Tag Archives: consumer behavior

Voice-Activated Shopping an Effortless Customer Experience

Is voice-activated shopping the digital outcome that retailers need to offer their customers an effortless shopping experience? Or is it taking AI and machine learning a step too far?

Humans are what we are because of our ability to speak with one another, to listen what’s said, to comprehend the info and to react on what we perceive. We also like to be part of a group, to socialize. Said MacFarlane 2, (2014): “Because our evolutionary heritage provides us with genetic material open to forces and influences from the physical environment, we also require a social environment for brain development and for the acquisition of skills such as speech and written communication.”

So we learn from others and learn others by using our voices. But that is now changing. Now, after millions of years of being humans, we’re learning machines how to listen to voices, to recognize and analyze the message and then to respond in a ‘sensible’ way.

So, if you’re still able to speak, say Hallo! to voice-activated shopping. Because, according to Hailee Sosnowski’s post in DigitalCommerce, voice search is projected to account for half of online searches by 2020.

What is Voice-Activated Shopping?

Voice-activated shopping (VAS) means that a customer can use his or her natural voice to control technology whilst shopping. There is no need to touch anything and the customers can do voice-activated shopping by using their smartphones. VAS is already adopted by some retailers.

Laura Agadoni (JLL) remarked the following about voice-activated shopping: “Right now it’s being used for ordering groceries, pizza or coffee. For consumers there’s no driving to stores, logging onto a computer, or pulling out smartphones to open an app. They simply say what they want to one of the new voice activated devices coming onto the market from the likes of Google and Amazon.”

Take the example of Alexa, the AI-based personal assistant from Amazon. With Alexa in your kitchen, adding an item to your Ocado order is a breeze, says Holly Godwin (OcadoTechnology). Run out of biscuits and have a friend coming for tea? – Just tell Alexa “Alexa, ask Ocado to add biscuits”.

Alexa converts the audio stream into a command (for example, “add to trolley”) and a search term (such as “biscuits”). Alexa most probably will find exactly what you want, because Ocado has ‘trained’ Alexa to recognize the top 15,000 commonly search terms from Ocado.com.

How will Voice-Activated Shopping affect the retail market?

In today’s age of digital driven technology, it’s no shame to ask how voice-activated shopping may further disrupt the retail market. However, there is no consensus about what the opportunities or challenges of VAS are for retailers.

Opportunities using VAS (OnlyRetail.com)

  • More sales. Amazon found that sales of its Echo devices increased nine fold compared to 2015. Also, they also spend 10% more and their buying frequency went up by 6%.
  • Shopping for customers is now effortless. VAS allows householders to buy groceries just by talking to the fridge.
  • Gathering data for an omnichannel approach. Voice-enablement could be the unifying force omnichannel has been missing.
  • Investing for the future. It’s been reported that 55% of 13- to 18-year-olds use voice search every day, so clearly there is an appetite (Emma Lyons, Campaign US).
  • Speed of ordering. The ability to immediately order household essentials is the most obvious use for voice-enabled retail.

Challenges using VAS

  • “It’s still quite a new market and quite complex, so it requires advice and people will want to come talk to someone who can explain how it works, so we see it as an opportunity in that respect,” according to Grace Bowen, RetailWeek.com.
  • Tailoring search algorithms for Voice-enablement. “We know that shoppers will not go past the second or third page of a Google search result – voice will be like that on steroids” (Luke Tugby Retail Week).
  • Acceptance of VAS. Older generations may take a bit more convincing to adopt voice-activated technology.
  • Universal use of VAS in retail. A big question is whether voice recognition technology can work for all retail. What about fashion? Consumers can’t very well order a “black dress,” for example, and get exactly what they want, wonders Laura Agadoni (JJL).

Concluding

Speech has been argued to be the most natural and comfortable way to communicate 1. So it came as no surprise that it is now integrated in AI technology. So, what do commentators say about voice-activated shopping technology?

“Voice recognition technology is the next iteration of online shopping as consumers increasingly prize ways to complete chores or get the information they need easily and quickly,” Laura Agadoni (JJL).

“The convenience of voice search makes it instantly attractive to consumers, but it also introduces new complexities that retailers who want to survive the age of voice must fully understand,” Hailee Sosnowski, paid search planner, BKV (DigitalCommerce360.com).

