Total online shopping for this year's Cyber Monday topped $3 billion, a record amount and an impressive 21 percent increase from the previous year. Combined with the news that Alibaba hauled in more than $14 billion in November for Single’s Day, entrepreneurs could (and should) conclude that the traditional retail shopping experience may be on its final legs.
I have opined on many occasions that retail is dead or dying (I may have also contributed personally to its slow decay). A recent study, however, from Blackhawk Engagement Solutions, an international incentives and engagement company, may offer a ray of hope to small retailers.
The study, a compilation of two distinct studies, examines the means, the devices and the influences along millennials' paths to purchase. The first study was conducted in April 2015 and surveyed more than 500 millennials, focusing on specific shopping behaviors. The second study was conducted in October 2015 and included an additional 500 millennials and their mobile app and gift card preferences.
The results demonstrated that millennial shoppers are plugged into mobile and social shopping and are completely disrupting historically traditional shopping patterns.
"Millennials are leading a change in purchase trends," said Rodney Mason, global vice president of marketing at Blackhawk Engagement Solutions. "As such, it's incredibly important for retailers and retail marketers to understand how to appeal to this demographic. Millennials are savvy shoppers and many have come of age in a post-recession era, and our our research shows that this group routinely comparison shops on mobile to get the best value and shopping experience. The market, however, has not yet capitalized on those habits."
Retail entrepreneurs can certainly learn from the key findings the study, which can provide guidance as they examine and refine their strategies this holiday.
1. Smartphones are a primary means to connect to the Internet.
No surprise, but smartphones are a dominant method of connection to the web for millennials, with 89 percent of them using the devices to connect, vs. 75 percent who use laptops, 45 percent tablets and 37 percent desktop computers. Retailers therefore need to have a mobile first strategy if they want to stay relevant with this generation.
2. Social media is number one for shopping information.
Without a doubt, millennials are connected to social media. More important, they are using it as their primary source to find and hear about products, special deals and shopping news. The study also found that the traditional methods of advertising, television (six) and print media (seven), both fall behind other digital advertising methods. Retailers need to at the very least integrate digital media with their traditional advertising strategy -- if not replace it altogether.
3. Millennials are sensitive to price.
When it comes to price sensitivity, 95 percent of respondents said they have more or the same sensitivity to price as last year. Additionally, price has the greatest influence on millennials' purchase decisions above all other factors, including quality, brand, store and availability. This is surprising because a growing economy or shopper segment typically leads to less sensitivity to price, but millennials clearly are bucking that trend. More than likely, this is due to the simple fact that they have the ability instantly to price compare and save on almost anything they buy.
4. Google and Amazon are favorites for comparing prices on smartphones.
Amazon (46 percent) and Google (43 percent) dominate millennials' preference for price comparison activities. Love it or hate it, the reality is that millennials (and more so older generations) are using mobile devices to price compare and save, even while in your store or on your website. To compete, retailers need either to offer competitive pricing or more value than consumers can get on Amazon, Google or other large retail outlets.
5. Millennials prefer higher-value rebates over instant discounts across shopping categories.
For categories including electronics, entertainment, sporting goods, clothing, wireless plans and even groceries, the majority of millennials indicated they would choose a higher-value rebate offer over an instant discount. What this means is that retailers can offer rebates that provide more savings (and greater value) than simply cutting and matching a price or offering an instant discount.
When retailers figure in the value of unredeemed rebates, it could ultimately wash out any price cut. Retailers should tread with extreme caution, however, and assure that any rebate program is not difficult to redeem or deceptive, which could end up harming your brand long term.
6. Millennials will consider "Buy Online, Pickup In Store" as an incentive.
An impressive 88 percent of millennials say they would consider buying online and picking up in store to save $10 on a $50 item. For retailers who ship, offering a discount to pick up in store not only creates perceived value but also saves shipping and handling cost and drives traffic to the store.
7. Gift cards are believed to be safest for online shopping.
Millennials are sensitive to cyber security issues and identity fraud, and 64 percent of millennials believe that gift cards are safer to use online than any other digital payment method. Moreover, 66 percent believe gift cards limit identity fraud. By offering gift cards or alternative payment options, such as Paypal, retailers can attract sensitive buyers who are looking for alternatives to Amazon.
8. Millennials embrace loyalty programs.
While millennials are much less likely to be loyal to a brand, 69 percent belong to a retail loyalty program, and 70 percent of those are happy with their programs. While the preferences of millennials are changing, requiring entrepreneurs to examine brand loyalty in an entirely new way, retailers can still drive return sales by creating a transparent and value-added loyalty program.
These shopping habits probably are not news for most big retailers, but for smaller retailers who struggle to compete and stay relevant in today’s digital landscape, attracting millennials may be as easy -- and as affordable -- as understanding and adapting to the non-traditional shopping habits of this growing market of millennials shoppers.
What do you think? What other trends do you see evolving from retail? Please share your thoughts in the comments section below.