The National Retail Federation (NRF) recently teamed with data science leader IBM to study global consumer shopping trends, which the researchers said have fundamentally changed. The biggest change to shopping behavior is that consumers are “always on.”
The days of planned shopping trips to a favorite store are almost gone. The report says consumers are far more apt to shop whenever and wherever the mood strikes. The report said 70% of respondents say they shop in so-called “micro-moments,” and 35% do so at least weekly.
“Thanks to mobile technology and social media, consumers have been rewired as it pertains to shopping, and it may usher in one of the industry’s biggest shifts in consumer behavior,” the report states.
Consumers are highly informed on price, ingredients, delivery options, production methods and even brand missions made possible by the prevalence of social media, growth of mobile technology and proliferation of e-commerce and digitally native retailers. Aside from being able to shop anytime, anywhere or any way they want, consumers are also driven by micro-needs that reveal their desires to know more about brands and those that closely align with their own values.
The researchers said it is important for brands to recognize this fundamental shift in consumer expectations that have moved from price and quality competitiveness to include other qualities such as certified organic, environmentally friendly and sustainably sourced.
“More than 70% of respondents said they are looking for specific attributes that are important to them when choosing a brand,” the report states.
The report found 81% of respondents belong to one of the two shopper groups in the report, with 41% wanting good value and 40% wanting to support brands and services that align with their values.
The value-driven consumers want to ensure they are getting their money’s worth and are most likely to select brands based on price and convenience. This group is the most unlikely to switch to brands because of sustainability or other environmental concerns. IBM said the highest concentration of these consumers is found in North America, Northern Europe, Japan, Korea and China. The primary reason these consumers have this stance is linked to their incomes, which for 50% is at or below middle-income levels, the report states.
For the value-driven consumers, the importance of brand trust indexed “moderately high,” convenience indexed “high,” whereas sustainability was only “somewhat important.”
The fast-growing group of “purpose-driven” consumers put brand trust high on the list. Convenience is also high, as is the importance of sustainability. The purpose-driven group is also willing to pay a premium for products and services that align with their values.
“Purpose-driven consumers are also willing to change their shopping habits to reduce environmental impact and care about issues such as sustainability and recycling. Europe and parts of Southeast Asia and Latin America have the biggest representation of this group. Slightly over half (51%) of this group report middle or above middle income,” the report states.
The brand-driven consumer group makes up just 13% of the respondents. This group trusts brands and are loyal, regardless of price. Aside from the high demand of trust, this group rates convenience and sustainability high on their list of importance. Compared to other groups, the brand-driven group has the highest average income, and they shop and spend more.
“Brand-driven consumers want it all and are highly engaged in shopping. And they are willing to pay a premium for assortments that fit their lifestyle. India, parts of the Middle East, and Latin America have the highest concentration of them. Overall, 37% of brand-driven consumers say they have above middle income,” the report states.
The smallest group (6%) are consumers who are product-driven shoppers focused on product functionality. These consumers are less engaged in shopping overall and are not tied to any brand or product attribute, according to the report.
“Product-driven consumers rely on research for nearly every new product purchase. However, it’s not just about price; these consumers are willing to pay a premium for transparency that vouches for product authenticity. Just over half of them (51%) identify as earning below middle income,” researchers noted.
IBM also looked at how the shopper group preferences vary across several categories from apparel to grocery, personal care, beauty, and furniture and home decor. The researchers found value-driven consumers are most prevalent (46%) when shopping for apparel and fashion. This group is less focused (35%) on value when shopping for food and beverage. Four out of 10 in this group sought value first when shopping for personal care or beauty products and 44% were also value-focused when shopping for home goods.
Purpose-driven shoppers led in the food and beverage category at 44% and also tied with the value-driven consumers at 40% in the beauty and personal care categories. In the furniture and home category, 38% of the shoppers identified with purpose-driven. The two categories make up a lion’s share of the shoppers, and researchers said the value-driven consumers appear to be more conscientious about what they eat as opposed to what they wear.
With sustainability being important to a majority (60%) of survey respondents, researchers agree this has likely reached a tipping point for brands and retailers. Nearly six in 10 consumers surveyed are willing to change shopping habits to reduce environmental impact. Nearly eight in 10 respondents indicate sustainability is important. And for those who say it is very/extremely important, over 70% would pay a premium of 35% on average for brands that are sustainable and environmentally responsible.
“Retail and consumer products companies around the world have been increasing their focus on sustainability over the past five years. Since 2014, global sustainable and environmentally responsible investment is up 68% and now tops $30 trillion [U.S. dollars],” researchers said.
Consumers are far more aware of global environmental issues and are reacting by changing to brands that seem to be the most transparent about sustainability goals and accomplishments.
More than 70% said it is at least moderately important that brands offer “clean products” and are sustainable and environmentally responsible. While Millennials are leading the charge in sustainability awareness, every age group in the report indicates sustainability, environmental, and/or personal wellness attributes are significant considerations in selecting brands.
“While Gen Z cites health and wellness as their top priority, clean products are most important for the other groups. Interestingly, natural/organic attributes are of lower importance across age groups,” researchers said.
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