it’s driven by the younger demographics – Millennials and Gen Z – we’re seeing this happen with older demographics, too, as the community changes. This has also given rise to ‘nouveau loyalty’ – customers who are loyal to a brand as long as it connects emotionally with them. This might not be through continuous purchases; it might be through engagement with a brand advocate or on social media channels.
3. Push for mindfulness
The need for customers to interact with brands they connect with emotionally has led to the strong re-emergence of ‘mindfulness’. Some may find this concept a bit radical or ‘new age’, but we’re seeing this as an important purchasing factor in many markets, especially those with dominant younger demographics, such as the Asia-Pacific. In fact, 39 per cent of shoppers in our Australian research this year classed themselves as ‘mindful’.
It’s about customers searching for ways to get their money to work harder for them. They have grown up with information at their fingertips, and they’re looking to see how they make life better for everyone right now. In today’s hyper-connected world, issues like climate change are at the forefront of their minds, and it feeds into the things they look for across the entire customer journey.
It’s also feeding the continued rise of the circular economy. Customers will prefer a product that’s higher quality because it can be reused rather than thrown away. You only have to look at the rise of fashion marketplace app Depop in the US and UK to see its importance in the consumer space.
For the first time, people really care where the products are coming from and who’s benefiting from them, and they’re voting with their wallets. They have the buying power to drive key brand decisions.
How to adapt and win
Behavioural strategist Dr Max Mckeown wrote that “adaptability is about the powerful difference between adapting to cope and adapting to win”. Whether you’re a supplier or a retailer, you need to adapt your product offering to ensure it’s meeting your customers’ needs. But there’s no point matching what your competitors are doing. ‘Optimising to parity’ simply doesn’t cut it anymore because parity will no longer exist in six months.
To succeed, retailers need to understand and adapt to their customers and build a proposition around their needs. They have to know who their customers are and ask two questions – ’What are my customers looking for?’ and ‘What channels are they using?’
They need to partner with suppliers that share their values and are prepared to adapt to their customer’s needs, too. They also need to ensure their customer segmentation and personalisation is right. It’s easy to lose a customer. It’s difficult to get their attention back.
Finally, they shouldn’t neglect to ask for customer feedback: ‘How can we improve?’ The more agile you are in adapting to that feedback, the better your overall retail experience will be. And the more it will show on your bottom line.
Matthew Scott is Commercial Lead, Australia at Klarna. This article is based on his presentation, ‘Beyond 2020: The Future of Retail’, at Digital Day on May 27.