By Glenn Geller, Director Planning and Insights at Propac Agency
We are turning into a buyer nation.
Shopping –browsing through aisles and diving into sales racks -- is no longer very rewarding for customers. An activity once full of inspiration and discovery loses its luster when retailers jam shelves hoping to entice shoppers and instead frustrate and paralyze them. Siri or Alexa help find the best deal faster than a sales person. No amount of innovative shopper experiences can erase those facts.
Buying -- the process of locating and purchasing a product you know you want — is intent-driven and on the rise. Millennials and Gen Z – who make up 134 million consumers today – naturally operate in a buying mindset. It mirrors how they grew up, conveniently purchasing items online and with their smartphones.
Price and value are critical to both demographics and keep these customers in “buy mode” when they enter a store. Millennials are on a never-ending budget, paying down credit card and school loan debts. Gen Z, whose defining benchmark is the Great Recession, is considered the most frugal generation in nearly a century. The NRF says 98% buy in-store some or most of the time. They’re determined to live well, yet well within their means.
A new study by Forrester Consulting for RetailMeNot backs this up, reporting 77% of consumers say deals influence what they buy. While eMarketer reports coupon use is staying steady at 50%, savings apps and loyalty perks that reinforce the buyer mindset are growing in popularity. Everything from Open Table to Nordstrom’s new Nordy Club appeals to their search for purchase-related perks.
We saw this at play in a recent promotion for one of our clients through ShopKick, which earns customers ‘kicks’ in-store and online, redeemable for a variety of gift cards. Receipts for this major CPG company jumped on average 28% at checkout for three featured products on sale, well above the snack category benchmark of 18 to 22%.
But if shopping is dead why are pop-up stores popping up all over? They solve two things ecommerce alone can’t: Immediacy and the need to touch, feel and personalize something before purchasing it. (For retailers, they help reduce abandoned eshopping carts and costly returns of online purchases.)
Real estate firm JJL predicts digital brands will open 850 “clicks-to-bricks” stores in the next five years. They’ll be a mix of concept tests and permanent locations that appeal to early adopters and follow the footsteps of UNTUCKit, Bonobos and Casper mattresses. To match buyer with brand, Facebook recently launched #InstagramPopUp in London.
The biggest barrier for buyers is technology. While it created on-demand purchasing, it still hasn’t nailed a buyer’s evolving need state in a consistent, all-encompassing way. Samsung’s $5.8K Family Hub refrigerator scans expiration dates and helps with lists. Even if Amazon develops hundreds of dash buttons, they won’t help buy a car or a sweater.
Technology-driven Amazon Go shops are much more likely to connect. Download an app and buyers can make immediate, frictionless purchases at a good price. No cashiers. No cash. Just walk in and out. Bloomberg reports Amazon may have up to 3,000 stores by 2021; they’re now in Seattle and Chicago with plans to open in New York and San Francisco soon.
While the buyer is the clear winner, a likely loser will be traditional convenience stores – once considered a buyer’s haven for on-the-go needs. Amazon saw an opening in these chain’s differing layouts, product variety, service and price. In 2017, according to NACS/Nielsen, their numbers grew slightly (0.3%) to 155,000, but expect those numbers to dip if they don’t – like so many other retailers -- evolve and adjust to the demands created by today’s buyer mindset.