The buying trends to factor into your marketing strategy

A CMO’s guide to consumer spending habits for 2015

EGUIDE

Connecting Elementwww.connectingelement.co.uk

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Introduction

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In this eGuide, we explore exactly how consumer spending habits are changing in 2015 – and explain how to adapt your marketing strategy to emerging trends.

For most chief marketing officers (CMOs) of multi-location brands, 2015 is no different to any other year.

Is 2015 really the same as previous years? And if not, why not?

It starts with a budget and a plan of action for the group and its individual branches. But is 2015 really the same as previous years? And if not, why not?

Here, we explore why 2015 will not only be a record-breaking year for consumer online spending habits, but also a time to scrutinise how and, more importantly, why your marketing tactics will need to evolve to keep up.

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The UK’s demographic profile is changing shape, which means shopping behaviour and shopping preferences are too. If retailers want to keep up with consumer purchasing trends, CMOs need to anticipate the effect this may have on their marketing strategies.

Age demographic in focus

The UK’s population has swelled to 64 million, with a quarter of the growth occurring in London Office for National Statistics

Two thirds of retail spending growth will come from shoppers aged 55+KPMG

The UK population is growing faster than any other EU countryOffice for National Statistics

The UK high street will be shaped in 2015 and beyond by an ageing population, as the demand rises for more technology-focused provisionsUK Parliament

France

Spain

UK

64M

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An ageing population & Generation yBy 2030, the number of people in the UK aged 65 or older is set to reach 15.5 million – an increase of 43% from 2012.

A stronger focus on this demographic profile’s shopping preferences is likely, with the high street being adapted to meet needs of an ever-ageing market.

For instance, health services and libraries off the well-trodden path are expected to reclaim high-street territory.

Of course, retailers will need to rethink their marketing campaigns to attract older consumers. But they’ll also need to consider the definition of ‘older’ in terms of behaviour.

This ageing demographic is ‘down-ageing’ and not behaving in a way we traditionally expect the older generation to act. Forget the knitting needles – the baby boomer generation is more tech-savvy than it’s given credit for.

The rise of Generation Y

The rising influence of Generation Y – those born between the early 1980s and the early 2000s – is also having a major impact on retailers and their ongoing strategies.

In terms of its size, Generation Y is overtaking the baby boomers. As well as seeking different products to older generations, this group has an entirely different attitude towards the way they shop. With a higher propensity to using online media, Y will be attuned to developments such as multi-channel retailing.

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A balancing actGeneration X (those born between the 1960s and the 1980s), having grown up in an era of emerging technology – and with more money than its younger counterpart – is currently the most active in terms of online shopping. But that’s set to change, with an increase in spending from either side: the baby boomers and Generation Y.

• Greater segmentation and better analysis of marketing data

• Better use of programme sub-branding for familiarity

• More clarity in offers on shop floors and websites

While tackling the demands of the baby boomers, retailers must also address the needs of a maturing younger generation

Personalisation is already a hot topic, but it’ll become even more pressing over the next five to ten years as there is no such thing as an average consumer nowadays.

What we have instead is a mosaic of minorities: lots of different groups of people, with many often belonging to more than one group. And for retailers and marketers, making assumptions without having the right marketing data to back them up can be extremely unproductive.

Reaching a single market is also futile, simply because there is no single, homogenised market to reach.

The good news is that retailers have time on their side to plan for and adapt to this evolution. Demographic change happens slowly and can be anticipated, analysed and understood, allowing marketers to map the new customer journey before creating a strategy that fits their target audience.

That means:

While tackling the demands of the baby boomers, retailers must also address the needs of a maturing younger generation. CMOs will need to work much harder to understand customers and target their marketing efforts more carefully.

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The role of technologyUnfortunately for marketers, technology, on the other hand, moves much more quickly. In a competitive marketplace, technological advances happen faster and the savvy consumer is quick to adopt them – as well as quick to lose patience with brands that don’t keep up.

Simply put, the traditional models for products and services getting to shelves are becoming outdated. Requirements have changed and marketing is now about fast response times, which is reverberating throughout the entire supply chain – not just advertising.

