The Golden Quarter is the most lucrative time of the year for retailers, but, requires a cohesive strategy in place to win wallet-share. The competitive pressure on retailers to perform at Christmas is huge, but winning shoppers over requires flexibility to adapt to a diverging set of generational shopping trends.
We’re seeing retailers use a diverse set of strategies to try and delight their customers, but what do shoppers want to see, and what does this mean for retailers? We recently spoke to almost 7,000 customers around the US and Europe in order to understand what they want to see from retailers during this festive period.
Getting the basics right is key
Regardless of which toy is flying off the shelves, or which brand has the best window display, retailers must go back to the basics for Christmas.
We found that consumers still consider a variety/range of stock available (34%) and convenience of an outlet’s location (21%) as the primary factors for choosing to shop with one retailer over another, when price is not a factor. For retailers who are constantly keeping ahead of the big market trends, this research can help them refocus on the customer and on getting their basic wants and needs right before realizing the potential of a bigger and better retail experience.
An interesting trend we’re seeing emerge in the market is a rethinking of what constitutes a ‘basic’. One of the areas we spoke to shoppers about was where they want to see retailers investing. While maintaining or reducing costs was the number one (33%) priority, a number (21%) wanted retailers to invest in making products and packaging more environmentally friendly. This was particularly true of younger shoppers, with 24% of 18-24 wanting retailers to invest in this area.
This is certainly a reflection of the growing consumer trend for more transparency around environmentally-friendly products and standards, and for retailers it will be essential that they react. Consumer demands are driving retail supply chains, and retailers need to transform their supply chains to be more connected, intelligent and transparent in order to respond to these new demands in an effective and cost-efficient way.
Adapting to diverging generational trends
Of course, not all consumers are the same, especially when it comes to the divide between younger shoppers and their preferences for technology.
With so many priorities for retailers to tackle, it would be easy to put off adapting to younger shoppers, whose preferences require more investment. However, our research found that the 18 – 34 group are on course to outspend other age groups this year. 40% are set to spend more on their holiday shopping in 2019 than last year, compared to an overall average of 28%. Winning over this group could bring a serious boost to the bottom line.
Within the data, there are numerous indications of changing attitudes and behaviours that retailers will need to respond to. Among 18-24-year-olds, there is a much higher demand for automated check-outs (27% said it would improve their shopping experience compared to the global average of 16%), and innovative technologies in-store (24% vs. 15%). Even if investments in innovative technology may not be swaying a majority of shoppers this season, it seems increasingly likely that a generational change will take hold.
The everywhere retailer
Physical stores are still set to receive a significant amount of festive spending, with 39% of consumers planning to make most of their purchases in-store during the holiday season. Online retailers, which offer access to multiple different brands, are also set to receive sizable shares of festive budgets this year, with 32% planning to spend most of their money on these websites.
This goes to show that retailers cannot simply bank on online or the physical store. They need to be wherever their consumers are, whether that’s online or offline, in a department store or the online equivalent marketplace, or a flagship store.
Physical stores were most likely to be favoured in France (49%) and Spain (46%), and most under threat in the US (31%, compared to 38% through the likes of Amazon). The generational trend is not entirely straightforward, with more 18-24s (31%) expecting to spend most in-store than 25-34 year-olds (27%) or 35-44 year-olds (28%).
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The retail store is undergoing a fundamental transition as digital and mobile reshape how consumers shop, but stores are certainly not dead, as this research shows. Especially with a younger generation who are interested in seeing technology like virtual reality mirrors in-store, for example, retailers have an exciting range of possibilities ahead.
The past few years have also seen the arrival of conversational commerce as a new form of engagement for retailers, offering up an opportunity for retailers to create as yet unimagined new services and ways of reaching customers. Of course, you need to build customer trust first.
Our research found that consumers would be more likely to use conversational interfaces for shopping if they felt the experience would be secure (25%), if they were offered unique voice discounts (23%), and if they were confident it would be a straight-forward experience (20%). This is particularly key for retailers targeting younger shoppers (18-24-year olds), where the percentages rose to 29%, 33% and 27% respectively.
A festive-tipping point
Overall, the 2019 holiday season catches retailers at a confusing moment. With a new decade on the horizon, most retailers understandably want to prioritise innovation and make the investments that will satisfy changing customer needs, and put a difficult decade behind them.
However, there is a balance to be struck. As peak season approaches, retailers should remember the basic truth that success is about having the right availability of the right products at the right prices. Technology is not so much an end in itself, as an enabler for retailers to get to that timeless goal, build more sustainable supply chains, and delight an entirely new generation of shoppers.