Monthly Archives: January 2017

Selling to the Young Ones, Generation Z

The teens and tweens of today are a cohort of kids that doesn’t have a definitive name yet, however some have dubbed it Generation Z. Generation Z, the largest demographic cohort comprises 25% of the US population (Wikipedia, 2015).  They will start working by 2020 and earning lots of money that need spending. Therefore Generation Z should be taken seriously by retailers who need to know who they are and what their needs, wants and preferences are.

The characteristics of Generation Z

Generation Z was born after 1994 and is the newest generation. The generation has grown up surrounded by technology and are known to be highly connected with each other 1. A highlight of this generation is their ‘color-blindness’, their sensitivity to diverse cultures and personal differences 2. They are willing to embrace diversity to an unprecedented degree and are globally accepting. Although the Z Generation is go-getters and trendsetters, they guard their privacy fiercely. Rayan Scott contributing in Forbes underlines four characteristics that are critical to know about Generation Z:

  1. Technology – Generation Z has never known a world without smartphones and social media. They gobble up information quickly and are ready to move on to the next thing in an eye blink.
  2. Privacy – they are less interested in sharing their lives for the public record. Anonymous social media platforms are more appealing to them than Facebook.
  3. Cultural diversity – Gen Z embraces multiculturalism as a touchstone of who they are, and this also informs their attitudes on social issues.
  4. Pragmatism – growing up in an uncertain world, and being raised by Generation X parents whose own prospects seemed stunted by less exuberant times, this generation is drawn to safety.

How will these distinct characteristics of Generation Z influence their shopping behaviour?

The shopping behaviour of Generation Z

Although most of them do not earn money, Generation Z is influencing almost all of the household purchasing decisions 3.  They are a group that is heavily influenced by friends, bloggers and social media, according to Farla Efros, president of HRC Retail Advisory. Teens are becoming to act more like adults in their everyday life and this also translates into their purchasing decisions. Tweens on the other hand are still too young to make their independent purchasing decisions. Chain Store Age reported the following findings of a recent study by HRC:

  • Gen Z shoppers like malls – 72% of Generation Z respondents (kids 10-17) and millennial parents with kids said they visit a mall or shopping center at least once a month.
  • Gift vouchers are popular – 69% of Generation Z children would rather receive a gift voucher for their birthday, further proving their desire to make their own purchase decisions.
  • Social influences are more important than celebrity endorsements – Gen Z shoppers tend not to be strongly influenced by celebrity endorsements from athletes, actors and singers. However, over 61% of their purchase decisions are most strongly influenced by friends, with 13% being influenced by bloggers.
  • Social media plays a major role in purchasing decisions – approximately 50% of Gen Z shoppers surveyed use social media while they shop. Of time spent social media, most popular is Facebook (61%), followed by YouTube (38%) and Instagram (24 %).

Concluding

A new generation cohort becoming retail customers, such as Generation Z, brings with them a unique perception of life and their norms, values and beliefs. From 2020, Generation Z will make out 40% of the economic active population in the US. Time to get ready for them is quickly running out. Importantly, retailers have about three years to prepare themselves for the ‘Age of Generation Z.’

Read also about the shopping behavior of older people ” Shopping Behavior of The Baby Boomers “. And something in general about generational cohorts “ Demographic Segmentation – Dividing the Market by Generations

Notes

1 Paakkari, A., 2016. Customer Journey of Generation Z in fashion purchases: Case: LMTD.

2 Mathur, M. and Hameed, S. 2016. A Study on Behavioural Competencies of the Z Generation, In International Conference on Management and Information Systems, 23: 24.

3 Cruz, M. 2016. Generation Z: influencers of decision-making process. The influence of WOM and Peer Interaction in the Decision-Making Process, Master’s Thesis, Católica Porto Business School.

