Holiday Priority: Responding to shifts in consumer behavior
U.S. shoppers are set to spend more during this year’s holiday season, new research reveals – but retailers should not expect to benefit equally, either in the months ahead, or in the longer term. Those that focus on ‘the customers that truly matter’ in the forms of improved engagement and personalization are likely to win a greater share of the spoils.
According to an Accenture survey of 1,500 consumers, the average American expects to spend $658 on holiday shopping this year – up from $632 last year, with nine in 10 expecting to spend as much or more as they did in 2017. And yet, while consumers are becoming more optimistic, their behaviors are changing. Retailers that do not respond will lose ground.
The inclusive consumer Given our current transparent environment, it is no wonder that consumers are becoming more aware of retailer’s tactics as it relates to inclusion and diversity. Millennial shoppers, in particular, expect retailers to think more carefully about issues related to age, gender, ethnicity and disability. More than half the millennial shoppers in Accenture’s 12th annual Holiday Shopping Survey say they’re more likely to shop with retailers and brands that show awareness of such issues.
What does this mean for retailers? First of all, they may want to rethink their marketing messaging, focusing on more inclusive advertising. Shoppers no longer want ads that assume it’s always moms who do the shopping – and they also expect representation of people from different ethnic backgrounds, the LGBT community and those with impaired ability.
Experience is key Nor should retailers overlook the product mix or the in-store experience. Many consumers could be turned off by imagery that assumes they relate to just one body size or type. And they will expect to see staff in store that reflect their own communities.
Another important area of focus for retailers will be the rising demand for “experiences” rather than physical goods –vacations, visits to the theater, travel or dining out, for example. In Accenture’s research, 49% of shoppers said they will buy experience-gifts this year, up five percentage points on 2017, while the number planning to buy physical products fell back 11 points to 73%.
Responding to that trend will require retailers to rethink their products and service – but also to reconsider the shopping experience they offer in general. If retailers can provide more in their stores than an opportunity to purchase items, they will likely see improved performance – from the fitness clothing chain that runs exercise classes to the beauty stores that offer workshops on how to apply make-up and other products.
Responding to new channel preferences In addition, the most successful retailers will offer customers new ways to purchase their products. Social media, for example, is becoming an increasingly important shopping platform. Increasing numbers of shoppers are using channels such as Instagram to research and compare purchases, but there is also a growing demand to be able to use social media to transact.
Accenture’s research suggests that 15% of consumers plan to shop directly through social media sites this holiday, almost twice as many as the eight percent who bought this way in 2017. This makes sense: as shoppers make greater use of social media to identify the products they want to buy, they do not want to have to go elsewhere online (or even offline) to complete their purchases.
The analytics challenge We can expect even more nuances around consumer behavior to emerge over time. In turn, retailers that lack the means to understand what motivates and inspires their customers risk being left behind by rivals that can remain relevant.
Data and analytics tools are a big part of the answer here: they provide the means by which retailers can transition from focusing on products to making truly consumer-centric decisions. Such tools offer retailers the opportunity to build a more detailed picture of their customers than ever before: who their most valuable shoppers are, what these individuals want to buy and how they want to buy it, what tempts them into stores or to make purchases online, and, just as importantly, what turns them off.
Smart retailers are therefore investing heavily in data and analytics. They’re collecting more customer data, both from their own interactions with shoppers and from external sources, including social media. And they’re investing in tools that enable them to see the patterns in their data much more clearly. These analytics technologies provide not only historic explanations of why sales rose or fell, but also predictive insights about the impact of a different customer offer – and even prescriptive intelligence that helps retailers decide which course of action to take.
Conclusion: Getting ready for future seasons Using the forensic techniques outlined above, proactive retailers can respond to consumers’ fast-changing needs and views in real time – and even anticipate their next moves. Doing so will enable them to secure a growing share of the customer wallet, both in this holiday season and in the years to come.
Jill Standish is senior managing director and head of Accenture’s retail practice.