My advice? Are your business performing as planned? If not, revisit your business’s digital marketing plan and identify the problem areas. If the most important reason why your business is losing sales is that your customers seeks VAS, then do VAS!

Read also: Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

Notes:

1 Kääriä, A.  2017. Technology acceptance of voice assistants: anthropomorphism as factor, Master’s Thesis, University of Jyväskylä.

2 MacFarlane, A.E. 2014. Voice activated: exploring the effects of voices on behaviours., PhD Thesis, University of Canterbury.

Image:

Flickr.com

Webrooming and Showrooming – Buying Behaviors of Retail Customers in Virtual and Physical Environments

Webrooming and showrooming are popular jargons that describe how retail customers use different combinations of online and physical channels to search for information about products, corroborate this information and make the purchase 4. These customers are tech savvy and they use their mobile phones to great effect to help them to decide what to buy where and at what price.

Both Bricks and Mortar retailers and Clicks Only retailers were slow to react to the changes in the buying behavior of their customers. However, Bricks and Mortar retailers are now adding the online channel to their business and Clicks Only retailers are opening physical stores. The adoption of the omnichannel by retailers couldn’t happened sooner. Hence Bricks and Clicks retailers…

Brain Eisenberg, quoted by ClickZ said that “Retail does not exist without an online component and online retail isn’t as cost-effective if you don’t have a brick-and-mortar component.” “We’re connected all the time through the phones in our pockets, but we live in a physical world”, said Eisenberg.

Webrooming and showrooming

Showrooming

Most of us has done showrooming at least once before. Showrooming is when you visit a store, saw a product you like, but then purchase it online instead of from the store 1. According to Douw G Steyn, author at Bricks2Clicks, the advent the internet has led to the adoption of innovative digital technology and the rolling out of broadband mobile connectivity.

At the same time, consumers quickly learned how to use mobile devices to compare products and prices when shopping 2.  These tech-savvy consumers are changing the fundamental consumer-retailer relationship and showrooming is fast becoming a problem plaguing the retail industry.  In the past few years, as online shopping exploded and smartphones became the norm, the showrooming phenomenon — consumers using their phones to comparison shop in stores — seemed poised to gut the revenue of offline retailers.

The real hurdle, though, is pricing writes Ann Zimmerman in the Wall Street Journal 5. “Lower prices are one of the main reasons people pick Amazon and other internet-only emporiums over traditional retailers” said Ann.

Machavolu and Raju, 2014 6 advice retailers to do the following to counter showrooming:
  1. Adopt a Collaborate-and-Coordinate business model. In today’s business set-up, manufacturers and retailers, both are working in different silos and eventually end up contending against each other. But it will be fine if both operates together to offer customized solutions that exactly suits their shoppers’ needs.
  2. Treat customization as the mantra for success. Customization programs can only be successful when retailers believe they are a key areas of focus for all their staff. Treating the programs as only a ‘side task’ may result in mediocrity and leave the retailers worst off than before.
  3. Lay emphasis on customer experience. The new age customers want themselves to be part of the process while the product is being planned, developed or delivered, hence companies must focus on getting their customers involved in doing so.

Luo, et al (2014) 2 have identified two measures that retailers can take to influence shoppers’ intention to showroom, namely 1) to reduce the online-offline price difference and 2) to improve the level of employee knowledge competency. Webrooming is nowadays recognized as an opportunity that retailers can use to counter the showrooming phenomenon.

Webrooming, which is similar (but opposite) to showrooming is a manner which customers use to help them in making their buying decisions.

Webrooming

Webrooming is the opposite of showrooming.  Showrooming is when you’re standing in a store, and you pull out your smartphone to see if you can get a better price online. However, webrooming is when you’re searching online, check what item you like and go to the store to pick it up 3.

“Webrooming is actually nothing new. Since the early days of online shopping, more people have researched their shopping online than have actually bought there”, says Emily Adler in Business Insider. Emily highlighted results from a recent report from BI Intelligence:

  • Webrooming is more common than showrooming. In the U.S., 69% of people practice webrooming, while 46% do showrooming.
  • The data shows that millennials prefer webrooming. For electronics, shoes, sports equipment, and cosmetics, more millennials say they prefer to webroom, rather than research in store and then buy online.
  • Amazon remains the No. 1 place where showroomers end up making their purchases. But it’s an even more popular destination for webroomers who ultimately buy elsewhere.
  • Only recently have Bricks and Mortar retailers begun to capitalize on webrooming. They’re using tactics like knowledgeable sales staff, in-store pick-up of online orders, in-store Wi-Fi, and smartphone discounts that nudge showroomers to buy in-store.
  • New initiatives for the connected in-store experience keep popping up: tablets and mobile phones used as register systems. Also robotic arms that deliver clothing into dressing rooms, and beacon hardware, which powers in-store maps and automatic hands-free payments.

