The Connectivity Conundrum
Published on Mar 9 2015 7:59 AM in Features
A new study from A.T. Kearney analyses how in-tune brands and retailers are to the 'always-on' consumer's needs. Andrew Jennings reports.
Consumers across all mature markets in Europe have become a demanding lot. This demand, allied to ever-expanding network technology, has contributed to the rapid growth of connected devices, which allow consumers to do things faster and more effortlessly, every hour of the day.
With retail focus now well and truly shifted to the ‘consumer experience’, retailers need to expand their expertise to include services associated with products that further enhance the consumer’s experience.
The term ‘connected consumer’ is now a common phrase in the digital marketing lexicon: people who are embracing digital and social media, and are actively developing their own trusted personal networks.
It is imperative that supermarkets understand the connected consumer experience and buying experience if they want to serve that consumer well.
This consumer knows what they want: they are – more than others – in control over their buying journey and the ways they interact with retailers.
Connected consumers want great customer experiences, demand you to be relevant, find and share information in new ways and indicate that they understand the behaviour of ‘Generation Y’: always connected and online.
A recent global study backs the assumption that the connected consumer is now king. Connected Consumers Are Not Created Equal: A Global Perspective, a study conducted by A.T. Kearney, found that 54 per cent of connected consumers (those who say they connect to the Internet at least once a week) ‘prefer to shop online’.
The study, which surveyed 10,000 consumers around the world, found that 84 per cent of respondents in China said that they preferred to shop online, well above the global average.
Some 64 per cent of respondents in Germany said that they prefer to shop online, compared to 57 per cent of respondents in the UK, and 34 per cent in Russia.
Where We Shop
When it comes to the destination of choice for online shopping, 84 per cent of respondents said that they prefer to visit ‘pure-play online retailers’, with this percentage rising as high as 93 per cent among respondents in China and 91 per cent in the UK.
Some 39 per cent said that they prefer to visit ‘mass-merchant’ stores, such as traditional supermarkets (however, 53 per cent of US respondents and 50 per cent of UK respondents said that they prefer to visit these stores online).
Meanwhile, just 32 per cent said that they prefer to visit department-store websites; however, this is as high as 75 per cent in Brazil, but only stands at seven per cent in Japan.
“The results are not only a tale of consumer confidence and e-commerce adoption, but also of the evolution of e-commerce within specific countries and categories,” the report states.
“For example, the United States has low grocery penetration due to fragmented grocery retailing and its vast geography, whereas the smaller, more concentrated UK market has much higher online grocery sales, especially driven by well-developed offers already in place for more than a decade (led by Tesco.com).”
The research reveals that frequency and continuation of connectivity is high across all surveyed countries, with more than a half of the respondents saying they stay online every waking hour.
By country, the percentage of those who are “connected all day long” is the highest in Brazil (51 per cent) and lowest in Japan (13 per cent). A generalised portrait of a continuously connected user is a single man of 26-35 years old.
The A.T. Kearney study highlights four main motivations for consumers to go online.
The first is ‘interpersonal connection’. The importance of this factor is higher for emerging economies like India (94 per cent), Brazil (89 per cent), or China (88 per cent) and is less so in US, UK or Germany (all under 70 per cent). The second is ‘self-expression’, with the motivation to connect to express thoughts rather low in Japan (30 per cent), the US (38 per cent) and Germany (32 per cent) and rather high in India, Nigeria and China (88-89 per cent).
The third motivation is ‘exploration’, which is the factor with the strongest universal motivation to connect in all surveyed markets. The final motivation is ‘convenience’, where connected consumers use the internet to choose entertainment, navigate offline or - mostly - learn information on products and services and purchase them (92 per cent).
A.T. Kearney’s research found that while social media does engage, it doesn’t necessarily sell. The influence of social media on consumption varies dramatically by country and by age.
Between two-thirds and three-quarters of connected consumers in the US, UK, Germany, and Japan say they rarely or never consider social media chatter when thinking about products, services, or brands to buy. However, the majority of consumers in China, India, South Africa, Brazil, and Nigeria will use social network feedback in shopping.
Chinese shoppers, unlike Americans, tend to be the most avid social media adopters: 95 per cent (irrespective of age) use social networks to evaluate products and make purchasing decisions.
Social networks are where global connected consumers spend most of their time online. However, respondents from Brazil, Nigeria, India, and Russia tend to spend more than 50 per cent of their time on social network, the percentage in the US, Germany and Japan is lower than 40 per cent.
The survey found that there is no direct correlation between the number of users of a social network and the level of engagement or number of purchases.
There is a correlation between age and social network’s influence on purchasing decisions, however, with about 66 per cent of respondents under 35 years old confirming they rely on information from social media frequently or occasionally when making purchasing decision, versus 80 per cent of respondents over 65 per cent who rarely or never rely on social networks for shopping.
Depending on the shopping preferences, A.T. Kearney breaks it down into four types of connected consumers.
The first is described as the ‘bricks, no clicks’ consumer (30 per cent), who are less connected and mostly buy from traditional retailers. Second are ‘online champions’ (28 per cent), who actively surf online, sometime click ads, use social networks and sometimes buy online. This segment is dominated by respondents from developing markets.
The third type is ‘social animals’ (24 per cent), who are online most of their waking hours, but buy online less frequently than ‘online champions’. In the US, the UK and Germany, this segment is the smallest, while in Japan, Russia and South Africa it is big. Finally there’s the ‘transactionals’ (19 per cent), who are the most pragmatic segment. When they are online, they know what they want and what to do.
Reliant On Stores
Mike Moriarty, A.T. Kearney partner and study co-author noted, “Physical stores remain the foundation of retailing. Ninety per cent of retail sales occur in stores, and of people who buy ‘online’, 50 per cent of the sales go through online sites run by retailers with physical stores.
“For those consumers that buy something exclusively online, chances are (67 per cent) these consumers will go to a physical store to discover, test, taste or get their friends to weigh in on the decision.”
As Moriarty explains, the key point is that “the debate should not be a question of ‘digital vs. physical’. Successful retailers understand how each customer touch point adds value in the eyes of customers, and they develop omnichannel strategies that maximize customer satisfaction and profitability.”