As a platform, we take great pride in all that we've achieved since opening our doors for business nearly six years ago. We’ve
How retailers can attract younger customers
While the woes of the high street is seldom too far from the money pages of our broadsheets, so too is there a regular focus on the intergenerational divide. It’s often said that our youth of today have been squeezed by soaring housing costs, and are more acutely stifled than their older peers by the worst period of wage stagnation since the Napoleonic Wars.
Such generalisations leave themselves open to debate, but there is broad consensus that younger consumers are having a pretty tough time of it at present. Yet for all their travails, this particular age bracket still plays a vital role in powering the UK economy, and, from a retail perspective, their spending power continues to rise.
In fact, data from Statista showed that non-food retail spend for those between the ages of 18 and 34 actually exceeded that of over 55s (£48.1bn vs £47.7bn) in 2014, and is projected to surge to £53.8bn in 2019.
It therefore underscores the level of clout our youth can wield on the fortunes of struggling UK retailers, and why it is essential that retail business strategies should place emphasis on meeting the needs of this dynamic, ever-changing demographic.
Do Millennials and Generation Z exhibit similar trends?
We've identified the 18-34 age group above, and, broadly speaking, those who fall into this category are termed as 'Millennials' or ‘Generation Z’ (Gen Z). In the case of the former, they reached adulthood after the year 2000, while the latter were born in the late 1990s onwards. But when assessing these two demographics, one doesn't want to be overly simplistic, and these younger consumers do exhibit degrees of variance in their preferences and behaviours.
These differences are particularly noticeable when comparing 18 to 20-year olds, versus those over the age of 21. According to research conducted by ViSenze (in the UK and the US) last August, both younger and older millennials are equally enthused by the prospect of visual search (63 per cent versus 62 per cent). However, the younger contingent is more responsive to augmented reality as part of their retail shopping experience (37 per cent versus 28 per cent). Conversely, and perhaps somewhat surprisingly, older millennials in particular appear to prefer bypassing human interaction in favour of digital assistants and AI (31 per cent versus 25 per cent).
Yet despite such disparities, there are clear common denominators across these age brackets too. Chief among these is an embrace of technology, and increasingly eschewing the need for human interaction when making a purchase. For example, according to 365 Retail, a quarter of shoppers in the UK use self-service checkout. Of those aged 18-39 who use such facilities, 9 out of 10 agreed that they were a convenient and easy form of checkout. However, among those over the age of 60 who used them, less than half agreed.
Is a strong online presence particularly pertinent to Millennials?
Online shopping now accounts for more than one pound in every five spent in the UK, but is by no means the preserve of the young, and all generations shop online. Equally, omni-channel shopping is a feature across all age groups. That said, establishing a powerful online presence with real cut-through is essential when trying to attract younger consumers.
According to Statista, 95 per cent of Brits aged 18 to 24 made an online purchase in 2018. For those aged 25 to 34, this figure is equally prominent at 96 per cent. However, at the other end of the spectrum, less than half (48 per cent) of those over the age of 65 used ecommerce last year.
Which online channels should I use to target younger shoppers?
The Omni-Channel Retail Shopping Report, conducted by BigCommerce and surveying over 3,000 UK consumers, found some interesting trends. One of the key callouts was that both millennials and Gen Z shop to a large extent via social channels, including Instagram, Snapchat and Facebook.
Millennials in particular account for much of this, with more than 65 per cent indicating that they had made at least one purchase through Instagram over the preceding six months. The equivalent figures for Snapchat and Facebook were also very high; in and around the 60 per cent mark in each case.
Among Gen Z, nearly a third reported using Snapchat and Instagram. Yet among the baby boomer category, not a single respondent said they had used either medium to buy anything, while just 5 per cent used Facebook. It is thus pretty clear that social media holds the key to unlocking the market for younger customers.
This also overlaps with some other interesting conclusions in the study. It found that Gen Z rely more heavily on product recommendations than any other age group, along with social media adverts. Additionally, they are twice as likely to visit a retailer’s social channels compared with their average American counterparts.
What other areas should retailers focus on with their online strategy?
For starters, website speed is critical. According to the BigCommerce research, speed is 2.5 times more important on a retailer’s website to millennials and Gen Z shoppers than it is to Generation X (Gen X) and/or baby boomers. Convenience is king too, and even dwarfs price as a priority among those aged 18 to 35. These two age groups also put a great deal of value on a website having a loyalty scheme, while Gen Z in particular listed free shipping as being high up on the totem pole.
Brand reputation is also less important to millennials and Gen Z, and both favour personalisation to a much greater extent. In fact, the latter have grown up expecting a personalised shopping experience, so it is crucial that retailers are able to customise this at an individual level.
That is easier said than done though, with data coming at a premium. Since GDPR came into effect, those in the Gen Z and millennial categories have shown a much higher propensity for requesting that retailers delete their data than their older counterparts. Nevertheless, surmounting this challenge is pivotal in creating a personalised journey for those who want it most. Offering early access to new deals, loyalty schemes, faster delivery, free shipping and, indeed, the very promise of a more-personalised experience itself are just some of the carrots which can be dangled in exchange for customer data.
How big a role will mobile play for retailers?
It goes without saying that mobile optimisation is mission critical. For the first time ever, online sales over smartphone (40.4 per cent) eclipsed that of desktop (39.7 per cent) in Q4 of 2018, as per the Capgemini IMRG eRetail quarterly sales index. To put that into perspective, as recently as 2015, retail website visits for mobile and desktop were broadly equal. Yet in Q4 last year, the former outnumbered the latter by almost 3 to 1.