Concluding

It seems that retailers are starting to catch up with the buying behavior of their tech savvy customers. Whether their customers are webrooming and showrooming , the retailer’s main goal should be to get the sales through their businesses.

Notes:

1 Quint, M., Rogers, D. and Ferguson, R. 2013. Showrooming and the rise of the mobile-assisted shopper, Columbia Business School, Center on Global Brand Leadership.

2 Luo, Q., Oh, L.B., Zhang, L. and Chen, J. 2014. Examining the Showrooming Intention of Mobile-Assisted Shoppers in a multichannel Retailing Environment, In PACIS (p. 141).

3 Nesar, S. and Sabir, L.B. 2016. Evaluation of Customer Preferences on Showrooming and Webrooming: An Empirical Study, Al-Barkaat Journal of Finance & Management, 8(1):50-67.

4 Flavián, C., Gurrea, R. and Orús, C. 2016. Choice confidence in the webrooming purchase process: The impact of online positive reviews and the motivation to touch, Journal of Consumer Behaviour, 15(5):459-476.

5 Zimmerman, A., 2012. Can retailers halt ‘showrooming’, The Wall Street Journal, 259:B1-B8.

6 Machavolu, M.S.K. and Raju, K.V.V. 2014. Showrooming: The Next Threat to Indian Retail, MITS International Journal of Business Research, 1(1):1701.

Image:

Flickr.com

Demise of Loyal Retail Customers in the Digital Age

Loyal retail customers have for long now given Bricks and Mortar (BM) retailers an advantage over their competitors. However, the advent of the internet and the subsequent development of the online shopping channel have changed the shopping behaviour of retail customers.

Although BM retailers have invested millions of dollars in customer loyalty programs, the convenience, speed and assortment of products customers enjoy online lured many loyal customers away. This is apparent with the closedown of thousands of retail stores, and the vanishing of well-known retail brands over the last couple of years.

The big challenge for BM retailers is to the get customers back to their stores. Thereafter, the retailers should have a strategy in place to keep them coming back. In other words, making their customers loyal again…

What are loyal retail customers?

Customer loyalty is according to PR Loyalty Marketing both an attitudinal and behavioral tendency to favor one brand over all others. This may be due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.

Loyalty is formed in four stages 1 – cognitive, affective, conative, and action.

  1. Cognitive loyalty – in the first loyalty stage, consumers develop value expectations and preference for one brand relative to other available alternatives.
  2. Affective loyalty – here the consumers begins to develop a liking or attitude towards the brand based on an increasingly satisfying experience with the brand.
  3. Connotative loyalty – the third stage, which is confined to consumer’s behavioral intention. The consumer has deeply held commitment to buy the brand.
  4. Action loyalty – is where the desire and intention in the previous loyalty state has translated into realistic loyalty actions or behaviour.

It takes time, money and commitment from retailers to get loyal retail customers. This process, mostly took place at the BM retailer’s store in the local shopping center. However, retail customers in the digital age can shop anywhere, at any time, at the best price.

So, BM retailers need to rethink their customer loyalty programs. They need to find out what “delights” their customers. How has the internet and the online retail channel affected their shopping behaviour in the retail stores?

Loyal retail customers in multi-channel retail

Retailers can nowadays rely only on more than one channel to do business with. As a result, most BM retailers adopted eCommerce to become Bricks and Clicks retailers. Online retailers, on the other hand, started to open physical stores to serve as showrooms for their products. Indeed, loyal retail customers need to be found outside the traditional retail channels.

“In the digital age, your customers have apps that let them search for products, compare products, review products, check prices, compare prices, and even buy the product without ever stepping foot in your store “says Tiffany Marshall. So what must retailers do to get their loyal retail customers back?

