Doom. Gloom. And an empty showroom.
That’s what will be left of High Street retail in a few years time if you believe the news headlines.
And while retailers might have every right to be weary – last year we saw the worst annual performance on record for the UK retail sector – it’s important to remember that this digitally-driven shift in consumer behavior is taking place on a global scale and there is a light at the end of the tunnel.
Recent advancements in digital technology have had a very real impact on our attitudes and expectations towards shopping, says Business Psychologist and Director of DH Consulting, Dannielle Haig.
We caught up with Haig to get our hands on some of her consumer psychology insights into the retail sector.
Experience is everything to modern consumers
Leading retailers are pulling out all the stops to attract modern consumers in-store – cinemas, basketball courts, nail salons, skateparks, workshops and classes, anything that is of interest to their target audience.
Haig explains the approach: “As consumers, we’re much more active in our pursuit of an “experience” as opposed to mindless spending.”
But that’s not to say “experience” is all about the glitz and glamour. According to a report by BRP, 63% of consumers will stop shopping with a brand after just one unsatisfactory experience – so your in-store customer experience has to be top-notch, too.
To create a better, more effective customer experience, there needs to be a strong element of human interaction, says Haig.
“Human interaction is key to the actual shopping experience for the in-store shopper” she points out. “Ensuring that store associates are well-trained and knowledgeable is fundamental.”
Personalization is where retailers can stand out
In simpler times, retailers could count their immediate competition with their fingers, yet in today’s increasingly digital world, the competition is endless.
“The mindset of the consumer has shifted with the increased power for comparison and international availability,” says Haig.
Technology has had an overwhelming impact on the way we shop, as well as our attitudes and expectations towards shopping, says Haig.
For instance, a study by BRP tells us that 65% of consumers use mobile devices to compare prices when inside stores.
“Consumers now expect an integration of online and in-store experiences, so they are one and the same.”
As sites like Amazon have proven time and time again, brick-and-mortar retailers can no longer compete on price alone. But where retailers can differentiate themselves is by creating a more personalized experience, says Haig.
“Traditional sales are no longer as effective as they once were. Modern consumers want personalized offers and to receive rewards for their loyalty to a brand.”
According to BRP, 64% of consumers are comfortable with retailers identifying them via their mobile devices when entering a store in exchange for a personalized experience.
There’s also a strong demand for more personalized in-store finance options, says Haig.
“To increase their appeal to Millennial shoppers, retailers are looking to widen the payment options available for all purchases, not just big-ticket items.”
Take the fintech bank Klarna’s “Shop now. Pay later.” payment method, as an example, which is available in stores like Adidas, H&M, JD Sports and TopShop as well as E-commerce sites like Asos and Boohoo.
Establishing trust in a season of doubt
The retail industry has been rocked by a number of high-profile scandals in recent years, from unethical supply chains through to unsustainable environmental policies – so there’s good reason why consumers are often skeptical to trust brands.
“Trust is fundamental to the psyche of the modern consumer,” says Haig. “Trusting that your brand will provide a good quality service or experience. Trusting that they will receive adequate after-sales care. Trusting the ethical standing of the product being purchased.”
“Trust is easily lost which is why it needs to be given a huge amount of attention,” she says. “The relationship between brand and customer must always be maintained and never taken for granted.”
Take the shift towards sustainability and ethical sourcing as an example: 40% of British shoppers now prefer companies that report their ethical standards, and this has a fundamental impact on whether or not these shoppers will do business with your brand.
Consumers are also more skeptical of influencer marketing stunts than previously thought. Using prominent social media personalities to promote your new products has become a popular channel for retail brands, but 77% of Gen Zers and 96% of Baby Boomers distrust influencers, according to a 2019 study by Oracle.
“The influence of influencers is not necessarily as powerful as previously believed,” says Haig. “Perhaps the $6.5billion industry is starting to tarnish.”
But it’s not so much the approach retailers should be weary of as it is the message, says Haig.
“Retailers need to align their marketing with the values of the brand in order to create authenticity, which in turn, incites a sense of trust. This trust increases the psychological attachment to retailers.”
“For example, if you’re using influencers that match your brand’s ethics or values, you’re creating an aligned marketing approach.”