Unsurprisingly, this shift has been driven primarily by younger consumers, although what is particularly interesting is their clear preference for using mobile phone apps. Analytics company GlobalData revealed in a report earlier this year that 67.7% of those aged 16 to 24 prefer using retailers’ mobile apps, rather than a mobile-optimised website.
This comes in well above the overall average of 61 per cent, and the forecast by GlobalData that mobile spending will increase 88 per cent by 2023 underscores the importance of app investment as a means of targeting millennials and Gen Z – not least as a means of driving loyalty, and edging out competitors.
How can retailers attract younger shoppers in store?
As per the findings of BigCommerce, UK shoppers of all ages identified being able to touch and/or sample a product as the principal reason for shopping in store. Yet there are other discernible points of variance. For one, Gen Z shoppers place a great deal of importance on speed, and also cite the ability to find better deals in store as a reason for heading to the high street.
A recent Royal Mail study found that 93 per cent of UK consumers buy retail products in store and online. One of the primary goals of any omni-channel strategy should be to bring the two closer together, especially for younger buyers. Data collected online can be used to personalise their in-store experience, while apps can be used in store for convenient loyalty points accrual, and even for payments and checkout. Concept stores are another inventive way of leveraging brick and mortar with an online presence, and have proved particularly popular with millennials. There is also an increasing shift towards using social events, and creating fun ‘Instgrammable moments’ in store to get younger feet through the door.
The point is that, subject to a bit of innovation, brick-and-mortar stores still have an important role to play within UK retail – especially with regard to younger consumers.
Are younger consumers drawn to retail finance?
The simple answer is yes. There is various literature which confirms as much, and one such study is the aforementioned BigCommerce survey. According to their study, the use of retail finance – or buy now, pay later equivalents – is more than 5 times higher among millennials than it is among Gen X. Even those who fall into the Gen Z category are twice as likely to use retail finance than their Gen X counterparts.
This is by no means about enabling irresponsible spending. On the contrary, younger buyers cite convenience, competitive rates and the ability to sensibly spread the cost of big-ticket items as the core reasons for favouring point-of-sale finance.
It is this inclusiveness of retail finance, which spares millennials and Gen Z shoppers the complexities and paperwork associated with applying for credit cards or loans from a bank, which is a major trump card for retailers. It opens up a wider range of products to this demographic, improves conversion, drives loyalty, and lays the foundation for boosting order values. In a difficult climate for retailers, these are potentially powerful gains, and a vital hook when it comes to capturing market share within these age groups.
What else do retailers need to keep in mind?
Retail finance is one aspect of improving the checkout experience, but other forms of digital payments are important too. As an example, mobile wallet use (eg: Apple Pay) is 10 times higher among millennials and Gen Z shoppers than it is with Gen X and baby boomers. Similar dominance is replicated when it comes to using PayPal facilities. Embracing the digitisation of payments, in addition to traditional methods, has a huge role to play in reaching out to these individuals.
Other priorities among younger consumers identified by market research is a penchant for brand-led experiences, loyalty towards retailers with a social conscience, a reliance on social proofing and influencers, the importance of feeling understood, and, perhaps counter-intuitively, a desire to engage with brands as little as possible along the way.
It’s a tough set of circles to square, and makes for a moving target which is difficult to pin down. But for retailers and retail marketers, the rewards for exhibiting the innovation and foresight to get ahead of the curve are handsome. This isn’t just the market demographic of the future – it’s one with plenty to offer right now.
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
Since opening our doors back in 2014, we’ve always prided ourselves on living and breathing two key principles at Lending Works: innovation, and putting the customer first in everything we do.
With the retail sector enduring its fair share of challenges, companies are looking at new ways to attract customers, and drive conversion. In an overcrowded, dog-eat-dog marketplace, with behemoths such as Amazon flexing their muscle, it’s easier said than done.
On 4 June 2019, the Financial Conduct Authority (FCA) released its new regulatory framework for peer-to-peer lending (P2P); a Policy Statement known as PS19/14. As you might imagine, it's a document which, following a three-month consultation, is a hefty read of no fewer than 102 pages.
In a difficult climate, customer acquisition and lead generation present stern challenges for UK retailers, and a great deal of marketing spend invariably gets directed towards getting feet through the door.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Ahead of the IMF’s world economic outlook last month, new managing director Kristalina Georgieva described the global economy as being in a ‘synchronised slowdown’, and the institution has subsequently trimmed growth forecasts for 2020.
Last week we took stock of the labour market, with the latest Office for National Statistics (ONS) data showing that the tide may be beginning to turn on Britain's so-called 'jobs miracle'. Unemployment ticked up to 3.9 per cent for June to August (an increase of 0.1 per cent), with the number of people in work falling by 56,000.
Whenever discussion turns to Britain’s misfiring property market, the words ‘stamp duty’ are seldom far away. Indeed, over the past two decades, it’s been something of a political football – one which has had a profound impact on both housing transactions, and the coffers at the Treasury.
In recent months, it’s been interesting to observe the reception to Greta Thunberg, the 16-year old climate change activist who has been afforded some high-profile forums. The impassioned viewpoints she has shared have earned her legions of fans, albeit no shortage of detractors too. In particular, a speech at the United Nations climate change summit stirred fractious debate.