Media Genesis suggests that retailers do the following to get back loyal retail customers:

  • Build an emotional connection – whether it’s through exclusive content or rewards, making your consumer feel special is an important part of brand loyalty.
  • Personalize – you have your customer’s data; use it to your advantage! Make your content relevant and engaging by making sure that it is (almost) custom-made for your consumer.
  • Use your data – use data, analytics, and your digital business capabilities to go beyond just rewards. Use the information you’ve gathered to really analyse how your consumers want to engage with your brand and build a strategy to do it.
  • Create an active online presence – forgoing a good website and a strong online presence is essentially a death sentence in today’s digital marketplace. Most consumers prefer to shop online and not having an easy to use website is like excluding your brand from the conversation. It’s not enough to just post on social media. Create conversations, respond to customers, and help make customer service a 360° experience.
  • Merge your worlds – make the online to offline experience completely complimentary by identifying all of the crucial touch points you may have with your consumers. You might even see a return in foot traffic if the consumer consistently sees your brand attached to good prices online. When they need something in a pinch, your brand will be at the top of their mind.
  • Make it easy – as a business, you now have to prioritize delivering quality, enjoyable interactions with your consumers. This is the best way to build a lasting customer relationship in the digital age. If your web presence does some of the heavy lifting for your consumer, making it easier for them to reach their end goal, the quality of the experience will resonate and they’ll be back for more.

Concluding

Online shopping caters to the busy lifestyle of modern people, and its prevalence manifests the rise of the stay-at-home economy 2. Also, the internet, big data, the internet of things and social media has revolutionized the way customers interact with their retailers. I wonder, however, how loyal retail customers can be towards a chatbot?

Lastly, has the demise of the loyal retail customer started?

Read also: Personalization of Marketing Communication – not just for your Customer’s sake

Have look at this video: “The role of customer loyalty in the small business”

Notes

1 Kursunluoglu, E. 2014. Shopping centre customer service: creating customer satisfaction and loyalty, Marketing Intelligence & Planning, 32(4):528-548.

2 Wu, M.Y. and Tseng, L.H. 2015. Customer satisfaction and loyalty in an online shop: an experiential marketing perspective, International Journal of Business and Management, 10(1):104.

Image and video

Flickr.comlynda.com

Predictive Analytics helps Retailers to make sense of Big Data

“The most successful retail companies are utilizing data science and predictive analytics (PA) to improve efficiency, improve marketing campaigns, and gain significant customer insight for a competitive advantage” says Christine Kern, contributing for Innovative Retail Technology. But what about the “not so successful” retailers? How can they share in the advantages that Big Data and PA offer? Retailers can – by using predictive analytics.

What is Predictive Analytics?

Predictive analytics is a set of business intelligence technologies that uncovers relationships and patterns within large volumes of data that can be used to predict behaviour and events, according to Eckerson (2007) 1. Or, as Eckerson states it more bluntly “Predictive Analytics is like an “intelligent” robot that rummages through all your data until it finds something interesting to show you.”

Also, forecasting is about predicting the future, and predictive analytics adds questions regarding what would have happened in the past, given different conditions. Therefore, PA attempts to quickly and inexpensively approximate relationships between variables while still using deductive mathematical methods to draw conclusions 2.

Gregg Brunnick, Director of Product Management & Technical Services, Business Systems Division, Epson America explains the usefulness of PA: “If you know how many cheeseburgers John sold during last Tuesday’s lunch hour, for instance, you can improve the efficiency of your food ordering, preparation, labor, and marketing operations.”

The value of Predictive Analytics for retailers

Deon Abott of Smarter HQ writing in Inside Big Data, suggests that data science and predictive modeling have become the holy grail for the retail industry. For this reason retailers built reports summarizing customer behavior using metrics such as conversion rate, average order value, recency of purchase and total amount spent in recent transactions.

These measurements provided general insight into the behavioral tendencies of customers. However, says Deon “In order for retailers to create a meaningful dialogue with customers that honors the shopper’s preferred level and mode of engagement, it takes more than summarized reports, which is why customer intelligence and predictive analytics provide the opportunity to significantly change the retail marketing industry.”

Generic uses of Predictive Analytics are according SAS the following:

  • Detecting fraud. Combining multiple analytics methods can improve pattern detection and prevent criminal behavior. As cyber-security becomes a growing concern, high-performance behavioral analytics examines all actions on a network in real time to spot abnormalities that may indicate fraud.
  • Optimizing marketing campaigns. Predictive analytics are used to determine customer responses or purchases, as well as promote cross-sell opportunities. Predictive models help businesses attract, retain and grow their most profitable customers.
  • Improving operations. Many companies use predictive models to forecast inventory and manage resources. Predictive analytics enables organizations to function more efficiently.
  • Reducing risk. Credit scores are used to assess a buyer’s likelihood of default for purchases and are a well-known example of predictive analytics. A credit score is a number generated by a predictive model that incorporates all data relevant to a person’s creditworthiness.

