Dismissing the notion that online may replace in-store entirely, the report shows that most consumers expect to have significant interactions with physical stores after the COVID pandemic subsides.
Gen Z and millennial shoppers are now more likely to order products directly from the brands, reveals a recent report.
More than two-thirds (68 per cent) of Gen Z and over half (58 per cent) of the millennials have ordered products directly from the brands over the past six months, compared to 41 per cent on average across all age groups. Only 37 per cent of Gen X and 21 per cent of boomer shoppers have ordered directly from a brand over the last six months.
For those who have bought directly from the brands, almost two thirds (60 per cent) cite a better buying experience as a reason for purchasing directly, and 59 per cent cite access to brand loyalty programs.
This is according to a new Capgemini Research Institute report, titled What Matters to Today’s Consumer, which reveals the far-reaching impact of the COVID pandemic on consumer behaviour and preferences.
In return for these benefits, the consumers are willing to share their data. Currently, almost half (45 per cent) of all shoppers say they are willing to share data on how they consume or use the products. More than a third (39 per cent) say they are willing to share personal data such as demographic information or product preferences. However, 54 per cent of all the shoppers say that offers, deals, and/or discounts would make it more likely for them to share their data directly with the brands.
Tim Bridges, global head of consumer goods and retail at Capgemini, said, “Younger consumers’ willingness to go straight to the brands when purchasing goods, presents a real opportunity for consumer product companies. This enables them to collect consumer data and helps create a more mature direct-to-consumer channel. Being data-powered enables the consumer product and retail organisations to translate supply and demand trends into intelligent decisions on where best to stock their products, customise products and services, and enhance customer experience.”
Online not likely to replace in-store shopping entirely
The surge in e-commerce over the last two years, due to safety concerns and the desire to avoid physical stores, has now plateaued. The notion that online may replace in-store entirely has been disproven, and the majority of consumers (72 per cent) expect to have significant interactions with physical stores after the pandemic subsides – exceeding pre-COVID numbers (60 per cent).
Globally, all age groups expect their level of in-store interactions post-pandemic to be higher than their online interactions. Boomers are the most likely to interact in-store (76 per cent), and Gen Z the least likely (66 per cent).
However, the nature of these interactions is changing, as the distinction between online and in-store continues to blur. For instance, post-pandemic, 22 per cent of the shoppers expect to have a high level of interactions with click-and-collect orders. This trend is the highest for the millennials (33 per cent) and the lowest for boomers (11 per cent).
Delivery and fulfilment services gain importance in certain segments
With convenience remaining a key priority for the consumers, delivery and fulfilment are increasingly being transformed from a cost centre to a growth driver for many organisations. In the health and beauty and grocery segments, the shoppers place greater importance on delivery and fulfilment, than in-store experiences. This is especially true for groceries shoppers across all age groups, where 42 per cent of the shoppers say that delivery and fulfilment are the most important service attributes.
The research also highlights that convenience of delivery is a major factor that can push the shoppers to try new and emerging models of shopping. Slightly less than half of the consumers (47 per cent), who have purchased products via subscription services, do so for the convenience of home delivery. Post-pandemic, 22 per cent of the shoppers expect to have a high level of interactions with click-and-collect orders (i.e., ordering online and picking up in-store or curbside), indicating an enduring desire to interact with physical stores.
However, the shoppers are less willing to pay a premium for fast delivery. Across all the shoppers, over three per cent of the total cost is the average they would be willing to pay for a two-hour delivery, down from over four per cent in 2019. While younger shoppers with children remain the most willing to pay a premium, the consumers increasingly expect fast delivery as a standard part of the customer experience.
Health and sustainability are top of mind for consumers
Health and sustainability look set to continue influencing consumer decisions going forward, and organisations should consider investment in empowering the customers to make informed choices around these, cites the report.
In November 2020, 70 per cent of the consumers said they’d be more cautious about cleanliness and personal health once the pandemic is over, and 63 per cent said sustainability will be more important, when deciding which retailers and brands to purchase from. These figures have remained stable in 2021, at 69 per cent and 60 per cent respectively.
Forty-four per cent of the consumers are willing to pay a premium for grocery products that have sustainable packaging. This is more pronounced amongst Gen Z (64 per cent) and the millennials (54 per cent), than older generations like boomers (30 per cent).
How brands and retailers can capitalise on the evolving consumer trends
To meet the evolving needs of today’s consumer, the report identifies four key actions for the brands and retailers to benefit from these underlying consumer trends:
1. Collect and analyse first-party consumer data to customise new products and services for specific customer segments.
2. Develop an omnichannel strategy that incorporates the roles of in-store, e-commerce, direct to consumer and marketplaces.
3. Reposition delivery and fulfilment services as a growth driver for customer experience.
4. Set pricing of sustainable products more competitively in line with consumer expectations.
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