Jamie Merrick, Head of Industry Insights, Demandware, explores how disruptive economies are drastically changing consumers’ behaviour.
THE OVERWHELMING force of the internet and global corporations has broken down geographic barriers and created a homogenised market of global brands, single currencies and common languages. Disruptive forces, from greater smartphone adoption to ubiquitous high-speed internet and new platforms for peer-to-peer engagement, have combined to create a new age of consumerism that includes diverse social tribes, proliferating networks and channels.
Today’s consumers are digital natives that have grown-up operating in a portable, digital world. They are very comfortable with international markets and our recent survey of 7,000 millennials in the UK, US, Australia, China, France, Germany and the Nordics revealed that over half (57%) don’t care which country they shop from.
Armed with ubiquitous high-speed wireless internet and powerful smartphones, connected consumers have unlimited access to knowledge and power. However, this also means that consumers are dictating the terms of their engagement with brands and retailers so commerce needs to be everywhere. As messaging platforms, connected devices, shared economy applications, and virtual reality combine, then the role of each channel will be to provide a seamless entry and exit point as part of a unified shopping experience.
Driven by greater smartphone adoption, the associated app economy, one-click shopping and next-day delivery, today’s consumers demand immediacy. Our global research showed that the top two factors that encourage loyalty among millennials across the world are having the lowest prices (68%) and offering the fastest delivery (60%). Delivery speed is especially important in Germany (65%), the Nordics (67%) and Australia (63%).
To fulfil consumers desire for immediacy and successfully compete against the likes of Amazon Now that offers same-day delivery, retailers are increasingly leveraging stores as fulfilment centres. In the future, we can expect providers that use new technology developments, such as self-driving cars, to emerge and offer last-mile fulfilment services at speed. It’s this ability to react to the fast-paced market and be agile in their operations that will determine which retailers ultimately succeed.
With the rise of social media and messaging platforms, today’s consumers value communication, presenting retailers with an opportunity to build a large and engaged audience. For example, some retailers are already capitalising on the engagement aspect of messaging and using the value of real-time chats with actual human beings to help reduce abandoned carts. Nordstrom’s TextStyle is a messaging medium that puts customers in direct contact with a sales associate during the purchasing decision, and applications like China’s WeChat provide an integrated ecosystem of messaging, ecommerce and mobile payments.
In addition, while millennials are subject to an incredibly diverse range of influences, the rise of peer-to-peer engagement platforms means friends and peers are valued over professional reviewers and celebrities. Globally the research showed that millennials were marginally less inclined to be loyal to companies that have good reviews and recommendations made about them (43%).
However, in some countries, such as Germany (52%) and China (51%), millennials were found to be more inclined to be loyal. Those retailers that establish best practices and strategies for addressing each messaging and social channel will be among the early winners in an increasingly distributed commerce landscape.
The direct, linear relationship that retailers previously had via physical stores and traditional ecommerce is yielding to a more erratic and uncontrolled environment. With technology lowering the barrier to entry to new suppliers, new services and new products, there is simply more choice and consumers are embracing it. Take Uber and Airbnb as examples. These two technology unicorns have become the poster children for digital disruption. Both have found a way of using technology to deliver a better service available at a lower cost and with a minimum amount of capital, replacing traditional taxis and hotel chains.
Increasingly, commerce will be embedded into multiple engagement platforms as part of a unified shopping experience – one that combines stores, online, social media and apps to offer a unique experience. However, the expansion of commerce beyond traditional digital channels is creating a new frontier in retail. To succeed, in a distributed commerce environment, retailers need agile operations that equip them with the scalability to extend commerce to multiple channels. Only then is it possible to break down the barriers between channels and geographies to make everything accessible to the consumer on their term as part of a unique brand experience.