Erick Siegel of Big Think suggests that predictive analytics allows for a keen assessment of the probability that any one person will buy, sell, click, lie, die, etc. PA doesn’t just predict the future; it can influence it as well.

The challenges of using Predictive Analytics

The big challenge for retailers is to use PA correctly. Not using PA appropriately can cause loss of brand equity and market share with astonishing speed. The key is in understanding the customer’s “digital body language”, suggests Earley (2014) 3. Retailers need to understand customer data – the attributes, needs, characteristics, life stage, behaviour, demographics, and psycho-graphics. The information coming from the data may be used to help customers behave in a way that satisfies their needs 3.

Unfortunately, the use of PA by some retailers has been reported as controversial. Not only are most companies not informing their customers of when and what data they are collecting, but they are not letting them know about their analysis policies, according to Corrigan et al (2014) 4.

According to Arliss Coates from EConsultancy retailers should note the following when using PA:

  • Is automation driving out your innovation and originality?
  • Do you have people that know how to interpret the results of PA?
  • Scenario planning – humans cannot prepare the machines to anticipate every possible nuance or scenario.
  • An over-reliance on data to substantiate decision-making may hampers innovation.
  • The “garbage in, garbage out” principle – bad data will render bad results.

Concluding

The explosion of data is here to stay. At this moment it seems that the availability and use of big data and predictive analytics will grow exponentially. In spite of some controversy and challenges, PA couldn’t have come at a better time for retailers. Predictive analytics may help retailers to integrate their channels more smoothly and thereby keeping in pace with their competitors.

Read also: Big Data for Small Retailers – Is it Doable?

Have a look at this practical demonstration of PA from IBM “”Predictive Analytics for Retail – Introduction”:


Notes

1 Eckerson, W.W. 2007. Predictive Analytics. Extending the Value of Your Data Warehousing Investment, TDWI Best Practices Report, Q1.

2 Waller, M.A. and Fawcett, S.E. 2013. Data science, predictive analytics, and big data: a revolution that will transform supply chain design and management, Journal of Business Logistics, 34(2):77-84.

3 Earley, S. 2014. Big Data and Predictive Analytics: What’s New? IT Professional, 16(1):13-15.

4 Corrigan, H.B., Craciun, G. and Powell, A.M. 2014. How does target know so much about its customers? Utilizing customer analytics to make marketing decisions, Marketing Education Review, 24(2):159-166.

Image

Pixabay

Video

IBM

Word of Mouth Marketing for Better or for Worse

Word of mouth (WOM) is one of the most important communication channels that customers use to discuss retail shops and brands. WOM is informal, frequent and important and the outcomes can be beneficial or disastrous for a brand or a retailer.

Word of mouth has a huge impact on consumer behaviour. Social talk generates over 3.3 billion brand impressions each day and shapes everything from the movies consumers watch to the websites they visit 1. A study by Bughin, Doogan, and Vetvik (2010) 2 suggest that “word of mouth is the primary factor behind 20 to 50% of all purchasing decisions and generates more than twice the sales of paid advertising”.

However, negative WOM can quickly cause havoc with a brand or a retail shop. The advent of the internet, together with social media platforms has changed how peers communicate their experience with brands and shops.  A single bad experience shared by a customer on a social media website, may hurt your brand or business badly.

For retailers to use WOM strategically as a marketing tool, they must first understand why customers discuss your business. Why do they praise or criticize your brand?

Customer conversations aka ‘word of mouth’

Customers love to talk about their shopping experiences because they need to share and receive information, have social interactions, or express emotions 3.

Lu-Shien, living in San Francisco, USA had this to say on the Yelp review site about a new restaurant in their neighborhood: “The vibe, the serving ware, the food. All of it is presented in a modern fresh bistro style. A simple menu with a few headliner items – just the way I like it.” Maybe Lu-Shien has said enough to fill the restaurant to capacity because WOM is perceived by consumers as more credible than, and free from the bias of, firm-to –consumer communications 4.

