Mapping the mind of Millennial shoppers
It is every retailer’s dream to mine the mind of Millennial shoppers. The pursuit of this consumer segment is relentless and for good reason.
A report from AT Kearney published in July 2016 reveals that the Millennial population accounts for 27 percent of the global population or about 2 billion and about 58 percent live in Asia.
The authors of the report agree that these figures support the importance given to these population segment as they are likely to influence consumer spending and potential economic growth in the years to come.
In Singapore, the government recently launched the Committee on the Future Economy, which charts the strategies for the country’s next phase of growth. Among the recommendations is an Industry Transformation Map (ITM) that would help build capabilities for diverse industries. In the retail sector, the report noted the disruption of the industry by e-commerce players, and thus recommends the use of innovative business formats and technologies to broaden the customer base.
This is consistent with retailers’ strategy of pursuing innovations to entice a technologically savvy generation who now comprises the bulk of the shopping population.
A survey of Millennial shoppers and retail consumers across nine markets worldwide was conducted recently by global loyalty agency ICLP and reveals many facets of these next generation consumers - what drives them in their purchase decision, what are their views on brand loyalty, and what are their interest. Here are some of the findings of the research:
For a generation that is often portrayed in pop culture as being fickle, the survey finds that Millennial consumers in Singapore appear to prize consistency and reliability when making buying decisions.
The poll covered 300 Millennials in the city-state and 74 percent said they would buy more if their favorite retailers’ products were more consistent and reliable, placing this as the top factor driving more purchases. Meanwhile, 73 percent would buy more if retailers rewarded them better, and 67 percent would do so if retailers better understood their particular needs and requirements.
Underlining the fact that Millennial shoppers do not merely seek out novelty, the survey findings suggest that any innovation in the industry should be directed towards greater consistency and reliability, as well as better rewards, and more thoughtful personalization.
“Even as our economy evolves alongside a new generation, our findings of Singaporean Millennials reiterate the fact that retail innovation is not just about creating the next trendy concept or offering,” said Bruno Tay, Country Manager of the global loyalty marketing agency ICLP. “There are fundamental factors like consistency and reliability, rewards, and personalization that that make shoppers feel truly special and will continue to form the foundation of a sustained relationship with brands.”
Compared to generations born before 1980, more of Singapore’s Millennials also place an emphasis on personal recognition by brands and retailers – a fact that likely reflects the impact of digital technology in shaping expectations of smarter data-driven propositions. About 32 percent of Millennial shoppers now consider it important for retailers to make relevant recommendations that are specifically tailored to their interests, while only 20 percent of the older shoppers do.
Similarly, 28 percent of Millennial shoppers think it is important for brands to remember their shopping, payment, and delivery preferences – versus only 16 percent of the older shoppers who do.
Transactional outlook on brand relationships
The survey modeled the brand relationship after the psychology of individual relationships with friends and romantic partners. Singaporean consumers were asked to rate their retail experience with brands on seven core relationship criteria, namely recognition, rewards, reciprocity, reliability, respect, trust, and communication.
These were then mapped onto a model based on Sternberg’s Triangular Theory of Love, in partnership with an expert on relationship dynamics Prof Ron Rogge at the University of Rochester in the United States.
In that regard, most Millennials in Singapore do not see themselves as being devoted to their favorite brands, with only 3 falling under this category. Twenty-eight percent view their relationship with brands as casual, while 23 percent merely like the brands without a strong element of commitment.
ICLP said such patterns reflect a broadly transactional outlook on brand relationships; against the backdrop of Singapore’s uncertain retail landscape, this lack of emotional commitment underlines the urgency to engage consumers more deeply.
“What the Millennial consumers feel today gives us a glimpse of the future of retail in Singapore. The current lack of emotional engagement, coupled with the emphasis on consistency and personalization, points to fundamental gaps that brands and retailers need to fill,” Tay added. “It calls for innovation that is purposeful and focused. For one, with the vast amount of data available today, they ought to step up their digital capabilities, so they can understand and recognize every consumer as an individual, nurture each relationship, and inspire devotion.”
Hong Kong Millennials
The ICLP survey in Hong Kong found that although Millennials are the most influential generation, only 2 percent of local millennials were ‘devoted’ to their favorite retail brands, which is consistent with the findings in Singapore.
ICLP noted that Hong Kong Millennials, with the lowest percentage in the APAC territories and countries surveyed, are characterized as having high levels of passion and intimacy but no commitment, and are strongly inclined to recommend brands with a low degree of brand loyalty.
Obviously, brands are urged to improve customer loyalty in order to stay competitive in today’s challenging retail landscape. ICLP said brands need a cohesive consumer engagement strategy to improve commitment and passion and foster devoted relationships with millennials.
Given this scenario, Millennial still have the potential to become brand advocates; they are educated, tech-savvy and socially active, and expect a real-time response. However, retailers need to understand the importance in converting the 33 percent of Hong Kong millennials from a ‘liking’ to a ‘devoted’ relationship with their brand.
Communication is important
The study noted that to convert Millennials to become brand ambassadors or to become more brand loyal, they need to take note of their response to the survey: 21 percent of Hong Kong Millennials value communication tone and manner to capture their interest and continued interaction with a brand; 23 percent think their personal information is important and expect to benefit from providing it to the retailer; and 61 percent would buy more if brands were better at communicating with them.
“These findings reveal that retailers in Hong Kong still have some way to go in engaging Millennial shoppers, a technologically savvy generation that more businesses are seeking to court in order to tap into their potential as advocates. Brands need to look into a tightly integrated strategy to drive commitment of millennials,” commented Mary English, General Manager at ICLP.
“Some shoppers would feel valued if brands were better at communication, while others may prefer brands to improve visibility across various channels to connect and interact with them, such as using different social media platforms. Retailers need to understand shoppers’ individual needs by leveraging customer data such as response rate and viewership to track purchase preferences. Brands can then use this information to implement a more comprehensive and tailor-made loyalty rewards program that can fit their personal needs, thus developing long-term trust with their customers,” she added.
Keeping 'brand love' alive
The challenge for retailers is to keep them from falling out of love with their brand and in love with others. Retailers should make adjustments to their engagement models to maintain and retain ‘devoted’ relationships with this group.
These findings also come in handy: 17 percent of Hong Kong Millennials think it is important to have relevant recommendations for products and services from the brand based on their preferences; 22 percent believe it is important for a brand to recognize them with a personalized message, gift or offer on their birthday; 69 percent would buy more if retailers used their data to better understand their individual needs and requirements; and 77 percent would spend more if they were rewarded better by their favourite retailer. This highlights the significance of personalized rewards that motivate and encourage customers towards a more ‘devoted’ state.
“Our research shows that Hong Kong Millennials would recommend their favorite brand to their friends if they were devoted, thus it is important for retailers to move the ‘liking’ and ‘romantic’ relationships forward to ‘devotion’. Devotion is the highest category of attainment for retail brands. It is the key to growing high-value, sustainable relationships between Millennials and brands, to improve commitment and passion, and drive millennials’ loyalty,” English concluded.