Experience (Not Price) is What Wins Over U.S. Shoppers
Thanks to technology, shoppers have more power than ever. Prices and products are no longer enough to cement buying decisions. Instead, American consumers place higher value on — and demand more from — the shopping experience.
This shift toward experience is one of the key findings in a new study that tracked the opinions, preferences and spending habits of more than 1,000 U.S. shoppers. The survey, conducted by 451 Research and commissioned by Adyen, also included 250 business-to-consumer retailers operating in the U.S.
Make Buying Less Trying
In this new world where experience rules, researchers found that consumers have three main demands: convenience, context, and control. Long lines in stores were one of the biggest and most blatant barriers to a convenient shopping experience. Among consumers who don’t prefer shopping in-store, 55 percent said it was because they don’t like waiting in line. Nearly half (48 percent) said anything more than a five-minute wait is too long. But notably, retailers haven’t gotten this message. According to the study, long lines in stores cost retailers a whopping $37.7 billion in sales each year. Shoppers said they either bought the item elsewhere or abandoned the purchase altogether.
And the stakes get even higher. For retailers, simply having an omnichannel strategy is no longer enough. The study found that shoppers now expect intelligent, pervasive, seamless experiences, all personalized to their own fast-changing context.
Big Spenders, Bigger Demands
Two distinct groups emerged in the survey: spendsetters and resisters. As a group, spendsetting shoppers embrace technology and set the trends for how people want to spend and shop — thus the name. Spendsetters, who tend to be younger (52 percent are millennials), also tend to be brand loyalists. As a group, they like shopping. In fact, spendsetters were four times more likely than resisters to say they love to shop. Resisters, on the other hand, are older (40 percent are baby boomers) and generally technology-averse. Only three in five resisters owns a smartphone, and fewer than two in five own a tablet.
For spendsetters, context and control are critical, and shopping with a smartphone is a given. Two-thirds of the spendsetter crowd said they want to receive personalized information (e.g., local offers, mall promotions, push notifications) based on their immediate location. Fifty-nine percent of spendsetters said they want to use a store-branded app to pay in-store (e.g., by scanning a barcode at checkout). The vast majority of spendsetters (75 percent) said a “just walk out” payment experience, a la the Amazon Go store, would encourage them to shop more in-store.
You Snooze (on Upgrading Experience), You Lose (Customers)
Failing to deliver these tech-fueled shopping experiences results in more than just disappointment. It can have an immediate — and lasting — impact on a retailer’s bottom line. Nineteen percent of shoppers said they had encountered a merchant that didn't accept their preferred payment method in the past year, and of those, 55 percent spent less or went elsewhere as a result. For retailers, that added up to $1.1 billion in potential lost sales.
On many fronts, spendsetters are a leading indicator of where the retail industry is headed. Retail is shifting from a straightforward exchange between people and products into a more nuanced, tangled relationship between stores, shoppers and shoppers’ devices. For retailers, this means designing a shopping experience around unified commerce, which gives consumers the same fluid, convenient experience in-store as they get online. Looking ahead, it also means catering to spendsetters. Understanding the motives and preferences of this influential group — the power shoppers of today and tomorrow — is a way to build a sustainable business model for years to come.
Kamran Zaki is the president of Adyen North America, a company that delivers frictionless payment solutions across online, mobile and in-store.
Kamran Zaki is the President of Adyen North America. Adyen is one of the fastest growing firms in the e-commerce industry that delivers frictionless payment solutions across online, mobile and in-store. Adyen is the payments platform of choice for many of the world’s leading companies, including eBay, Theory, Tinder, ASICS, Microsoft, Samsung, Uber, Facebook, Spotify, LinkedIn, Twitter, Netflix, Sephora and Tory Burch.