Sometimes, however, customer reviews aren’t that positive. Said Ali D, from New Orleans, USA also on Yelp about a clothing store “You know, I’ve bought and sold here a few times over the course of a few years, but today’s experience means I will not be going back. I had questions but could not – really – get the attention of the sales girls, because they were having the ultimate bitchy conversation at full volume in front of several customers.”

Nevertheless, according to Ken Davenport writing in The Producers Perspective, only 8% of brand-related word of mouth conversations are “mostly negative”. Hence, the average online review is 4.3 stars out of 5. But what about the customers saying nothing online, and just walk away from your business? Ken suggests that 9 in 10 word of mouth conversations about brands are offline.

Therefore, there is no respite for retailers keeping their customers happy.

Word of mouth marketing – the retailer’s response

Retailers need to take word of mouth marketing seriously, especially now that is taking place in the cyber space. Silverman (2010) 5 identified the following properties that make word of mouth a powerful marketing tool:

  • Credibility – its independence makes it the most powerful, influential, and persuasive force in the marketplace;
  • It is an experience-delivery mechanism;
  • It becomes part of the product itself;
  • WOM is custom-tailored, more relevant, and complete;
  • It is self-generating, self-breeding, and grows exponentially, sometimes explosively;
  • Because it is virtually unlimited, word of mouth happens fast and big;
  • WOM can originate from a single source, or a relatively small number of sources;
  • It is extremely dependent on the nature of the source;
  • Word of mouth can be very inexpensive to stimulate, amplify, and sustain.

If word of mouth has such a big influence on image and profits, then surely retailers should make it part of the marketing strategy.

Silverman suggests taking advantage of these properties, retailers should look at:

  • What is the content of the word of mouth?
  • Who is originating the word of mouth (its sources)?
  • Who is receiving it?
  • What are the channels through which it travels?

“When we understand the answers to these questions, we’ll be ready to look at how to trigger a chain reaction leading to an explosion: how to get it started, how to amplify it, how to channel it, and how to cause it to go in our direction”, proposes Silverman.

Have a look at this video from The Word of Mouth Marketing Association:

Concluding

Getting people to talk about your brand and shop is the way to go. The most important rule of WOM marketing is to “be interesting” and that “nobody talks about boring companies, boring products, or boring ads.” 6 But, word of mouth also has a sharp end. So, retailers need to make WOM work, like a marriage, ‘for better or for worse’ (preferably for better).

Notes:

1 Berger, J. 2014. Word of mouth and interpersonal communication: A review and directions for future research. Journal of Consumer Psychology, 24(4):586-607.

2 Bughin, J., Doogan, J. and Vetvik, O.J. 2010. A new way to measure word-of-mouth marketing. McKinsey Quarterly, 2:113-116.

3 Lovett, Mitchell J., Renana Peres, and Linli Xu. 2016. There’s No Free Lunch Conversation: The Effect of Brand Advertising on Word of Mouth. Marketing Science Institute.

4 Thomas, V.L. and Saenger, C.  2017. Promoting or protecting my brand: The identity-expression and fear-of-imitation conflict, Journal of Consumer Marketing, 34(1).

5 Silverman, G. 2011. Secrets of word-of-mouth marketing: how to trigger exponential sales through runaway word of mouth, AMACOM Div American Mgmt Assn.

6 Berger, J. and Schwartz, E.M. 2011. What drives immediate and ongoing word of mouth? Journal of Marketing Research, 48(5):869-880.

Image and video:

  1. Pixabay.com
  2. WOMMA

Generation Y, Showing the Way for Retailers in the Digital Age

Generation Y or Millenniums, comprises of individuals that were born between 1980 and 1994, and make up about 25% of the world’s population. Gen Y is therefore an important cohort for retailers to target because of its size and purchasing power. Retailers, as with the other generational cohorts (Baby Boomers, Generation X and Generation Z), need to know what the shopping behaviors of the Gen Yers are. But first we need to know who Generation Y is?

Who is Generation Y?

Generation Y individuals came of age during a period of economic growth, a strong emergence of social media and reality television, and the disappearance of modernist values, supported by internationalization and strong influences from popular culture 1. They are perceived as more focused on living large and carefree compared to more serious previous generations.

