Firms must flex to win love and loyalty of new wave of online shoppers

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This article is brought to you by Retail Technology Review: Firms must flex to win love and loyalty of new wave of online shoppers.

New research by the World Retail Congress with Railsbank investigating the behaviours of today’s new global consumer finds that the online buying habits developed over the pandemic are sticking.

Internet retail sales may have slipped back from the ‘giddy high’ of 37.8% in January 2021, but they were still a whopping 27.1% in January this year, according to business data firm Statista, well above the level of 19.1% in March 2020, as Covid-19 was just emerging.

“This shows that a great number of consumers who found they had no option but to shop online during the pandemic are continuing to do so having been awakened to the convenience, choice and ease of shopping offered by e-commerce,” says the report.

The report reveals four distinct ‘consumer personas’ that are driving the surge in online demand: the Digital Arrivals, the Subscribers, Ethical Consumers and the Thrill Seekers. 

The Digital Arrivals may not be entirely new to online shopping but, pre-pandemic this typically older group preferred to browse and buy in stores. Many of them didn’t know what to expect online and didn’t know how to find the brands they were looking for. They are most likely to have started their online journey during lockdown by shopping for groceries.

Retailers will need to deliver smooth and simple customer experience if they are to continue to earn the trust and loyalty of this group online. 

Among the more digitally-adept population, subscriptions are popular. According to the Royal Mail’s June 2021 Subscription Box Survey, 52.1% of 25-34s are subscribers to at least one box subscription service. 

The subscription sector has more than doubled in size in three years, with consumers spending over £1.4bn on subscription boxes in 2020 alone. These include everything from meal kits to flowers and grooming and beauty products to pet treatments. It has also sparked new partnerships such as Waitrose recipe box tie-up with Mindful Chef.

This sustained pattern of consumption will depend on customer satisfaction. Research by BAV Group with WPP found that for subscribers to recommend an online retailer to a friend, a service would have to be reliable (63%), trustworthy (52%) and good value (51%). 

Thrill seekers, often under 25, look for greater interaction and enjoyment from shopping. They demand playfulness in retail marketing alongside gamified elements. These will drive shops to become less transactional spaces and instead become destinations where consumers can discover and play with products and engage with brands. They are the most likely to drive spending in the Metaverse as the virtual world is not alien to them and they are regularly searching for new experiences.

Speaking at Retail Week’s Accelerating Ecommerce Week Summit, Mei Chen, Alibaba’s head of fashion and luxury for the UK, Spain and Northern Europe, said: “The metaverse is about merging the online and offline experience. It’s a new playing field not only for customers but for brands to interact with them.”

The final ‘persona’ is the Ethical Consumer, a group that spans all ages who have been alarmed by plastic pollution highlighted in programmes such as Blue Planet and climate crisis documentaries and activists such as Greta Thunberg.

They want products produced, marketed, sold and delivered in a way that aligns with their environmental and social values.

Retail Week’s ‘Green is the New Black’ report, which surveyed 1,000 UK consumers in January this year found 59% were more likely to buy from a brand with a strong ethical and sustainable ethos.

This is forcing businesses to take radical action. For example, five of the biggest grocers, Tesco, Sainsbury’s, Waitrose, the Co-Op and Marks & Spencer, have pledged to halve the environmental impact of the weekly shop by 2030.

The power of the green pound was highlighted by the Co-op’s ethical consumerism report, released at the start of 2022. It found that consumers spent almost £61bn on ethical products and services, a rise of 30% from 2019. This figure on sustainable spending equates to £2,189 per household, more than double the £1,028 level recorded in 2010.

With the day-to-day firefighting of the pandemic over, retailers must take stock of the systematic changes in behavioural spending habits across the sector, says the report. To win loyalty and drive expenditure, retailers must:

  1. Remove friction along the customer journey with strong UX and IT infrastructure.
  2. Use Data and AI to enhance customer experience, appealing to the Thrill Seeker and ‘trepidatious’ Digital Arrival.
  3. Step into the metaverse to appeal to Gen Z consumers keen to upgrade their current shopping experience.
  4. Change up store formats to leverage retail real estate as a space for tactically displaying products. Larger stores should offer a full range of products, while smaller in-town stores should allow access to big-box retail offerings.
  5. Ditch the cash and deliver on the trend in ‘cashless stores’.
  6. Go green and put ESG front-and-centre of their overall strategy.  It will be those retailers that not only act sustainably but become truly financially sustainable.

Railsbank co-founder and CEO, Nigel Verdon, who presented the key findings at the Congress today said:

“There are two main challenges for the traditional bricks and website retailers. Firstly, now, more than ever, is how to compete for the new digital experienced consumer with digitally native ecommerce merchants. Secondly, is how to deliver a joined up ecommerce and in-store experience to the consumer, one which knows the consumer in-store and on-line, and rewards and engages that same consumer. The backdrop to all this is clear. Covid accelerated the number of new digital experience consumers, represented not just by the younger, but also the older generations as well.”

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