Fulfilling Millennialsâ Retail Expectations Could Be A Few Clicks Away! | DMA

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Fulfilling Millennialsâ Retail Expectations Could Be A Few Clicks Away!


Broadly categorised as 18-34 years of age, millennials are revolutionising the shopping experience and forcing retailers to re-evaluate how they attract and communicate with consumers. Tech-savvy millennials are redefining purchasing habits. They want to interact with brands through digital channels. Traditional marketing methods such as brochures and in-store advertisements might have appealed to the older generation, but millennials are looking for a more participative experience with brands often casually engaging with them on social platforms such as Facebook and Twitter. Deloitte’s research, “Navigating the new digital divide”, 2015 revealed that 47% of all millennial consumers in the UK use social media during their shopping journey, compared to 19% of non-millennials. This generation is plugged into mobile and social shopping, disrupting historically traditional shopping patterns and the market has yet to capitalise on these habits.

Millennials online shopping behaviours

Having an adequate online presence is the first step retailers must take. This means a website that is not slow, carries content that is short, fresh and informative and attractive to a younger audience and products that are available to buy (i.e. in stock). Furthermore, to ensure that they are attracting millennials effectively, they need to change the way in which they engage this age group. Below are eight key considerations for retailers to understand Generation Y’s shopping habits.

1. Millennials are using their smartphones to shop

In order to attract and sustain shoppers and particularly millennials, it is imperative that a retailer has an online presence that is compatible with handheld devices. According to Ofcom’s 2016 Communications Market Report, around seven in ten of all adults in the UK claim to own a smartphone – more than any other connected device. Furthermore, Accenture’s 2016 survey of global consumers revealed that millennials were most likely to use smartphones for shopping this year.

2. Peer-to-peer recommendations are key:

Millennials are using social media as their primary source to learn about products, deals and shopping news. Peer recommendations are hugely important to them. Many will search for reviews on sites such as Google review and Feefo before purchasing a product. According to a survey conducted by Cloud Commerce software provider, Demandware in January 2016, 77% of consumers between the ages of 18-34 in the UK are more likely to buy a product if they have seen it shared, “liked” or “favourited” on social media platforms. Facebook came in as the most influential social media website, with 59% of Millennials in the UK claiming to buy items they had seen on the site. Youtube came in second at 41%.

Unboxing videos on Youtube have become hugely popular with millennials and even more so with the younger Generation Z. These videos allow consumers to unbox a product online and share a demonstration with millions of other viewers without the adulterations advertisers add to the product. Unboxing videos experienced a growth of about 57% in 2014 alone. A Google consumers survey in 2014 reported that in every five consumers, one used unboxing videos as a guide to the purchase of products. Similarly, millennials trust bloggers and vloggers to recommend products from an independent and uncompromised point of view. Millennials are leaders in “word-of-mouth” recommendations and are therefore valuable brand advocates, arguably the most effective marketing tool a brand can have.

3. Millennials like to compare prices before they buy:

Pricing is the most important consideration to millennials above quality, brand, store and availability. This is due to the simple fact that they have the ability to instantly access online price comparison sites like Google and Amazon, even whilst they are in-store, and save on almost anything they buy. Indeed, PwC’s Total Global Retail research in 2016 showed that 25% of online shoppers compared prices using their mobiles in-store. To compete, retailers need either to offer competitive pricing or more value than customers can get on Amazon, Google or other large retail outlets.

4. Millennials prefer to use their own devices for assistance in-store:

Millennials do not choose to ask for help from a representative in-store. Unlike baby boomers, who prefer traditional support channels, like phone and sales assistants, millennials have grown used to the way technology can reduce the need for human gatekeepers to ensure accuracy often engaging with the store through live chat on their mobile devices rather than picking up the telephone. Although this clearly does not mean that sales assistants should be done away with, it does mean that retailers need to have a sufficiently good online presence and connectivity in-store. Indeed, despite the growth of e-commerce and mobile apps, the majority of sales are still generated in-store (88%) according to Deloitte LLP’s “Digital influence in UK retail 2014 survey of 2,043 UK consumers, but over half of consumers want to use digital devices in-store. Therefore the retail strategy must focus on how to support digital in-store.

5. Millennials do all their product research online

As with many consumers, 96% of millennials prefer to visit bricks-and-mortar locations when buying, particularly items they want to test. But this does not mean they’ll buy it in the shop, with many getting a feel for a product before buying it online. Conversely, many consumers have already searched online and come in store to test and purchase the product with no intention of browsing further. The point here is that bricks-and-mortar shops and online shopping are complimentary and retailers should ensure that they offer a holistic shopping experience to customers combining the online and in-store experiences.

6. Millennials like loyalty programs

According to Loyalive, UK Loyalty stats July 2015, 69% of consumers in the UK say rewards make them more likely to shop at a particular retailer. Millennials are no different. Traditionally defined as brand promiscuous, recent research by the Direct Marketing Association contradicts this somewhat, showing that 46% of 16-24-year-olds are actively loyal to brands. However, loyalty cards are not enough. Indeed, half of UK consumers believe it takes too long to redeem points (Loyalive, 2015). Retailers need to work harder, taking the loyalty schemes online. They should personalise their loyalty schemes, contacting customers at appropriate intervals with offers that are of interest to them. Similarly, loyalty schemes need to be friction-free, i.e. there should be no need for a physical card at all. App-based loyalty schemes are still in their infancy but with 30% of shoppers forgetting to bring their loyalty cards with them when they shop (Loyalive, 2015), it is a no brainer that the next move must be digital.

