With only a few holiday shopping days remaining, the retail industry is laying the groundwork for 2021. While there is optimism that brick-and-mortar restrictions may be permanently eased in the coming year, research suggests that consumer behavior has been changed for good. In order to see success, retailers will need to adjust their strategies to appeal to these new customer segments.
“There will be no return to the status quo,” said Natalie Berg, retail analyst and founder of NBK Retail. “The days of being everything to everyone are well and truly over: In order to find their tribe, retailers need to be bold about who they are and what they stand for.”
This concept of tribes has been furthered through new research by global payments company Klarna. Klarna surveyed 4,000 consumers across the U.S., Europe, the U.K. and Australia to find out how shopping behaviour has changed over the last year. Through its research, it has identified five key consumer groups for 2021.
Divided into Family Firsts, Aspirational Achievers, Here and Nows, Savvy Fashionistas and Conscious Consumers, the tribes refer to specific types of shoppers – who want different things from brands. If a business can identify its main shopper base, it can target strategy accordingly.
Klarna identified Family Firsts as those who prioritize shopping for others and home goods, with busy lifestyles that encourage the convenience of e-commerce. This segment was the most likely to be brand-indifferent (30%) and reported the highest increase in willingness to try new brands (55%). This presents an opportunity for retailers to expand customer acquisition efforts.
“Time is the most precious commodity for Family Firsts, who are juggling multiple roles and competing demands on their attention,” said Berg. “They don’t have patience for out-of-stocks or long delivery lead times, so retailers must ensure a frictionless e-commerce experience, with flexibility in both payment and fulfilment options, to cater for their needs.”
Aspirational Achievers and Savvy Fashionistas both value the ability to pay over time, but for differing reasons. Affluent shoppers who purchase investment pieces are likely to appreciate the option to schedule multiple payments, while trend-conscious consumers who want to maximize their budget are drawn to the option to pay in installments. Savvy Fashionistas reported flexible payment options would encourage them to shop regularly (33%) and buy more (35%).
Retailers catering to Here and Nows will want to consider investing in their social marketing and digital presence; the majority of this group (54%) are doing all or most of their shopping online. But despite being the most likely to use TV ads for inspiration (24%), Here and Nows also reported that they were the most likely to be deterred by poor personalisation (18%) and too many adverts or marketing emails (26%).
“Online retailers must bear in mind that product alone is no longer enough,” said Berg. “Retailers must move beyond the transactional nature of e-commerce and make the experience more engaging, immersive and hyper-personalised. Social commerce can bridge the gap between convenience and discovery, which Here and Nows are particularly craving in the absence of in-store shopping.”
The final group, Conscious Consumers, value sustainability and ethical manufacturing; trustworthiness and good reputation were more important to this group (42%) than any other. The majority also would be unlikely to shop anywhere that they felt wasn’t COVID-secure, suggesting that retailers should clearly broadcast their security protocols.
Despite these individual preferences, Klarna also found some consistencies in the expectations of the new consumer. Good value for many remains the most important concern for all consumers (67%); the next three priorities were promotions and deals (60%), a good reputation and trustworthiness (60%) and having a wide range of products available (58%).
“This year’s events have transformed the way we browse and buy, reinventing our relationships with brands and retailers and accelerating change at an unprecedented rate,” said Luke Griffiths, CCO at Klarna. “Merchants must keep a finger on the pulse of their customers wants and needs and adapt their products and service offers accordingly to build a connection with shoppers to drive loyalty and, ultimately, sales.”