A new report from Capgemini, a global leader in consulting, technology and outsourcing services, reveals that consumers have missed the in-store experience, and have learned to move seamlessly between the online and physical stores.
Consumers have also increasingly shifted to buying directly from brands, which encompass everything from local businesses to larger brands owned by mega-corporations, forgoing big-box retailers. The data accentuates the desire for consumers to build better connections with brands and indicates that brick-and-mortar stores can bring value to the shopper experience.
Key highlights from the What Matters to Today’s Consumer report include:
- 72 per cent expect to have significant interactions with physical stores in the longer term after the pandemic subsides;
- 40 per cent have ordered products directly from brands instead of retailers in the past six months; and
- Consumers have pointed to brand loyalty programs (64 per cent), alignment with brand values (64 per cent) and better buying experiences (61 per cent) as incentives for direct brand orders.
“The behaviours of today’s consumers have shifted dramatically over the past 18 months and their expectations have evolved in parallel. As our research suggests, many of these changes will prove permanent,” said the report. “The consumer of today is shopping across multiple channels; she has returned to in-store shopping but also plans to continue shopping online, a channel she has grown accustomed to during the pandemic. She has also come to expect fast, easy delivery and fulfillment, whether she is shopping on- or offline.
“She continues to be very concerned with the ethical status of the products she buys – as well as the companies from which she buys them — and wants to be assured that these products are both healthy to consume and sustainable to produce. She also does not expect sustainable products to necessarily come at a premium. She is open to ordering directly from the brands she favors and sharing her data with them, especially if this will result in her receiving a better buying experience.”
The report said these trends and behaviors are more pronounced for certain consumer segments. For example, research reveals that Generation Z (18–24 years of age) shoppers are more willing to pay a premium for products espousing clean, natural, and sustainable attributes. Shoppers with children in their households value fast delivery more than do shoppers without children. A greater share of Boomers (57–75) have already returned to in-store shopping today than have Millennials (25–40) and Gen Z.
“For brands and retailers, the implications of these evolving consumer trends infiltrate all aspects of their businesses, from strategy to product development, digital, analytics, operations, and marketing. To capitalize on the opportunities offered by these evolving trends, we highlight four key focus areas for brands and retailers.
“An omnichannel strategy that incorporates the physical store, ecommerce, direct-to-consumer, and online marketplaces (such as Amazon, Alibaba) is essential to meet today’s consumer in all the venues at which she shops. Being ready and able to collect the data that today’s shopper is willing to share and extracting value from that data to allow better directed marketing and more carefully designed and tailored products and services is paramount. Given the importance of delivery and fulfillment to today’s consumer, re-positioning these aspects within the business model, and transforming them from a cost center to a growth driver, is critical to future business success. Going forward, there will be a growing mainstream demand for sustainable products. While a certain demographic of shopper may accept a higher price for the time being, it will be imperative that these products can be sold at a more attractive price point in the future.”
The full report can be found here: https://bit.ly/33Ko1Gj
Vinayak Madappa, Strategic Advisory Partner, Consumer Products, Retail and Distribution at Capgemini, said that pre-pandemic there was an uptick in online shopping but the pandemic changed that, accelerating growth in online behaviour.
“As we started to understand the pandemic and COVID a lot better, people have started to assess their risk a bit differently and as a result they want to go back to store for a couple of aspects,” he said. “One aspect is going to the store, the experience that retailers provide in let’s say apparel, in fashion, in beauty, are quite critical. The ability to look, feel and smell and experience the products in certain categories is critical. And that’s driving a big change.
“The other aspect we’re seeing is people want to continue to have that social engagement and interaction and with remote work and being at home all the day, the store is becoming an experience. Those are a couple of the key things we’ve seen that people are expecting, driving the in-store resurgence.”
Madappa said consumers have started associating their personal values with brands that are aligned to those values. Trends here can be seen in the health and wellness category as well as environment and sustainability. Consumers are willing to pay a bit of a premium for products if they are aligned with their values.
“Retailers need to pivot. They need to start to make more data driven decisions, understanding consumer behaviours. All retailers have a wealth of data of transactional data that they’ve acquired and they need to enable a business-led data driven strategy so that they can start to understand behaviours and inform their end to end decisions from their merchandising strategy all the way to supply chain fulfillment and logistics,” he said.
“And I think that’s going to be pivotal to see how the co-existence of the retailers with the CPG companies (consumer packaged goods) in managing what products they have on the shelf, what products they want to place in-store versus (online).”
He added that consumers today are willing to share a lot more data about themselves. They want transparency from retailers on how that data is consumed, managed, secured and utilized. They believe the data strategy should be a two-way street.
“One way is benefits back to consumers around pricing, promotions, benefit loyalty programs and experiences as well as information regarding products and the way companies, organizations, operate,” said Madappa.