Images:

1 Flickr.com

2 Flickr.com

Shopping Behavior of The Baby Boomers

If you were born 50 to 70 years ago, you’re a ‘Baby Boomer’. Yes, most of you are still alive and do most of things you did as a youngster, but doing it differently. Retailers should realize that you are different from other generations and therefore behave differently when shopping. If they make your shopping trip a pleasant one, they may find that you (Baby Boomers) can be a profitable customer niche. Similarly can retailers with an online presence achieve more sales and positive word of mouth once they recognize Baby Boomers is a valuable consumer segment.

The Baby Boomers is part of a cohort – that is people who are born within a certain time frame and who are consequently subject to similar environmental influences. Other groups in this generational cohort are “Generation X or Millennials”; “Generation Y” and “Generation Z”. The Baby Boomers and how they shop will be discussed in this piece.

Who and what are the Baby Boomers?

Baby Boomers were born between 1946 and 1964, the period after World War 2. The number of Baby Boomers peaked in 1999, but has decreased since then and their number will continue to decline. Boomers make rational consumption decisions and their decisions are influenced by experts and close friends. They are more ethnically diverse, more highly educated, more likely to be employed in professional and managerial positions and spend more of their adult years working than previous generations 1.

They also differ in their personal and social lives from other generations as they are less likely to be married and to have an available spouse or adult children. Many Baby-boomers face triple dilemma of burdening care-giving of parents, financial support for offspring, and their own future older life 2. Such an overburden can lead to insufficient preparation for old age and may lead to depression. Boomers however, are not unfamiliar with the internet.

The Baby Boomers is the first generation that enters retirement with an extensive knowledge of the internet 1. Lee Rainie and Andrew Perrin of the Pew Research Center reported the following about the adoption of technology by US Baby Boomers:

  • 76 – 83 % are internet users;
  • 60 – 66 % have broadband at home;
  • 87 – 91% own a cellphone;
  • 45 – 54% participate in social media;
  • 46 – 52 % use Facebook.

Apart from being users of the internet, Baby Boomers also spend a lot of time on the internet. Ian Barker of BetaNews reports that Boomers spend the longest time on the internet compared to the other generational cohorts.

Now that we know a little more about Boomers and their use of technology, it is time to see how they behave when gone shopping.

The shopping behavior of Baby Boomers

Retailers can use cohort analysis in market segmentation because each cohort shares values, attitudes, consumption patterns, or an ability to use technology 3. Shopper age affects the shopping behavior of consumers. It is not different with Baby Boomers – Baby Boomers are direct when shopping; they know what they intend to purchase and plan their shopping trip 3.  They are more deal prone than other generational cohorts. Atkins and Hyun 4 suggest retailers do the following improve the shopping experience of Baby Boomers:

  • Marketers must understand the importance of saving time/effort and money for these consumers;
  • In-store directional signage, information kiosks or in-store product pickup will increase the convenience of the shopping experience;
  • Offer frequently purchased products such as pharmacy and staple food items closer to the entrance;
  • Provide promotional savings such as senior discounts and coupons that will entice and satisfy the older consumers;
  • When targeting older customers, who value getting the right purchase, it is important to offer product assortments that meet their needs

Baby Boomers also shop online.

The online shopping behavior of Baby Boomers

Baby Boomers use the internet a minimum of 10 hours per week. Importantly, they use those hours to connect with friends and family (66%), to read the news online (about 37%), and to shop (35%) 3. eMarketer interviewed Lori Bitter, consultant at The Business of Aging and author of “The Grandparent Economy” about “How Baby Boomers Make Purchase Choices Online and on Mobile”. Some of the comments Lori made are the following:

