The increased cost of living and soaring interest rates have caused consumers to think twice before opening their wallets.
The post Revealed: The secret CX strategies to dominate in a downturn appeared first on Inside Retail Australia.
In the current state of retail, demand and conversion rates are steadily dropping among traditionalist shoppers.
At the same time, a small group with a New Economic Order (NEO) mindset seem untouchable by the economic state and is driving up to 70 per cent of discretionary spending in Australia. A groundbreaking, soon-to-be-published market insight report by Resonate CX unveils the pain points, drivers and preferences of these two consumer groups in Australia.
The increased cost of living and soaring interest rates have caused consumers to think twice before opening their wallets. Demand is falling, conversion rates are dropping, and customers are cautious. The pressure that inflation is currently putting on the retail sector is leaving an increasing number of retailers mercilessly squashed. According to AISIC, the number of insolvencies in the retail sector has doubled over the last two years. Retail is no longer for the faint-hearted.
Key to gaining conversions in emerging segments
The key to survival in this retail zero-sum game is to understand and tend to customers’ constantly evolving pain points, drivers and preferences. An example is the rise of the NEO mindset, which has been growing since the early 2000s.
According to social scientist Ross Honeywell, society is split into two groups of consumers with different mindsets: the Traditionalist and the NEO (New Economic Order). The traditionalists have a conservative attitude, are risk avert investors and price-sensitive consumers. They are drawn to good prices, features and functions. The NEO counterparts have a higher disposable income, are more progressive, and value quality, brand authenticity, and exceptional shopping experiences.
A market insight report by Resonate CX is called “The State of Brick-and-Mortar retail customers 2024” zooms in on the experience of shopping in physical stores, examining loyalty, brand power and what makes an exceptional in-store experience for the two groups. Early insights from the article reveal:
Growing basket size in a shrinking market
Not much has changed in the last few years when it comes to drivers that make consumers choose in-store shopping over online. Instant gratification is the main reason for customers in both traditionalists and NEOs to make purchases in-store. They want to get the product in their hands and start using it immediately. Not surprisingly, for price-sensitive traditionalists, avoiding shipping costs and the ability to try out a product are two other important factors that drive in-store purchases. Instead, NEOs are attracted to fun in-store shopping experiences, receiving staff assistance and supporting the local community to a much higher degree than traditionalists.
“Being sensory pleasant, with great customer service that isn’t pushy but available. And customer service at checkouts,” said one NEO customer
Apple is an example of a brand that caters to both these personas. The traditionalists would visit for the opportunity to touch, try and play around with a wide variety of Apple products in store (but would possibly turn down because of the hefty price tag). The many possibilities to interact with products is a calculated strategy by Apple, as it is proven that the more you touch a product, the more likely you are to buy it.
The NEOs would be drawn to the designed environments and the staff’s way of engaging and servicing customers. The “personalised “journey” that the staff takes customers on is one of the keys to Apple’s customer experience success. The community aspect of visiting an Apple store would be another highly appealing factor, for example, the spaces for coding classes, boardrooms for entrepreneurs, and events.
The hidden pitfalls that are costing you conversions
One thing that traditionalists and NEOs have in common are the three most important factors for leaving a physical store:
– Overpriced products.
– Inconvenient store layout.
– Difficulty finding products.
As expected, the main reason for traditionalists to close their wallets and leave a store is if they perceive the store has overpriced products. NEOs are slightly more affected by the physical environment and visual merchandising, ranking inconvenient store layouts and difficulty finding products as the biggest pains when visiting stores. “Good value. So good quality items at a reasonable price, great employees with great attitudes, clear and straightforward store layout with no aisle congestion,” said one ‘traditionalist’ in the report.
Not only will an optimised layout reduce churn, but also tell (and sell) a story to people who are coming into the shops. It’s a chance to influence what customers are drawn to, how long they stay and what they end up buying. This is crucial for retailers to beat the competition and win the brick-and-mortar retail game.
Tap into the psychology of impulse buying
More than 75 per cent of all customers make unplanned purchases sometimes. NEOs, however, have a significantly higher frequency of unplanned purchases. Almost seven out of 10 make unplanned in-store purchases most of the time. Retailers who understand what drives spontaneous purchases, especially by the NEOs, will be presented with a tremendous opportunity to increase basket size and boost sales.
“The State of Brick-and-Mortar Retail Customers 2024” report further reveals the reasons behind unplanned purchases, what makes a dream customer experience, and other patterns of in-store behaviour, expectations, and primary drivers influencing the customer experience. These insights are crucial for brands to understand these consumer groups and effectively tailor marketing strategies.
Gain the competitive edge now and get the insights first
The insights from the report will be presented by the CEO of Resonate CX, Mita Bedi, to select retail executives in Sydney, Melbourne and Brisbane in August. Thereafter the report will be released in its full form.
About the authors: Amelia Rickard is marketing manager and Federico Sasse is a market research analyst at Resonate CX.
The post Revealed: The secret CX strategies to dominate in a downturn appeared first on Inside Retail Australia.
