A decade ago, there were about 400 million people on the Internet; today, there are nearly 2 billion. More than 940 million people around the world have 3G mobile phone subscriptions , and more than 500 million use Facebook.
The digital universe is changing the way people shop – as we discovered last year, when we surveyed over 30,000 consumers. We learned that customers are more connected, more vocal and more demanding than ever before. What they want, above all, is a personalised experience: they want retailers to know them.
But we realised that technology was only one of the forces shaping shopper behaviour. Other factors, like household demographics and socioeconomic shifts, are equally important. So this year, we decided to delve more deeply into the mind of the consumer. We wanted to find out how they reason, who they are listening to, how they are changing the shopping process – and how retailers should respond.
To gain this understanding, IBM’s Institute for Business Value surveyed another 30,624 consumers in 13 countries – six growth economies and seven mature economies – to learn what they really think when they shop. This included more than 2,200 consumers in Australia. The story that unfolded is fascinating and complex. It shows that what you see from the results of traditional customer analytics isn’t always what you get. The smarter consumer wants to be known and served, not sold to.
The smarter consumer has changed
The consumer is digital
A large and growing proportion of consumers take technology completely for granted. They are comfortable using the Internet, mobile technologies, in-store kiosks and digital TV to browse for and buy products.
In last year’s survey, IBM identified a group of people willing to use two or more such technologies to shop; we called them ‘instrumented’ consumers. This year, 49 percent of respondents fell into this instrumented category – compared to 31 percent in the previous survey. Similarly in Australia, the proportion of instrumented respondents jumped from 31 percent to 45 percent. The number of shoppers who said they didn’t use any technologies in the shopping process fell to just 14 percent globally while in Australia, this figure decreased from 27 percent to 21 percent.
Mobile smartphones are a growing part of the shopping experience.
In Australia, the proportion of consumers using their mobile devices during the shopping process grew from 7 percent in April 2010 to 12 percent in October 2010. Mobile phones are much more accepted in emerging economies; they are used by 51 percent of shoppers in Brazil, 47 percent in Mexico and 41 percent in China. In fact, consumers in growth economies are more instrumented than their counterparts in mature ones.
Younger consumers are especially keen on using technology to improve the shopping experience.
But there has been a big change here too; the ‘digital babies’ have seized control. Last year, a relatively low 38 percent of 15- to 19-year-olds were instrumented. We concluded this was evidence their parents still determined how they used technology. If that was the case, mum and dad have lost the battle; as our survey found 52 percent of teenagers now use two or more technologies to shop.
It is also interesting to note that certain product categories are more instrumented than others.
Consumers are most likely to buy luxury brands, shoes/accessories and children’s apparel – which includes teenagers’ clothes – with the help of technology. This makes a lot of sense: people who buy luxury goods are more likely to have smartphones and youth apparel is purchased by the most instrumented group of consumers.
The household is virtual
Today’s consumer also purchases for a wider range of family members, whether or not they share a roof. This is partly because the family unit is changing; in Australia, 11 percent of respondents said they lived with adult parents, adult children or grandchildren. In addition, the Internet allows consumers to purchase more efficiently for family members who don’t live close to them. Over 20 percent of respondents said they regularly bought clothing, groceries, consumer
electronics and personal care products for their parents. So the purchasing decision is moving beyond the four walls of the traditional home.
Income and shopping attitudes diverge
A lot of retailers want to know if consumer spending this year will return to pre-recession levels and patterns. The evidence suggests not. This is because the link between what people earn and how they shop is breaking down. The good news is, around 80 percent of respondents said they were positive about their income situation. In fact, a fifth of respondents said they expected their income to rise by at least 20 percent over the next five years. This optimism
was shared across every income group. However, being frugal is still in fashion.