Responding to Changing Trends in Consumer Behaviour

We are currently living through a new revolution – one that is driven by user-generated information as you can see by the plethora of Web 2.0 sites up in the following image. We’re talking about people engaging with each other’s content and improving the quality of collective knowledge about everything.

Informational and interactional connectivity is resulting in exponential increases in the speed at which ideas and behaviours are spreading, particularly through an age demographic, which is no longer confined to the 16 to 25's. Month on month we see the age demographics of social interaction expand as ecommerce takes hold and social networks increase their reach. Facebook’s user-base for example has already shifted from people in their 20’s up to 35 year olds as defacto within the last year alone, with parents and grandparents also now creating profiles. The tipping points for each age group and regional audience are being reached ever more quickly and the web is no longer just about the Millennial and Gen X demographics, but extends well into the Baby Boomers and beyond.

The overall size of penetration is soaring too. Universal McCann research shows that the UK alone has 17m active internet users, 1m of which have shared an opinion within their trusted networks about one or more of your products and brands. Trusted opinions are shown to be the top influence in consumers decision making process. Do you know what they’re saying about you? If you think this doesn’t apply to you, just go onto Google and type in your company’s name and complaints and reviews.

People of all ages are collaborating to avoid being exploited by corporations; socialising to ensure they get the best deals; and looking for brand and personal associations that provide the most social kudos.

Where brands get it right, the pay-offs are massive.

Addressing this revolution in social consumer behaviour is about developing 2-way engagement, primarily by maximising the reach of your engagement channels, by which I mean any channels through which you can interact with your customers in real time... A good example being your web presence.

The need for maximising the impact of your digital channel is reinforced by the fact that since competition in the digital space is non-local, rapidly expanding, and thus much greater than in the physical space; firms that are not part of the social conversation will struggle to compete as more people go online to beat the impact of the credit crunch.

The same applies for firms that are not leveraging their digital channels to learn how to improve their cross-channel experiences. Getting real-time feedback on how shoppers' expectations measure up against experience, through participating in social online conversation is one of the most valuable insights any company can get.

In short... by leveraging social media and the web!

Facing up to the Credit Crunch

Probably the most critical issue/trend facing Retailers right now is the Credit Crunch.

As you must know, the subprime mortgage crisis in 2007 has had a massive global financial impact. From a retail consumer perspective it seems however, that the recession effect still has some way to go. ONS figures for last month showed a rise of 1.2% in sales, although retailers are not convinced and the rise is being attributed to a number of reasons from massive price reductions to the high street being a “lagging indicator” to general volatility shown by the May surge and July drop.

Either way, the immediate impact is uncertainty. Lenders are uncertain about future sources and costs of funding, while consumers are unsure about how much further house prices will continue to decline, and whether or not widespread job losses and mortgage rate rises are really going to happen.

All expectation is that this is a recession that will deepen and the trend towards careful spending is going to put increasing pressure on retail margins. As it stands, the policy of reductions that retailers have employed to boost sales is seriously hitting profits. The John Lewis Partnership recently underlined this by announcing a 27% fall in first-half profits attributed mostly to price cuts and increased marketing spend.

Finally apart from the direct impact to profits discussed, the credit crunch is also severely impacting investors and share prices, and nervousness in the financial markets is making it harder to raise investment capital for new initiatives.

The effect of the global credit crunch on business and consumer spending thus means that retailers must look to innovate and create competitive advantage without the luxury of profit growth and flexible budgets. In short it means they need low cost / high benefit customer propositions that involve linking up existing assets to improve customer propositions rather than involving large spend on new systems, staff or channels.

6 Key Consumer and Retail Industry Trends For 2008 / 2009

Let’s start with a quick look at some of the key trends in consumer behaviour and the retail industry. I’ll pick out 3 each.

3 Deepening Trends in Consumer Behaviour:

1. Customers are becoming more demanding – the Web 2.0 revolution has provided a forum for sharing opinions to the point where consumers really do call the shots. They expect choice and convenience or will go elsewhere.
2. Social Media online is exploding – and is becoming a key vehicle for both strategic marketing and customer engagement.
3. Premium products and services still sell well and Green is becoming iconic – many of the less price sensitive consumers are still highly style and status conscious, and consumers are going to increasingly great lengths to boycott brands that have poor eco-credentials

Ok, so that’s 3 consumer trends. How about the Retail Industry in general?

3 Deepening Trends in the Retail Industry:

1. The credit crunch is getting worse – and negatively impacting retailer profits
2. The e-channel is still growing fast – online spending in July for example reached £4.8 billion, up 80% on last year to a new all-time high. Retailers are expecting a major shift to online this Christmas.
3. The leaders are merging channels – and providing seamless brand and customer experiences across them all. Consumers in return are becoming rapidly less tolerant of pricing, availability or service differentials online and offline.

Charteris' ARC Conference Presentation on Leveraging multi-channel Assets

We attended the ARC Retail Conference this morning and gave a breakfast briefing on Cross-Channel Retailing - see slides below.

The slides cover the 3 critical challenges that retailers are facing right now and how they could start addressing them by developing low cost, high benefit, customer propositions through leveraging the channel assets they already have. Here's the slides. The presentation is extremely visual so it should be easy to scan through quickly.

If you want to know more just drop us an email on info@charteris.com or contact as us as below and we'll be more than happy to have a chat.

ARC Conference Presentation - Leveraging Multi Channel Assets V1

View SlideShare presentation or Upload your own. (tags: social retail)

Enjoy!