More-Rewards Retail predictions 2024
More-Rewards are proud to share our predictions for the year ahead. During these turbulent times it can be difficult to recognize areas for opportunity. Overall, we still see a lot of post-covid topics/behaviours occupying consumers’ minds. And whilst the retail sector has been under particular pressure in recent years with generally disappointing results for most in 2023, we believe that 2024 will be more positive for businesses that can focus on the following key areas:
Community
Consumers are passionate about supporting their local community
In a post covid world people are more invested in the wellbeing of their local communities. For retailers, it’s important to be aware of this and support shoppers with offers or services that benefit those communities.
According to Unibail-Rodamco-Westfield, 52% of shoppers set to shop more locally than they would have before the pandemic. 74% want to see retailers adapt to local areas and residents, up from 69% in 2019.
Nearly half of consumers (47%) say they’d participate in a retailers loyalty scheme if there was a greater focus on local products and offerings, according to Accenture.
Consumers also want to feel like they’re part of giving back
Social impact matters. As well as feeling part of a local community consumers increasingly want to feel that their purchasing decisions can help others.
38% of consumers will buy more from organisations that benefit society, even if their products or services are more expensive, according to the EY Future Consumer Index.
A Co-op survey, identified mental wellbeing (89% of causes), the impact of lockdown on young people’s education (66% of causes) and rising food insecurity (46% of causes) as some of the biggest challenges facing their communities. Retailers who are seen to be trying to alleviate these causes will be viewed kindly by consumers.
To cement this, a recent Accenture report on grocery experience said: “85% of store shoppers want to know that their retailer supports and contributes to the local community”.
Retailers need to bridge the gap between believing they understand emotional needs of shoppers and consumer opinion
While purpose is increasingly becoming a brand message for brands and retailers it is vital they remain honest and authentic.
80% of executives say their brand understands the emotional needs and desires of customers. But only 15% of consumers say that brands do a good job of emotionally bonding with them, according to a Capgemini Digital Transformation institute survey.
Retailers need to respond by committing to understanding what consumers truly want and value, according to Accenture, “whether that’s convenience, a love of food, awareness of its origin, or a connection to the local community.”
Health & Wellbeing
Wellness and weight control affect choice and basket size
During the pandemic, health and wellness became a top priority for many people. The concept of “self-care” also escalated during the pandemic, about two-thirds of consumers said they use vitamins and supplements to manage their physical health. (Supermarket News)
2024 will see consumers intentionally edit their baskets, rewrite their grocery lists and quit brands all together for options that better meet the necessities of health, well-being, value (of both price and purpose) and availability. Today’s consumers, with a heightened state of needs and challenges, are pausing at the point of purchase to ask themselves, “do I need this?” (Supermarket News)
One size does not fit all – health choices linked to purchasing power
Consumer shifts around online, value, and lifestyle agendas are creating an attractive opportunity for retailers to capture market shares over the next two to three years.
The pandemic accelerated the trend toward more healthy, sustainable, and local products with no apparent slowdown so far. Across Europe, net 30 percent of respondents plan to focus more on healthy lifestyle and nutrition in 2021 compared with 2020, 24 percent plan to spend more on regional and local products, and 19 percent plan to spend more on environmentally friendly products. These effects continue to be strongly influenced by individual economic situations. (Mckinsey)
Higher-income customers tend to be less price conscious and more willing to spend on healthy eating and nutrition. In contrast, lower-income segments still focus on saving money and are less concerned about healthy food choices.
Sustainable Opportunities
Consumer want to see a rise in second hand goods
A third of consumers are buying more second-hand items than they were 12 months ago and more women are happy to rummage through vintage or used items than men.
35 per cent of women and 25 per cent of men say they are buying more used products than new compared with 12 months ago, according to a study by Global Market Insite (GMI).
This means the retailers across the globe are being forced to implement the option of buying second-hand to retain their customers:
Asda has extended its thrifty brand positioning to support second-hand fashion. In May 2021, it added in-store resales to 50 UK stores. Sold alongside its own value range, George at Asda, stock comes from British wholesaler Preloved Vintage Wholesaler.
For its late 2020/early 2021 campaign Fortune Favours the Frugal, Ikea valorised the overlap between sustainability and budget consciousness. “It’s time to embrace living in moderation. Because being frugal doesn’t just leave us feeling more balanced and content, it’s friendlier to the planet too.”
Similarly, US food-waste rescuing brand Misfits Market, launched customisable boxes that can be repurposed and packaging drop-off and collection services. Loop, also provides pickup and collection services for reusable packaging. 52% of UK and US consumers want brands to use less or recycled packaging.
Retailers must address the green disconnect or risk losing market share
There is a growing breakdown between what retailers say they are doing to help and what they are actually doing. At the same time, there is also a divide between what consumers say that want or will do and what they actually pay for.
- 84% say sustainability is important when making purchase decisions, but 47% say it costs too much to purchase sustainable products.
- 86% of consumers consider the amount of packaging when buying products, but 35% want more packaging to protect them from the risk of infection.
- 61% of consumers want more information to help make better sustainable choices, but only 20% check sustainability claims made on packaging or in advertising.
- 27% of these cost-conscious consumers say sustainability is an important factor in their purchase decisions, but 73% say high prices deter them from buying sustainable products.
