Consumer behaviour - from tech to the tills

How is shopper behaviour changing and what factors inform consumer buying decisions? From in-store technology to loyalty schemes and weather patterns, we take a look at what brands need to bear in mind when planning their sales promotion activity.

Too much personalisation is creepy

1. 70% of UK shoppers would find it creepy if facial recognition technology displayed product recommendations based on their age and gender (Richrelevance, July 2015)

Yet the UK study, which surveyed UK consumers about their attitudes towards digital enhancements to the store shopping experience, also found that 72% of UK consumers find personalisation of product recommendations based on purchasing habits a ‘cool’ capability. It seems that there is a balance to be struck for brands and retailers to attract rather than repel their customers.

“While it’s always been a well-known fact that UK consumers are keen protectors of their privacy and personal space, we now have a clearer view into where they are increasingly embracing – and even expecting – tailored shopping services in the fast-changing world of retail,” said Diane Kegley, CMO of RichRelevance. 

“Personalisation in the form of facial recognition or personal greeting at the store entrance may not be welcome, but we’re seeing a trend of younger consumers who are open to a connected shopping experience—receiving recommendations delivered within their personal space like dressing rooms and smartphones, and allowing in-store tracking if it means getting a better deal.”

LOYALTY SCHEMES ENCOURAGE DATA SHARING

2. 76% OF UK CONSUMERS DO NOT WANT TO HAND OVER THEIR DATA TO A BUSINESS UNLESS IT HAS A ‘PROPER LOYALTY SCHEME’ (GI INSIGHT, JULY 2015)

The research shows that gaining customer insight through loyalty schemes is a powerful way of building stronger buyer relationships, and that the vast majority of consumers find real value in these programmes. The findings highlight the importance of loyalty schemes in gaining consumer confidence and trust, and the impact they can have on purchasing behaviour.

Andy Wood, managing director of GI Insight said, “In the age of big data and omni-channel customer engagement, a loyalty scheme is a highly sophisticated way of capturing customer data that also provides a built-in mechanism for applying the resulting insight in a logical and highly targeted way. Companies need to continuously collect fresh consumer data to provide value to their customers through well-timed promotions that reflect these consumers’ latest needs. A loyalty scheme does just that.”

ONLINE PROMOTIONS PROMOTE GREATER SPEND

3. RETAILER ONLINE PROMOTIONS ARE DIRECTLY IMPACTING THE BUYING HABITS OF 60% OF UK CONSUMERS (RAPIDCAMPAIGN, FEBRUARY 2015)

The Brands We Love v The Brands We Buy report suggests that promotions influence 28% of consumers to spend more, 27% to buy from retailers they would not normally choose, and 25% to make purchases they would otherwise not have made.

Marko Luhtala, CEO of RapidCampaign, says: “As a retailer, engaging your customers and encouraging them to continue down the path to making a purchase decision is crucial. Achieving this is not straightforward, but our research highlights the power of promotions in changing shopper behaviour and giving them a solid reason to buy. Well-crafted promotions make the purchase process more engaging and rewarding and can encourage the customer to take the next step towards making a purchase.”

A WEATHER MARKETING STRATEGY CAN INCREASE ROI

4. ALMOST 60% OF SHOPPERS CHANGE THEIR SHOPPING PATTERNS WHEN IT IS RAINING OR HOT (THE WEATHER CHANNEL, 2015)

When it’s raining, a third of shoppers shop less, while one in eight shop more – but in covered shopping centres rather than high streets – while 16% of shoppers say they switch to online when it rains. As Andy Street, managing director of John Lewis said in October 2014, “weather has a greater effect [on sales] than economic numbers, we’ve known that forever”.

Ross Webster, managing director of international sales at The Weather Channel wrote recently, “More and more brands are developing weather marketing strategies in order to manage environment factors beyond their control. The concept of using historical and forecast weather data combined with industry-leading technology and analytics to really understand consumer behaviour delivers results.”

He believes that retail brands need to ensure they are delivering contextually relevant, targeted advertising messages to drive marketing effectiveness, reduce campaign wastage and boost ROI. "Even the most minor changes in weather can affect consumer buying habits, so brands that are able to adapt their commercial message in real-time and at a hyper-local level will remain ahead of the game".

SHOPPERS WANT FASTER REWARDS

5. 54% OF UK CONSUMERS BELIEVE IT TAKES TOO LONG TO EARN REWARDS WITH LOYALTY SCHEMES (GRASS ROOTS GROUP, FEBRUARY 2015)

The research also found that 27% of people stop using reward programmes because of the length of time required to receive any benefits, with 33% of respondents expecting to receive significant rewards from a loyalty programme within a month of signing up. A further 45% are prepared to wait between one and three months.

Adam Goran, divisional director of customer engagement at Grass Roots Group said, “Customer loyalty schemes hold a lot of value to both brands and their customers. Brands have already done the hard work by earning customer loyalty, why then do so many risk losing their customers by not keeping them engaged throughout the entire loyalty lifecycle?

“Customers want, and expect, to be contacted by their loyalty scheme providers and if approached in the right way at the right time, they will become true advocates and not just occasional shoppers. If brands fail to capitalise on this and don’t engage effectively with their customers between the times where they spend and save their rewards, they will find it increasingly difficult to hold on to loyal customers.”

