Recent research from FreedomPay, a global payments technology company, and Retail Economics, a leading firm in the retail insight space, found that UK customers are spending over 28% more time this year searching and browsing for products online compared to the same time a year ago.
The study also finds that customers are using this extra ‘browsing’ time to not only search for good deals but also to do more due diligence on the products they are considering to make sure they are worth buying.
The idea that customers are exercising more caution is not a surprise when we consider the current macroeconomic environment and the pressures that higher interest rates and inflation have on personal and household budgets.
However, what’s interesting is that this extra browsing time is not evenly spread across age groups. It is particularly pronounced in shoppers under the age of 35 years old, half of which report that they are spending more time ‘browsing’ compared to last year – around six hours per week – which is more than double the amount of time spent browsing by those aged 55 years and older.
Again, a keen sense of caution among younger age groups makes sense when you consider other research sources that suggest that younger age groups are currently facing the biggest squeeze on their incomes and living standards.
However, the bad news for retail brands is that more time browsing online doesn’t automatically mean more sales or even the same level of sales as in previous years. In fact, FreedomPay and Retail Economics’ research suggests that online retail sales have fallen nearly 15% over the last year.
But it’s not all doom and gloom.
Despite the pressures on customers’ budgets, the research shows that personalisation still matters in customers’ minds, with nearly 55% of people reporting that they continue to value personalised offers and discounts when shopping. Further, the research finds that just over 30% of all retail purchases made by 18-35-year-olds can be attributed to personalised marketing.
So, what does effective personalisation look like in such a challenging economic environment?
Persado’s recently released 2nd annual Customer Motivation Report offers a valuable perspective. Using a class of generative AI called Motivation AI, Persado analyzed how customers responded to nearly 21 billion messages across more than 3,200 brand campaigns over the course of 2022.
Concerning retail, they found that campaigns and content that focused on conveying timelessness and versatility were the highest-performing campaigns in 2022. Conversely, campaigns that focused on ease and convenience, which would typically be expected to perform very well, were more likely to under-perform than over-perform in 2022.
Persado’s report goes on to predict that the themes of timeliness and versatility will continue to be high performers throughout 2023. It adds that the theme of quality is likely to make a strong showing too, as consumers look for well-made and durable products.
These findings chime with the FreedomPay and Retail Economics research and suggest that in order to deliver an engaging and personalised experience in the current climate, brands need to go beyond simply knowing a customer’s name and making suggestions and inferences based on their purchase history or digital behaviour. To stand out from the crowd, they must also understand their customers’ context and motivation.
By focusing on customers’ preferences, their emotional drivers, and the context in which they shop, brands can both deliver the personalised experience that their customers craze and drive sales, even in the face of economic and competitive challenges.
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