  • About Boomers browsing the mobile web and using apps – “The ones who have smartphones do use the mobile web. Boomers like peer reviews of restaurants and store experiences, and are beginning to use tools like Yelp or OpenTable. But they still mostly choose to search [the web]. In focus groups, boomers seem to be confused about when they’re actually in an app vs. when they’re online on their phones. Apps are not part of their adoption curve yet.”
  • Getting Boomers engaged on mobile devices – “For younger generations, their smartphone is their life, but boomers have to be led there. For example, some consumers can’t keep track of their rewards programs, but marketers can remind them to use those points at checkout. Baby boomers think about points and coupons differently than younger populations, but that doesn’t mean they don’t like a deal. Building in reminders through mobile is a [good idea]. “
  • What Baby Boomers think about the value that new technology offer them – “The baby boom generation has probably seen more change than arguably any generation in history. I don’t think they’re afraid of it, but they do have a “been there, done that” mentality. They might not have bought the iPhone 4, and skipped right to the iPhone 6. They’re willing to wait. In general, creating urgency is very difficult with this population.”

Baby Boomers that get older, and get less mobile, may shop more online. The products can be delivered on their doorsteps.

Concluding

Baby Boomers were a decade or so back the cohort that was targeted most by retailers. They were plentiful with lots of cash to spend. Age, however, has started caught up with them. They are still a profitable consumer niche if retailers recognize their needs and make the shopping experience a happy one. Retailer’s main target nowadays is the Generation X or Millennials cohort. Read this piece “Demographic Segmentation – Dividing the Market by Generations “for more on generational cohorts.

Notes:

1 Genoe, M.R., Liechty, T.,Marston, H.R. and Sutherland, V., 2016. Blogging into Retirement: Using Qualitative Online Research Methods to Understand Leisure among Baby Boomers. Journal of Leisure Research, 48(1):15

2 Park, Y.J. and Kim, Y.J. 2016. The Relationship among Financial Support for offspring, Care-giving to Parents, Preparation for Their Own Old Age, and Depression of Baby-boomers, Advanced Science and Technology Letters, Vol.131

3 Sullivan, P. and Hyun, S.Y.J. 2016. Clothing Retail Channel Use and Digital Behavior: Generation and Gender Differences, Journal of Business Theory and Practice, 4(1):125

4 Atkins, K.G. and Hyun, S.Y.J., 2016. Smart Shoppers’ Purchasing Experiences: Functions of Product Type, Gender, and Generation, International Journal of Marketing Studies, 8(2):1

Images:

Pixabay.comFlickr.com

 

How do Customers Respond to Self-Service Technology in Retail Shops?

Retailers use Self-Service Technology (SST) to make shopping for their customers more convenient. Some retailers even offer a smartphone app that lets customers scan items as they shop. “They pay on their phone, skipping the physical checkout counter entirely” writes Lauren Zumbach, recently in Phys.Org. Is self-checkout a time-saver for customers, or is it just another gadget that can go wrong, or is not understood nor trusted by customers?

SST has been introduced to Bricks and Mortar shops to match the convenience of online shoppers that never have to wait in a line 1. When last did you spend time at a checkout in a retail store? Have a look at this video just to remind you what it is all about! Looking at the long lines at a Walmart store on Black Friday, 27 November 2009, (Recorded by Maria S) one hopes that a self-checkout system will make things better.


So, where are we now with SST?

Self-Service Technology in retail shops

SST is technological interfaces that allow customers to produce services independent of involvement of direct service employees. In other words, the technology replaces many of the face-to-face interaction that customers usually have with retail employees. Retailers make use of SST to reduce costs, increase efficiency, flexibility, productivity and improved corporate performance 2. “The technology empowers customers to be in control of their shopping experience, while effectively reducing lines, cart abandonment and the time associates need to spend at checkout” writes Rebecca Minkoff in Apparel.

While SST is used at an increasing rate by retailers, there are some issues emerging.

The demographics of SST users

The age and gender may influence the use of SST by the customers of retailers.

  • Age – Orel and Kadar 2 found that younger customers had higher tendencies to use self-checkout systems during their shopping in supermarkets. These consumers were also savvy with internet and technology use. Lee and Yang 3, on the other hand, suggest that old consumers tend to feel that they are not competent to learn new things. Also, they enjoy interacting with other people such as store employees, service agents, and fellow shoppers. Therefor older people are less likely to adopt new service options such as SSTs.
  • Gender – men have more negative wait expectations than women 4. That means that if the lines at retail checkouts are too long, or move too slowly, men are more likely than women to leave the shop. Men may want to maximize the efficiency of their shopping trip by using SST. Women prefer doing their shopping with a minimum amount of external distraction, such as using a cumbersome SST 5.

