To be bylined to John Taylor,co-CEO atretail finance specialistsDuologi.
Many brands have simply been unable to adapt and keep pace with rapidly changing customer demands. From outdated products which no longer have a place in today’s market (see: HMV) to a lacklustre online offering or poor in-store customer service, retailers are making errors of judgement that leave them struggling to stay relevant and – crucially – financially afloat.
Key amongst these challenges has been how to access and engage the millennial demographic – broadly defined as those born between 1986 and 2000. The benefits of this are obvious, considering that millennials now comprise more than a quarter of the UK’s population, bringing with them considerable spending power.
However, it’s well known that the millennial customer of today is notoriously budget-conscious, sceptical, and more tech-savvy than any generation to precede them, and engaging their attention and business can be famously challenging – as evidenced by Virgin Trains’ recent ill-conceived “#Avocard” fiasco.
Businesses that have been able to tap into and harness the power of millennials – for example Boohoo, which recently posted that it has doubled its year-on-year sales and profits- have seen considerable success.
So, how can retail businesses leverage these traits to capture the attention and affection of this key market sector? Let’s look at the various ways.
Experience is everything
For a generation which has grown up in the shadow of Amazon – with its rock-bottom prices, rapid delivery service and huge breadth of products – the high street (or indeed other online e-tailers) no longer represent a cost effective or convenient way to purchase. Brands need to provide something that Amazon cannot: a great experience.
This means enticing shoppers with points of difference that resonate with their needs and desires; an ‘Instagrammable’ location or a simple, free returns process that doesn’t take up time in their day. This will be key for customer retention and repeat business.
Social media offers an invaluable way to connect and drive brand awareness amongst this generation. The highly visual, content-rich nature of channels such as Instagram and Facebook provide a ready-made platform to inspire shoppers and lead them organically to purchase. Instagram’s new ‘shoppable’ social posts, for example, take customers from post to purchase with just two taps. Shopping via social media removes a number of pain-points on the customer buying journey, and could virtually eradicate shopping trolley abandonment; an issue which affects almost three quarters (74%) of online retail sales.
Research shows that millennials are less likely to be affected by traditional advertising methods, this becomes even more important in terms of brand loyalty. Authenticity is key; retailers should genuinely try to engage and connect with their customer – not preach, or attempt to aggressively sell, to them.
Whilst research clearly points to the rise in online and mobile shopping, this doesn’t mean that millennials are only purchasing via these channels; far from it. Online is important – but often only constitutes one part of the buying journey. In fact, a report by KPMG suggests that many millennials are far more fluid in this respect; researching online but going in-store to purchase (or vice-versa), and even using smartphones while in-store to compare pricing options. Retailers must therefore tailor every aspect of their offering to allow for this; providing an integrated, seamless experience – regardless of the channel.
Offering finance options
Millennials are often described as the generation of instant gratification, demanding information and services at the touch of a button – to be delivered within seconds. This extends to finances; with immediate bank transfers and contactless payments the norm in a fast-track generation. Rapid access to cash is paramount, so brands that can tailor their finance offering accordingly are far more likely to tap into this important customer base.
Point-of-sale finance provides a great way to do this, allowing shoppers to access the funds they need to purchase items within just a few hours, both online and in-store. A range of options, including 0% interest or buy now pay later, means that notoriously cash-strapped millennials can pay for items in a way that suits them – meaning they are more likely to be accepted for their desired credit amount. Indeed, a report by ID Analytics found that six in 10 millennials whose credit application was declined do not return to that retailer for at least 12 months, showing how central this flexibility can be to sales.
Brands that offer point-of-sale finance can expect to see a significant return; our research shows that sales could be boosted by up to 30% through the provision of at least one option.
Gen Z: the new frontier
Clearly, enticing the millennial generation to spend with your brand should be a vital part of business strategy in the coming years, with its considerable influence and spending power. However, it will also be important to look further ahead – to Generation Z, the next cohort of digitally savvy shoppers whose need for speed will be make-or-break for the UK retail market.
The term “adapt or die” has never been more apt for this era of retailing; we can no longer rest on our laurels and simply do what we always did. Staying ahead of trends will be critical – and shoppers will thank us for it.