Some describes the Millenniums as most diverse; underemployed; lazy; entitled; self-centered spoiled brats. However, most of them feel frustration, fear, doubt and even anxiety taking their first steps “in the real world”. Since they are most of the time connected to the internet, Generation Y hears the ‘bad’ news about inflation, unemployment; changes in public policies in real time. Digital communication technology is part of Gen Y’s existence.

The Millenniums have grown up with technology and it has captured their lives. Hussein 2 (2016) stated that 87% of Generation Y always had their smartphones at their side, day and night. Further, he said, 78% of them spend over 2 hours a day using their smartphones, and 68% considers their smartphone to be a personal device.

“Gen Yers are multi-taskers who use their mobile phones for just about anything: social networking, to find a job, and to get grassroots-generated information about products, services, schools, employers and travel destinations” suggests Parment 1 (2013).

Also, Generation Y actively contributes, shares, searches for and consumes content – plus works and plays – on social media platforms 3.  The table below, published by the American Press Institute, indicates how and when Gen Yers use different social media network sites.

How Millennials use different social media network sites

Used daily Used occasionally
Facebook 57 31
YouTube 29 54
Instagram 26 23
Twitter 13 21
Pinterest 10 25
Reddit 8 15
Tumblr 7 14

 

Fifty seven percent of Millenniums indicated that they use Facebook daily, while 54% used YouTube occasionally. How can retailers engage with this tech savvy and connected cohort?

The shopping behaviour of Generation Y

Retailers that understand the shopping behaviour of their customers may enjoy an advantage over their competitors. Generation Y are generally not loyal customers. Therefore retailers should provide them superior customer value or any other advantage, such as a lower price 1. Gen Yers are very flexible in terms of buying expensive and cheap products – to define themselves.

Gen Y buyers select and consume products that helps to define them. The products must show what is important to them and what they value in life. They will choose products that express some aspect of their own personality or image. Hence the Millenniums visit numerous shops regularly, in effort to stay in tune with what is ‘in’ at the moment. As a result they often visit clothing stores without having a pronounced need.

The Millennials – the largest generation in US history – are entering their peak spending years. Lindsay Drucker Mann, a vice president in Global Investment Research at Goldman Sachs, explains how companies are responding to their growing economic influence:


However, the Y Generation is  the cohort that does most of their shopping online.

Online shopping behavior of Generation Y

The association that Gen Y has with digital communication technology makes the internet an obvious channel for retailers to interact with them. However, cautions Parment 1 (2013), Generation Y wants to decide when, where and how companies communicate with them. They take the opinion of others into account when making a buying decision.

Retailers should note that Generation Y freely discusses various issues with their friends on social media platforms like Facebook. Gen Y considers friends to be credible sources that have a big influence of how this cohort evaluates products and brands4.

Jaz Frederick, writing in PFSWeb.com highlighted some trends among Millennials and online shopping:

  • the average consumer aged 18 to 34 invests $2,000 per year on digital retail sites;
  • millennials show the highest growth (32%) in mobile sales;
  • smartphones are the most-used shopping device for the Y Generation.

Retailers need to be found online and make sure that Millennials have great experience when visiting their pages.

Concluding

The Generation Y is a complex cohort. Nevertheless, they are the generation who must lead humanity into the digital age. The Millennials will dictate to retailers what technology to use and what content they want. Ultimately, Gen Y is paving the way for all of us to face the realities of the digital age. Please have patience with them…

Read also:

  1. Selling to the Young Ones, Generation Z
  2. Know Your Clever, Less Distinctive Customers – Generation X
  3. Shopping Behavior of The Baby Boomers
  4. Demographic Segmentation – Dividing the Market by Generations

Notes:

1 Parment, A. 2013. Generation Y vs. Baby Boomers: Shopping behavior, buyer involvement and implications for retailing. Journal of retailing and consumer services, 20(2):189-199.

2 Hussein, Z. 2016. Assessing the purchase intention of Malaysian Generation Y in mobile shopping. IJASOS-International E-journal of Advances in Social Sciences, 2(5):424-431.

3 Bolton, R.N., Parasuraman, A., Hoefnagels, A., Migchels, N., Kabadayi, S., Gruber, T., Komarova Loureiro, Y. and Solnet, D. 2013. Understanding Generation Y and their use of social media: a review and research agenda. Journal of Service Management, 24(3):245-267.

4 Viswanathan, V. and Jain, V. 2013. A dual-system approach to understanding “generation Y” decision making. Journal of consumer marketing, 30(6):484-492.

