On June 9th, THoMer Sofie gave a presentation at Gondola Day, highlighting some of the insights from a consumer research done by Trustmedia, the advertising solution agency of De Tijd & L’Echo.
Many different trends are redefining the retail landscape, but in their survey 3 trends were dominant:
1. The blending of on- & offline channels
2. The rise of a new consumer
3. The consumer loyalty challenge
What do these trends mean for your advertising budget?
Blurred lines between channels
The survey reveals that the blurred lines between on- & offline channels have changed the shopping behavior of consumers and that the on/offline experience influence each other.
Online seems to be growing: “62% of respondents have bought something online in the last 6 months”. But at the same time offline still remains the dominant channel. Especially in certain categories such as groceries, online purchases are still limited (only 12%). So brick-and-mortar is definitely not dead. In fact, a vast majority of retail sales still happens in the physical world. Best illustration in Belgium that showcases the value of physical retail presence is the fact that Coolblue also started with brick-and-mortar shops.
But we shouldn’t be naive of course. We are probably approaching a tipping point that will rapidly increase the share of online spending as shoppers increase their use of digital/online tools. For now, only 20% of respondents buy via their smartphone and 38% via tablet. But in the future this will only increase.
Main reasons for not shopping online are the high or unclear shipping costs and the desire to touch & try. Some of these barriers can and will be overcome. On the other hand – not surprisingly - pricing and convenience are the main drivers for online purchases.
Because convenience is so important, traditional retailers roll-out different shopping options that make it a lot easier for consumers to get their shopping done how and when they want it. Examples are numerous: reserve online/buy in store, in-store pick-up, same day delivery, pick-up points etc. Zalando started recently with “retour on demand”, in close collaboration with Local Express (PostNL), where consumers can outsource the return of their packages.
Driven by a new consumer
The shopping behavior of consumers is changing constantly. The generation with the most striking results in the survey are the millennials, the generation of "I-want-it-now". This is the generation that grew up in a technology-filled, increasingly online and socially-networked world. They are also the generation that has received the most marketing attention, although it remains difficult to grasp their attention.
Good news for retailers is that millennials like to shop. They spend a lot (almost 300€/month), but they also value deals and discounts, even twice as much compared to other generations. They are even more likely to conduct research offline and purchase online than older generations such as the babyboomers.
Phenomena like showrooming (the behavior of shoppers who check out an article in a physical store, and then purchase it online at a better deal) are likely to rise further. Mobile commerce will no doubt further drive this trend, making it more common to buy on your mobile phone when you are in the shop. But this generation also clearly values convenience. For example, they use food boxes 5 times more often than other generations.
Especially for this generation saving time is a big differentiator in the highly competitive retailer ecosystem. So think about what you can do to make their life easier and enrich the shopping experience. Use technology in-store (such as free wifi for all, virtual reality, QR codes or NFC, interactive digital signage displays, etc.) to differentiate yourself from the competition.
But don’t forget about the babyboomers. On the short term, they remain an interesting target group as they still spend the highest amount on shopping and are also open for promotions and willing to change provider.
The customer loyalty challenge
Less than 1 out of 10 always returns to the same store for groceries. So there is fierce competition to become the preferred destination of shoppers. The main drivers for preferred choice are 1) a good price/quality ratio and 2) proximity & parking. Interesting is that house brands are barely a factor in the customer’s decision for where to shop: they get the lowest score for preferred choice (17%).
75% of respondents say to be influenced by promotions. When asked which promotions attract people most, then the number 1 is a loyalty card. We all know that a loyalty card doesn’t make people more loyal: we have cards from all retailers, right? So does it make sense to invest in this and/or continue with loyalty cards? I certainly believe it does. Not because of its ability to attract customers through discounts, however, but because of the power in the data.
To survive and thrive, retailers will need to get smarter and smarter about using data to drive growth. Some retailers are clearly leading the charge (e.g. Tesco). The ones who tap into this kind of analysis will be better equipped to keep pace with customer preferences. Retailers should evolve from a traffic-focused approach to a personalized approach and more authentic messages. By better getting to know their consumer, they can improve their content strategy.
So what do these trends mean for your advertising budget?
Fragmentation of touchpoints and the lack of loyalty make it difficult for both retailers and advertisers to reach their target group. Investments in media therefore should be well spent. Make sure you bring the right content at the right moment via the right channel.
When we ask consumers “promotions have most effect when they are spread via…”, responses are the folder of the company (17%), the website of the company (20%) and the newspaper (print & online – 17%).
1. Retailers and suppliers need to realize that a significant portion of their customers are already buying groceries online. Success in the future will be determined by the blended performance of your online and offline offerings – not one or the other. You need to be where the consumer is.
2. Your consumer is changing. Not only the millennials, but also the babyboomers are digital savvy. Be aware that this last group currently is spending most.
3. Be creative - take it a step further using digital and technology to differentiate yourself from competition (with location based deals, augmented reality, QR codes, NFC tags …)
4. Don’t push too much, but provide consumers with relevant content based on their interests, recent purchases, demographics, preferences,…
5. Use first and third party data to learn more about your consumers (find out what your customers want, when they wants it, what they read) and target them accordingly, on the right media platform.
For more information about the consumer research of Trustmedia, visit: http://www.trustmedia.be/nl/content/het-grote-consumentenonderzoek