- *All taken from the EY Future Consumer Index
Retailers must find a course between these numbers that placates the most people while staying true to brand values. Crucially, they mustn’t lie, as consumers will quickly abandon them. 80% of global consumers believe brands must be transparent about their environmental impacts in the production of their goods and services.
Consumers are demanding even more from retailers
It’s not enough to understand the nuance of how consumers feel about sustainability and how that affects their buying preferences. Their growing sustainability expectations stretch beyond the brand to how your company as a whole behaves.
Globally, people are setting a high bar:
- 51% of consumers believe they are doing all they can to make purchase decisions that shape a more sustainable future, but 68% expect companies and organizations to take a lead.
- 73% of global consumers believe brands have a responsibility to make a positive change in the world.
- 38% of global consumers believe businesses should prioritize responsible production and consumption of goods and services.
- 29% would pay more in taxes to combat climate change. This is a much higher proportion than the 12% who would be willing to pay higher taxes to combat the pandemic.
Digital Trends
The digital divide continues
A significant proportion of consumers have now been exposed to digital-first customer journeys, either for the first time or more regularly than before, according to Retail Economics research. They have overcome the initial barriers of setting up online accounts, entering payment details and overcoming issues of trust.
There is a strong correlation by age with older consumers much more likely to prefer the physical experience than younger generations. A sharp channel divide occurs between ‘digital natives’ (typically 16-34 years old) and those that are not. Digital natives tend to value the role of online channels more than older consumers at each stage of the customer journey.
The industry has responded well by quickly scaling up online operations and boosting capacity, but consumers’ overall experiences for online grocery shopping during the pandemic are mixed, highlighting the need for further improvement from retailers as we move into 2022.
Concierge apps are liberating consumers
New apps and platforms, primed for brand partnerships, are freeing up time spent shopping – more than 40% of British consumers spend over two hours grocery planning and shopping every week – especially all-in-one services providing meal inspiration, budget planning, advanced filtering and delivery. UK-based Lollipop, and US supermarket Albertsons’ collaboration with Pinterest are major highlights.
French app Jow (available in France since 2018 and launching in the US in late 2021) and German app Kitchenful (launched in July 2021) allow customers to build meal plans. Their baskets are automatically filled with the requisite ingredients (which users agree to the cost of), effectively creating orders that are then fulfilled by supermarket partners, such as Carrefour and Rewe.
Rapid-Fire Fulfilment Evolves
The pandemic-prompted increase in grocery e-commerce has seen intensified consumer expectations for ingenious delivery services.
The fastest-growing player in the proliferation of dark-store-powered ultra-fast fulfilment, Gorillas (Germany) uses small ultra-local warehouses to enable 10-minute delivery.
In a departure from its primary method, Gorillas’ October 2021 pilot with British supermarket Tesco has initiated the use of warehouses within five Tesco stores across the UK. Similarly competing with supermarkets, South Korean food delivery firm Coupang Eats’ launch of its Mart service (available in Japan and South Korea, from June and July 2021 respectively) will deliver products, including fresh produce and meal kits, in under 15 minutes from its own dark stores.
Asda and Tesco’s 2021 launches of one-hour delivery – Tesco’s Whoosh in London and Bristol, and Asda’s Express from 96 UK stores – sees both brands borrow user interfaces normally associated with fast-food delivery, such as enabling customers to follow drivers’ progress in-app.
Less is more with retailer apps
Many retailer apps demand engagement and effort before offering rewards to the customer – leading to feelings of being overwhelmed.
Relevant core functions (like shopping lists, for example) are functionally too rudimentary, so they do not offer any added value and cannot keep up with more dedicated apps. Irrelevant functions that shoppers do not immediately see the value of (e.g. nutri-score scanners) complicate instead of simplify the shopper journey, making apps confusing and leading to drop-outs. Technical gimmicks (VR/AR) & entertainment (gaming) are also not seen as sufficient drivers for permanent and regular usage of the retailer app.
Other Shopper & Loyalty Trends
Buy-Now-Pay-Later Platforms are Spawning Loyalty
Speakers at the FT’s Future of Retail conference in September including Walmart chief customer officer Janey Whiteside discussed the loyalty engendered by buy-now-pay-later (BNPL) platforms, which have boomed in popularity throughout 2020 and 2021, growing at a rate of 30% year-on-year. World Pay head of vertical growth Maria Prados said that “Buy-now-pay-later creates a lot of loyalty and community, which is very unusual for a payment method. 30% of shoppers won’t buy unless there’s a BNPL option. It’s the fastest-growing method globally.”
Meanwhile, Walmart’s Whiteside said, “It’s here, it’s staying and it’s growing. We’re seeing it become the preferred method for millennial consumers.”
Reports and Links
https://www.voguebusiness.com/companies/what-the-new-luxury-customer-loyalty-programme-looks-like
https://www.accenture.com/us-en/insights/retail/grocery-experience
https://www.ey.com/en_uk/future-consumer-index
https://www.stylus.com/ft-future-of-retail-2021-capturing-the-postcovid-consumer
https://www.stylus.com/grocery-innovations-flexing-to-new-routines
https://www.stylus.com/grocery-innovations-202122-personal-planetary-wellness