Image:

Pixabay.com

Know Your Clever, Less Distinctive Customers – Generation X

Generation X, which refers to those born from the mid-sixties to late seventies is one of the most highly educated generations in history and is characterized by technological and media savvy, skepticism and pragmatism 1. Above all, these shrewd customers usually make informed purchasing decisions and often search the internet for the best deals. So what makes Generation X different from other generational cohorts?

Gen X grew up with both parents in the workforce, or in a divorced household, causing many of this generation to become independent at a young age 2. This generation is described as experiencing social insecurity, rapidly changing surroundings, and a lack of solid traditions. Members of this cohort are said to have the following characteristics 3:

  • Value autonomy and independence
  • Thrive to open communication
  • View work from an action-oriented perspective
  • Do not believe in “paying dues”
  • Seek to acquire skills and expertise
  • Do not have long term loyalty to a company (but are loyal to individuals)
  • Believe in balancing work-life objectives
  • Are reluctant to take on leadership roles

“Like their namesake suggests, Gen Xers are less distinctive than other generations. And they know it!” says Paul Taylor, executive vice president for special projects at the Pew Research Center. Therefore retailers should  know how Generation Xers behave when shopping…

The shopping behavior of Generation X

Generally, generation X shoppers can be categorized by their keen understanding of marketing and media. Indeed, research is crucial for these individuals – they use the web to reinforce their existing opinions on brands and products, rather than to form them to begin with (RetailPro). Nelson Baber 4  did a study  on how marketing practices should be adapted to today’s technology-driven culture. He found that Generation X spend half their time watching television – more than they spend on the Internet.  However, Gen X will respond to television advertising as well as research information on the Internet. Therefore, Barber suggests products targeted toward Generation X should have informative advertisements on both venues that contain detailed advertising copy.

Generation X shopping online

Generation Xers are known to be shrewd online shoppers that spend nearly 40 hours per week shopping online. Therefore retailers with internet shopping sites should avoid too many pictures or advertisement copy that would cause skepticism among this group. Barber 4 suggests that advertisers present product information in a straightforward manner and allow users to share the site or product-specific selection with friends through e‑mail links or connections to social media. The table below lists some of the facts regarding internet use by Generation X.

Facts on Internet Usage among Generation X (Statista, 2013)

Internet Profile
Internet users in the USA 58.2 million
Mobile internet penetration (worldwide) 66%
Social Media
Facebook account ownership (worldwide) 81%
Number of social network sites in the US 44 million
Median number of Facebook friends (US) 200
Online Shopping and Spending
Average online spending in the US $561
Share of making purchases worldwide 68%
Books are the most purchased item 38%

 

The data as shown in the table indicate that Generation X loves the internet, social media and online shopping. Importantly, online – and Bricks and Mortar retailers targeting Gen Xers should take their behavior and outlook on life into account to achieve their lasting patronage.

Concluding

The last say about the shopping behavior of Generation X is best summarized by Lissitsa 1 and Kol, 2016. “Gen X is highly sophisticated in its buying behavior and is turned off by slick and generalized promotions. They still makes purchases based on traditional search and decision-making methods. They want to hear the features of the product as well as an explanation of why these features are necessary. Moreover, Gen X have an attitude of risk avoidance and a low capacity for risk. Lastly, as consumers, Gen X looks for customer convenience, community relations, and branding. They have a reputation of being incredibly disloyal to brands and companies.”

Read also:

  1. Selling to the Young Ones, Generation Z
  2. Shopping Behavior of The Baby Boomers
  3. Demographic Segmentation – Dividing the Market by Generations

Notes:

1 Lissitsa, S. and Kol, O. 2016. Generation X vs. Generation Y–A decade of online shopping. Journal of Retailing and Consumer Services, 31:304-312.

2 Acar, A.B. 2014. Do intrinsic and extrinsic motivation factors differ for Generation X and Generation Y. International Journal of Business and Social Science, 5(5):12-20.

3 Ordun, G. 2015. Millennial (Gen Y) consumer behavior their shopping preferences and perceptual maps associated with brand loyalty. Canadian Social Science, 11(4):40-55.

4 Barber, N.A. 2013. Investigating the potential influence of the internet as a new socialization agent in context with other traditional socialization agents. Journal of Marketing Theory and Practice, 21(2):179-194.

Images:

Wikimedia.org

Pexels.com

 

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