This is demonstrated by the sharp incline in online purchasing, which – according to the IMRG Capgemini’s e-retail sales index – has doubled in many sectors over the past few years and continues to rise in 2015.

Unlike demographic change, technology moves much more quickly. The complexity of the marketplace demands more personalised and considered customer journeys for a more effective route to sale.

These may incorporate rich media and engaging content, targeted and governed by unique user behaviours. But how is this possible with demand for more convenience and speed of service in those customer journeys?

The marketplace demands more personalised and considered customer journeys for a more effective route to sale

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Consumer spending online year-on-year since 2011

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The UK in numbers

UK residents spent £107bn online in 2014, up from £91bn in 2013 – that’s a rise of 17.58%

TOTALISER: £127bn

Early forecasts show a rise of up to 18.69% for 2015, which is an additional spend of 20bn, taking the current rate of 21% of all sales online up to 33%

Clearly the rate of growth in online spending is mostly down to the rise of e-commerce and m-commerce. Retail has adapted to the always-on consumer, and easy access to mobile-optimised apps via smartphones and tablets has given rise to 24-hour shopping.

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Always on, always open

What’s more, with m-commerce platforms offering services like ‘click & collect’, buying is more convenient than ever before. In a world where consumers are more mobile and more technology driven.

In 2015 we can expect to see customers not only buying more online. but also looking to spend more in each transaction.

Consumers expect retailers to give them what they want, when they want - which means 2015 will be all about bringing your A-game to the e-commerce table.

By analysing conversion data, marketers will need to pinpoint any areas where potential customers are falling off the path to conversion and try to fix them.

Six in ten adults in the UK now use a smartphone – the appeal of online retail, where shops are always open, is too good to ignore

Online retailers have seen unprecedented growth year-on-year

from 14% in 2012

to 16% in 2013

and 21% in 2014

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E-commerce success lies in customers trusting sellers and trusting products they can’t see or touch

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Show your social sideOne great conversion technique that e-commerce websites can’t be without in 2015 is the idea of social proof. We’ve always known that consumers are influenced by their peers when it comes to making buying decisions and choosing brands or products. What many retailers struggle with, however, is harnessing this element of the buying journey and using it across their digital channels. E-commerce success lies in customers trusting sellers and trusting products they can’t see or touch.

By the end of 2015, half of new retail customer profiles will be based on social network identities. To put that into perspective, last year it was less than 5%

Consumers are 71% more likely to make a purchase based on social media referrals (Hubspot)

Out of 53% of consumers who said they use Twitter to recommend companies or products in their tweets, 48% bought that product or service (SproutSocial)

70% of active online adult social networkers shop online, 12% more likely than the average adult internet user (Nielsen)

In 2015, online retailers will need to make the most of social proof to build trust with potential customers and get ahead of the competition.

Think about:

The most obvious – and effective – way to fill this gap in the online experience and establish trust is by providing customers with what they would be getting from their peers offline, in a format they are already familiar with, such as online reviews, social shares and other forms of recommendation. In research carried out by Nielsen, 68% of consumers said they trusted fellow consumer opinions posted online.

• Allowing customers to view online reviews left by others

• Including star ratings to give confidence at a glance

• Offering social sign-in to let customers connect via Facebook or Twitter

• Running competitions on social media to drive engagement and demonstrate your brand as a social one

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Points to take away

For more ideas on engaging customers online, download our eGuide: The importance of investing in social media

Age demographics will affect marketing outputAs the UK’s demographic make-up changes, marketers will need to ensure their segmentation is in line with the right groups of people so they can appeal to the ‘grey pound’ as well as the young and mobile Generation Y.

Average online transaction value is set to increase in addition to the volume of sales Marketers will need to capitalise on this opportunity to grow revenue by looking into conversion data to fix any leaks in the funnel.

Social proof will become essential to convert and retain customersMarketing must take to social media to build trust and give modern buyers the joined-up customer experience they have come to expect across all channels.

A CMO’s guide to consumer spending habits for 2015 written by the CE Team

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