Guest comment: Consumer trends and expectations in the global village shop

By Tarlok Teji

People around the world have changed and so too have their shopping habits. The information (or digital) age is a transforming Mega Trend, changing consumer habits and shopping patterns. The next wave of this digital transformation is upon us because the mobile phone is now the ‘screen of life’. We look at this screen now more than any other, such as the personal computer or television. Anywhere we go we take the essential items – wallet, keys and phone.

This is global behaviour that transcends time zones, geographical locations, cultural and political boundaries.

News and views are with us in seconds through blogs and tweets and we share likes and dislikes publicly and in private forums such as Facebook. This electronic ‘word of mouth’ recommendation is trusted more than any advertising done by the product manufacturer or retailer. The technology-enabled consumer today is savvy about what they trust and who they trust and is able to research and validate information on the move. Consequently, there has been an enormous shift in the balance of power to the consumer.

So what are the implications for retailers?

To reach the consumer the retailer must put them at the heart of everything they do and treat the consumer as a life-long customer – moving with the changing needs of the customer as the consumer changes through their life stages. Wherever they are, any time and any place, on the planet.

Not many retailers, ‘clicks’ or ‘bricks’ have grasped this concept.

Consumers are increasingly spending more through ecommerce channels and are happy to, for example, book flights and car insurance online. However, when it comes to consumer products the behaviour pattern becomes hesitant. It’s not surprising then that research shows online failure to complete research or transactions, with abandoned pages or abandoned baskets – running at 80%. Retailers are not reaching or satisfying their customers. This statistic is shameful and many chief executives do not even know what their abandoned basket rate is.

Our research shows that consumers will buy if it is convenient, simple and safe. Shopping online is a window to the world. Yet getting the product is still a difficult and anxious process for the consumer.

Starting with the order processing and payment stage of buying something online, what hidden costs appear to make the transaction unacceptable? For example, delivery costs and card charges are typically off putting. The checking out process requires numerous amounts of detail over a number of pages of forms and is it really safe to put your credit card details onto the website?

Many of us have learned not to put our bank and credit card statements into black bin bags and leave them on the street for collection. Instead we shred them to avoid anyone in our street or passer by stealing our financial information or identity. We avoid this risk, yet every day we are asked to put our details onto web pages if we want to buy something and do not realise that now millions of people could have access. The details may be sold to marketing companies or gotten via fraudulent access by hackers such as in the recent Sony saga. Although there are 3D security protocols that can make payment safer, not every retailer uses this and it is still a cumbersome process. I have to write down the password to then identify the 2nd, 5th and 9th digit asked for. If only this could be made simpler and more secure.

Getting the product that was ordered (not substituted) and delivered on time when convenient is still a problem. Even though order and collect has gained momentum, delivering the last 100 yards to the door step is full of challenge especially at peak times such as Christmas. Then we have the challenge of the returns process if the colour wasn’t quite the same as it looked on the screen or the sizing is different.

Having said all this, for the retailer the cost to serve is a lot less for online than operating stores. So retailers should start thinking hard about making changes as we bounce along the bottom of this recession into an era of permanent flat spend trend.

Unfortunately unless you are an only online retailer, the consumer view available to the retailer is complex and not integrated. So putting the customer at the heart of the business requires a fundamental change in the business model as well as internal organisation changes.

Most retailers today are still organised functionally and the customer is still someone to sell something rather than a lifelong loyal friend that sits at the heart of the business.

So to sum up, the world has changed. Consumers have changed their habits and shopping patterns – but have retailers really changed enough?

Tarlok Teji is a retail analyst at Manchester Business School.