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.
Toys ‘R’ Us rejects bid from toy mogul
A last-minute bid by a billionaire toy tycoon to keep some Toys “R” Us stores up and running has fallen flat.
The retailer rejected an offer from Isaac Larian, founder and CEO of toy maker MGA Entertainment Inc., to buy 274 U.S. Toys “R” Us stores, reported CNN Money. The $675 million bid reportedly was too low.
The funds to purchase the stores would have come from Larian’s own coffers, additional investors and bank financing, the privately held MGA stated.
Larian previously had started a campaign on the crowdfunding website GoFundMe to raise $1 billion to save the bankrupt chain. The longshot effort brought in pledges for about $200 million.
Toys “R” Us is in the process of liquidating its U.S. operations.
Retail Predictions: Six Big Trends to Watch in Blended Commerce
It’s no longer about bricks-and-mortar versus digital. When it comes to the changing retail landscape, it’s all about where they meet. As we move into 2018, it’s time to look ahead and predict what’s in store, so to speak, as the retail experience continues its evolution to meet a new world of customer needs:
1. Fulfillment Options Expand to a Full Menu. Connected-store programs that enable customers to “click and collect” — shop and pay ahead and collect items either in-store or via home delivery — will accelerate as more retailers pilot, roll out and expand offerings. Many retailers will be launching V2 (version two) of these programs and offering customers many different options. On the rise: Same-hour pickup and same-day delivery. Retailers will develop new programs so that online and mobile customers shop from local inventories, tying it to a service that delivers to the doorstep.
2. Amazon’s Physical Retail Strategy Will Reveal Itself. The juggernaut’s acquisition of Whole Foods was one of the top business stories of 2017. So far, we’ve seen Amazon taking its price leadership into the grocery field — lowering prices on many items at Whole Foods and driving traffic to stores. Over the next 12 months, we’ll see more of Amazon’s grocery strategy play out as it expands grocery delivery services and lights up Whole Foods locations as mini fulfillment points for other goods sold on Amazon.
Next up: We wouldn’t be surprised to see another big Amazon acquisition in 2018 – this time a retailer, possibly in apparel. The rationale: Both grocery and apparel fit well in Amazon’s overarching strategy to drive sales and customer loyalty in high-frequency retail.
3. Retailer of the Future Will Look a Lot Like Wal-Azon. We’re not there yet, but if you look at Amazon with a much bigger physical footprint and Walmart with a much greater digital footprint you’ll get a glimpse of the mass retailer of the future. In the model that is emerging, digital matters but so do stores.
Walmart is a great example of an aggressive response by a retailer once it realized the urgency of the Amazon threat. The company’s acquisition of Jet and the Jet team helped unlock the path forward. Now, Walmart offers in-store and curbside pickup points and continues to expand and refine them. It is tightly connecting its online property to store locations and offering many different options for customers.
4. Retailers Respond with Product Leadership/Innovation. Consider it the retail equivalent of the Netflix/Hulu/HBO/Amazon Video media-battle royale. In the same way that entertainment platforms compete for consumer mindshare — and market share — with distinctive, one-of-a-kind exclusive programming, we can expect to see the same from visionary, creative retailers. Will see more retailers operate in the style of Zara and H&M, trading in lines and brands that are not being sold through broader retail marketplaces.
Also in 2018, expect to see more store-within-a-store concepts like the Sephora/J.C. Penney partnership as retailers work to offer up traffic-driving product lines with partners.
5. Servicing Traditional and Digital Shoppers. Just as it’s not a great experience to wait in a fast-food line and see someone who has ordered ahead skip the line and grab their food, retailers in 2018 will be experimenting with how to get order-ahead/pick-up in-store just right for all customers. Initially, the focus is on running these programs effectively — getting the logistics down for in-store or curbside pickup. Then, it becomes how to answer the Starbucks question of who gets served first in an order-ahead world.
But also in 2018, retailers with more mature programs will be getting to the next order of business – working on revenue-enhancing strategies to attach sales and reward in-store trips for order-ahead customers.
6. Building a Better Box. Finally, physical stores themselves are beginning to take on new shapes. Consider the parallel trend emerging in restaurants: If a particular restaurant functions primarily as a kitchen for pickup, it doesn’t need to look the same as a sit-down location. In retail, if a store is a convenient pickup or service location, it doesn’t need to have the same footprint as a big, mainline store in the chain.
The Bottom Line
As we turn the calendar to 2018 and enter a new chapter in blended retail, one part of the plot holds up in any era: Classic retailers and brands can win out by connecting with consumers in ways that offer value, convenience and confidence in the experience.
Jaron Waldman is CEO of Curbside, a Silicon Valley startup that connects stores and restaurants with mobile customers. He previously founded Placebase, a location technology company that was acquired by Apple in 2009. Curbside works with leading retailers such as CVS, Nordstrom and Sephora and leading restaurant chains such as Chipotle, Pizza Hut and Boston Market to scale their order ahead programs.