7. Millennials want to choose delivery options:

Millennials are happy to pay for the convenience of delivery when they want it. This explains the success of schemes such as Amazon Prime Now which allows delivery within an hour at an annual cost and couriers such as shutl and On the dot who can deliver in one-hour time slots enabling customers to choose when they want to receive their goods. Busy lives and the desire for instant gratification has caused a surge in online shopping, click-and-collect and timed delivery slots. 75% of consumers interviewed by Retail Week in September 2015 said that delivery options influenced which retailers they chose to shop with. 65% of 25-34-year-olds surveyed said it was the most important factor. 91% of those surveyed liked time slots pioneered by grocers. In rural locations, 64% said they would shop online more if they had more control over delivery options. This compares to 79% of city dwellers. Retailers who do not offer flexible delivery options are immediately on the back foot in this competitive online world.

8. Millennials are the green generation:

Despite impulse buys and rapid spending habits, millennials put a lot of thought into the products they are buying. This generation is much more global and socially aware, preferring to buy products that are ethically sourced and authentic in culture. A 2015 Nielsen global online study found that millennials continue to be most willing to pay extra for sustainable offerings—almost three out of four respondents, up from approximately half in 2014. Retailers should consider their green credentials as well as marketing their corporate social responsibility efforts to millennials, engaging them and even asking them to join in.

But 18-34-year-olds aren’t the same

Although it is convenient to group 18-34-year-olds in the same category for market research purposes, the truth of the matter is that 18-year-olds are very different to 34-year-olds and so are their shopping habits. Whilst those at the younger end of the spectrum are more interested in shopping in speciality stores for specific items and apparel, the older Gen Y’er is more interested in home and garden ware and loyalty schemes. What is clear from the research is that despite the differences in the products they are buying, the way they are shopping online is very similar. Millennials know their technology and they expect the brands they shop at to know it too.

Millennials don’t like to be ignored

Marshal Cohen, chief industry analyst of market research company, The NPD Group, thinks reaching millennials requires laser-like focus. Millennials want to shop at places that market their products directly to them. If they feel a retailer is genuinely speaking directly to them, they will be more inclined to shop with them. Indeed, it would be extremely short-sighted to overlook them – there will be over 17 million millennials in the UK by 2019 and they already make up a quarter of the population. Born in the digital, on-demand era they are tech savvy and expect their favourite brands to keep up with them. They want their opinions to be heard and their habits to be taken into account. Not only do they want the digital shopping experience to be tailored to them, they want to be part of the success of the brand too. Increasingly retailers are using metrics such as the Net Promoter Score to understand consumers’ views of their brands and to act accordingly.

How millennials want to be communicated to

So how does a retailer communicate with a millennial and invite them to be part of this participative shopping journey? The key here is the balance. Communicating with customers will spring them into action, but talking at them and bombarding with deals and information not relevant to them will simply burn bridges. These digital natives want to communicate in ways that are convenient, flexible, and unobtrusive. They prefer to communicate with brands via SMS and social media – not apps, email, and phone calls according to research by Retail Week guide, in association with mobile engagement solutions specialist OpenMarket and based on exclusive consumer research of 1,000 people aged 18-34 years in the UK in 2016. When asked about whether they like to receive text messages from retailers, 38% of millennials said they do, and another 40% said they do in certain instances. In addition to SMS, today’s customers want brands to communicate with them through social media. A 2014 HubSpot study shows that 95% of millennials, 87% of Gen X’ers, and 70% of those between the ages of 45 and 60 expect brands to have a Facebook presence.

However, whilst consumers like SMS, there’s a fine line between what they consider normal and what they think is excessive. According to OpenMarket research, 25% of millennials said they would be happy to receive texts from retailers once every few months. That number drops to 22% for communication on a monthly basis. Finally, just 3% said they’d accept being contacted by text message once per day. The take-out here is don’t overdo it!

Similarly, there is a balance to be struck in what is communicated via SMS. When asked, millennials what they prefer retailers to text them about, more than half of respondents (52%) say order confirmation and shipping and delivery information. Click-and-collect is high on the list, too, with 31% citing in-store pick-ups.

Although SMS and social media are taking over, clearly there is still a place for other forms of communication such as email, but retailers need to understand millennials and strike a balance between the type, purpose and frequency of the communication.

Integrated digital and consumer strategy

Consumers are interacting with shops across various channels. 78% of consumers used digital devices for shopping-related activities before or during their most recent shopping trip (Deloitte, Digital influence in UK retail, 2015). Therefore, there is an expectation for retailers to provide an integrated and seamless shopping experience. E-commerce and brick-and-mortar stores cannot be seen as two separate entities. It has never been more important for retailers to integrate their digital and consumer strategies providing a more holistic shopping journey not only for millennials but for all customers.

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