Another issue with the use of SST by retailers is about the atmosphere of the shop.

The atmosphere of the shop

Store atmosphere is the physical characteristics of a retail store used to create an image in order to attract customers. Creating the ‘right’ atmosphere for your shop is more important than ever because of challenges from online retail. Shari Waters writes the following in The Balance: “If you’re thinking about opening up a business of any kind, it’s imperative that you remember the role that store atmosphere can play in its success. Customers not only care about how a store looks and feel; they’re also likely to make purchasing decisions based on the ambiance of the establishments they patronize.” But what effect does SST have on a shop’s atmosphere?

SST may have the following effects on the atmosphere of retail shops:

  • Customers receiving less attention from retail employees may affect the shop’s atmosphere negatively;
  • SST may lower the shop’s customer density which may be perceived as an improvement of the atmosphere 4;
  • Old consumers tend to feel that they are not competent to learn new things due to their information processing deficiencies 3. They may therefore create an ‘atmosphere’ of chaos in the shop as they seek assistance with SST, which is probably not there…

In spite of the issues around SST, the implementation thereof is growing globally.

The future of SST

The swiftly growing retail industry has been witnessing the fastest adoption of the self-checkout terminals. According to Technavio reported in BusinessWire, the forecast is for the global retail self-checkout terminals market to grow at almost 18% during 2017-2021. Amazon.com has also put its trust in SST. Thabiso Mochiko of the Financial Mail quotes Amazon as follows: “Amazon Go is a shopper’s dream. It eliminates the drudgery of queuing at a till. The company’s “Just Walk Out” technology automatically detects when products are removed from or even returned to shop shelves and keeps track of them in a virtual cart. When you’ve completed your shopping, you leave the shop and are charged electronically.”

It seems that nothing is going to stop the use of SST in our shops…

Concluding

So, how do customers respond to SST in retail shops? It is like this – nowadays people are getting older and the younger ones are tech savvy in a digital world. The older people go shopping not only to buy groceries, but most importantly to interact with people in the shop. They may be retired, living alone and miss socializing with people. Also they are not always tech savvy therefore may resist using SST. Young people, on the other hand, are tech savvy ‘by excellence’ and enjoy SST as a ‘game’ – something that should be there.  And gender? Have a peek of my blog “The Shopping Behavior of Woman”. However, as it concerns SST, men love SST if it can get them out of the shop as soon as possible. Women, in contrast, may ignore SST as long as possible because it may reduce their shopping time. Maybe the image below will illustrate my last point.

The Shopping Patterns of Men and Women

Notes

1 Bednarz, M. and Ponder, N. 2010. Perceptions of retail convenience for in-store and online shoppers. Marketing Management Journal, p49.

2 Orel, F.D. and Kara, A. 2014. Supermarket self-checkout service quality, customer satisfaction, and loyalty: Empirical evidence from an emerging market. Journal of Retailing and Consumer Services, 21(2):118-129.

3 Lee, H.J. and Yang, K. 2013. Interpersonal service quality, self-service technology (SST) service quality, and retail patronage. Journal of Retailing and Consumer Services, 20(1):51-57.

4 Grewal, D., Baker, J., Levy, M. and Voss, G.B. 2003. The effects of wait expectations and store atmosphere evaluations on patronage intentions in service-intensive retail stores. Journal of retailing, 79(4):259-268.

5 Rinta-Kahila, T. 2013. The adoption of retail self-service checkout systems-An empirical study examining the link between intention to use and actual use.  Department of Information and Service Economy, Aalto University School of Business.

Images

flickkr.com; i-imgur.com