Guy Chiswick is managing director at Webloyalty Northern Europe
Customers are firmly in the driving seat when it comes to selecting which retailers are most deserving of their attention and share of wallet. Faced with ever-increasing competition, this means brands have to work harder than ever to understand the purchasing journey, targeting shoppers in effective ways across multiple channels and meeting their needs so they’ll keep coming back.
With many factors at play, we were eager to gain insight into what is most likely to influence shoppers’ decisions. We conducted global research with over 5,000 consumers across 13 countries, and from this, we identified five key shopper profiles: Peer, Price, Practicality, Personalisation and Perk Motivated shoppers.
Although our 5Ps of Shopper Motivation report revealed that customers are most likely to be motivated by price, it quickly became clear that convenience and practicality have become hugely important factors when it comes to where to shop.
Almost a fifth (18%) of UK shoppers fall into the Practicality Motivated category; those who indicated being strongly or moderately influenced by ‘convenient store location’, ‘delivery’ and ‘returns policy’. In fact, this was the second biggest category after Price Motivated shoppers (52%).
This is also a trend on an international scale, although at varying levels of importance so multinational retailers should consider this when investing in convenience. There are more Practicality Motivated shoppers in Turkey (41%) and Brazil (34%) than Finland and Norway (12% respectively), for example.
Convenience leads to loyalty
Of course, expanding delivery options and increasing convenience to customers has been a key focus for retailers in recent years. With ecommerce taking off and creating new routes to market, customers demand – and expect – brands to make delivery and returns a seamless and stress-free process.
But now, it’s clear that convenience is not just a bonus for shoppers, but can be a make or break factor when it comes to choosing who they shop with. More than this: it can hold the key to boosting loyalty. Our research revealed that 74% of Practicality Motivated shoppers are likely to continue buying the products of their favourite retailer – making them the most loyal of any profile if appealed to successfully.
The brands already delivering
Retailers are recognising the importance of convenience and are implementing new services to appeal to them and drive loyalty. Here’s my pick of three brands leading the way:
- Shortly after the launch of its same-day delivery service in London, ASOS recently announced it would also be rolling it out in Leeds and Manchester. This is the latest step in the brand’s efforts to woo more shoppers with the convenience of its offering; in the last year alone the fashion giant claims to have introduced 200 related delivery improvements around the world.
- In the US, Walmart launched “Mobile Express Returns” in November, a simplified returns process available for items sold and shipped online, and for store purchases in early 2018. It works by customers scanning a QR code with their phone at a Mobile Express lane in a store’s customer-service area, and then handing over the package to a Walmart associate, who verifies the contents and completes the return. The retailer expects the whole process to take about 30 seconds – convenience indeed for shoppers who want to get on with their day.
- The grocery sector has been busy experimenting with faster, more convenient delivery options for the past few years. Sainsbury’s, for example, is expanding its one-hour delivery services to other parts of London – more than 70,000 postcodes have been added into their Chop Chop delivery service after a successful trial period in the parts of the city’s south-west.
Retailers feeling the pinch
But convenience for customers often comes at a cost to retailers. After all, someone has to foot the bill and shoppers are increasingly reluctant to pay for shipping. According to Feedviser, 85% of Amazon users hesitate to buy because of shipping charges.
It’s an industry-wide issue; nearly 70% of retail supply chain executives think the cost of fulfilling and delivering online orders erodes gross margins, and believe costs will only continue to rise in the near future, according to the Retail Industry Leaders Association. Furthermore, a GeekWire analysis showed that Amazon lost $7.2 billion from delivery last year.
To compensate for escalating delivery and fulfilment costs and to ease pressures, an increasing number of retailers are turning to other solutions such as secondary revenue streams. Our Beyond the Core Report, conducted in partnership with the BRC, revealed that two-thirds of UK retailers are using secondary revenue methods to tackle the margin squeeze. These methods include affiliate marketing and cross-selling services, as well as loyalty and reward programmes to further engage with customers.
A balancing act
Customer loyalty is hard to come by, so with our research revealing that convenience is now a key driving factor behind this, it’s important that retailers continue to place an emphasis on this in their business strategies.
However, the cost of delivering convenience is only going to increase as consumer appetite for online shopping grows in the coming years. Retailers should consider new, innovative ways to drive additional revenues to protect the bottom line and futureproof themselves in an increasingly competitive marketplace.