The future shopper: They live among us15 August 2014
This is a great article written by Jon Bird.
There is an alien creature that has arrived in our midst, with habits that would be completely unrecognisable to previous generations, and yet they are beginning to reshape the landscape – tearing down old institutions and building up entirely new ones.
I’m referring to the future shopper. And they live among us (in fact, you may even be one.)
As I wrote in last week’s column, we are living in an early beta version of what’s to come. Naturally shoppers reflect that reality. Not so very long ago, shopping was an event. People went shopping. My grandmother (and even my mother) would go to town to go shopping. Now, for the future shopper, retail is ever present. It’s a constant companion (and temptation) in the palms of their hands, 24 hours a day. Shoppers summon and the stores come running.
Always on, mobile enabled shopping is just one aspect of change. Anne Zybowski, VP retail insights at Kantar Retail, presented many more revealing facts about the future shopper at the Intel Futurecasting Summit in Portland, Oregon. (Zybowski’s observations were based in part of an ongoing Kantar Shopperscape study of 4000 US households. While it’s naturally US centric, the harbingers of change show up first in the world’s largest consumer economy.)
What they buy is changing
By 2020, Kantar estimates, every American household will spend $3 on services for every $1 on goods. Many of those services will form part of ‘the sharing economy’, or be experiences (such as travel) that shoppers increasingly favor over physical stuff. How they shop is changing
Nearly one in five US households are now Amazon Prime members, and this number has almost doubled from 11.2 million to 21.5 million in just two years. What’s Prime? It’s a service for which you pay $99 per year in order to get free two day shipping on a huge amount of goods. (Customers also receive a host of other benefits, like free video streaming and access to Kindle books, but it’s the free shipping that is the key trigger for joining.)
Over time, Kantar’s research says, Prime becomes more indispensable . Forty nine per cent of Prime members tend to check Amazon before shopping anywhere else. (I’ve noticed that trend in my own shopping habits. Just click and it comes. It’s so easy.)
At the same time that Amazon is attracting Prime members like filings to a magnet, the US shopper’s core store set is shrinking. The average number of retailers in a shopper’s portfolio has shrunk from 12.4 in 2007 to 10.7 today, and the core set (the absolute go to stores) has contracted from 5.8 to 5.0.
More and more, Amazon is at the centre, along with its traditional counterparts. Among Prime members, 30 per cent say they “shop some retail stores less often”.
Why the spend is changing.
As retailers know only too well, it’s becoming harder to persuade shoppers to part with their cash. Kantar’s view is that shoppers are actively limiting spending and their shopping behaviors, and customers want to “spend about the same, but get a lot more for it”.
That’s easier to do when information is transparent and accessible via a mobile device.
But the value equation is not just about price anymore. Convenience is king, along with immediacy, says Zybowski.
“Just because the store is there doesn’t mean it wins on convenience.” (Frightening thought for bricks and mortar retailers.)
So a pattern is emerging which will result in a fully fledged future shopper – one who aims to conserve cash at all costs; spends on services rather than goods; deals online with a preferred partner because it’s easier; reduces their store set to the bare minimum; and demands convenience and immediacy.
Tough customers? Absolutely. But for those (like Amazon) who have recognised where shoppers are heading, the future is absolutely bright.