OFFERS ARE CRUCIAL AT CHRISTMAS

6. OVER THREE QUARTERS (85%) OF SHOPPERS PLANNED TO USE A PROMOTIONAL OFFER WHEN CARRYING OUT THEIR GROCERY SHOPPING LAST CHRISTMAS (VALASSIS, DECEMBER 2014)

The survey revealed that more people were looking for promotional offers last Christmas than in 2013, with two thirds (67%) of shoppers citing the cost of living as the main driver of this behaviour. Almost half of shoppers (49%) planned to use three or more promotional offers when doing their Christmas grocery shopping.

Charles D’Oyly, managing director of Valassis Limited, said, “Such is the pull of promotions that supermarket loyalty tends to dwindle in the face of securing a good deal. Price triumphs over quality with only 21% shoppers saying that quality is more important [in 2014] – this compares to 49% in 2013.”

WEARABLE TECH WILL INFLUENCE FUTURE BUYING DECISIONS

7. MORE THAN FOUR IN 10 (43%) SHOPPERS COULD ENVISAGE USING WEARABLE TECHNOLOGY DEVICES IN THE FUTURE, SUCH AS SMART GLASSES AND SMART WATCHES, TO SHOP FOR FOOD AND GROCERIES (IDG, NOVEMBER 2014)

On the food and grocery front, six in 10 (62% of) shoppers also said they would be interested in receiving special offers in-store via their wearable device, with 61% interested in using it to redeem or collect loyalty points.

As well as wearable gadgets, the report suggests that shoppers would be keen to use their smartphones when grocery shopping, particularly if it enabled them to stick to a budget and search out the best deals. Joanne Denney-Finch, IGD chief executive, said: “Savvy shopping tactics are now the norm, which has enormous implications for any upcoming digital technology that can tap into this trend.

"We are operating in an increasingly multichannel environment, with half of shoppers now believing it’s more convenient to shop around and use different formats for their grocery shopping – including digital and online.” She added that the food and grocery industry has an enormous opportunity to take the lead in this field “by ensuring we are creating innovative, practical uses for mobile and wearable technology that will help to make life as easy as possible for shoppers.”

PLACE PROMOTIONS AT THE TILL IN CONVENIENCE STORES

8. 18% OF SHOPPERS SAY THEY BOUGHT AN ITEM THEY HADN’T INTENDED TO BUY WHEN VISITING A CONVENIENCE STORE (HIM, JUNE 2015)

The research found that the level of impulse purchasing in convenience stores is at a five year high, up from 15% last year and 14% in 2013.

Interrupting shopping behaviour in a convenience store is a challenge, with three out of four shoppers wanting to get in and out as quickly as possible. This results in 42% failing to notice any communications or signage in-store.

The research shows that the number one driver of impulse purchasing is promotions. This is not just in terms of cost saving, but through the focus and visibility given to promotional products. Many retailers offer cross category promotions to drive cross category impulse purchases. One key area which retailers and suppliers shouldn’t ignore when planning their promotional activity is the till and queue area. One in ten impulse shoppers pick up the product from this area of the shop, while one in five shoppers only visit this area when in-store.

OFFER A JOINED-UP CUSTOMER EXPERIENCE

9. 69% OF THE UK POPULATION WHO OWN SMARTPHONES IN THE 18-36 AGE GROUP HAVE ‘WEBROOMED’ – RESEARCHING ITEMS ONLINE AND THEN PURCHASING IN STORE (MERCHANT WAREHOUSE, MAY 2015)

‘Showrooming’ – where customers touch, feel and perhaps try on a product in-store but ultimately make the purchase online – has long been cited as a threat to retailers, but the rise of ‘webrooming’ reinforces the need for retailers to create a seamless customer experience across every touch point. As Andrew Saville, head of sales (retail) at Experian wrote in his blog recently, “Retailers need to run programmes that expand consumers’ access to information online, while retaining some control over the customer journey by emphasising offline stores as the customer’s potential final destination.”

Saville added that obstacles shouldn’t be put in the way to make it difficult for web visitors to purchase online: “The power lies with the customer – you’re just trying to make it easier for them. Remove all the silos – siloed processes and departments are anathema to creating seamless customer experiences. Operations, marketing, sales and service should be considered one team in order to work towards a single goal – a joined up seamless customer experience.”

MUMS ARE OPEN TO INFLUENCE WHEN SUPERMARKET SHOPPING

10. NEARLY HALF OF MUMS (49%) WRITE A SHOPPING LIST, BUT 61% OF THESE REMAIN FLEXIBLE OVER WHAT THEY BUY (STARCOM MEDIAVEST GROUP/MUMSNET, OCTOBER 2014)

The research concludes that these mums are more available for live brand engagements, meaning supermarkets have the potential to communicate and influence shoppers through online, mobile and messaging, particularly during the top-up shop.

From the research, seven types of shoppers were defined to identify the best approach for supermarkets to communicate with each of their customers and build loyalty:

• Family Followers – 22% of Mumsnet shoppers. The most important segment due to heavy family influence
• Brand Loyalists – 7%. More than two thirds buy branded products
• Utterly Organised – 23%. Always use shopping lists to plan their weekly meals
• Super Savers – 13%. Big in-store and online savers who stick to lists and own brand products
• Bargain Buyers – 9%. Take advantage of in-store and online saving where available
• Own Brand Champions – 12%. Over two thirds of purchases are own brand
• Spontaneous – 13%. Rarely use lists and tend to browse rather than plan their shop

BONUS STAT…

Bananas are the most common item bought on impulse by shoppers in the UK (Dunnhumby, June 2015)

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