Ask for SCORE by Dean Swanson
As if the past few years haven’t been tumultuous enough for small business owners, you also have to adapt to changing consumer buying behaviors. Impacted by the still raging global COVID-19 pandemic, inflation and lifestyle milestones, today’s consumers have changed where and how they shop. And unless you pivot with them, you will lose their business.
Rieva Lesonsky, one of SCORE’s content partners, is President and CEO of GrowBiz Media. She wrote an article last week that is a great refresher for small business CEOs and gives some great examples of tips for staying aligned with your customer behaviors.
I share his thoughts; here’s what you need to know.
Purchase channels: The most obvious change in consumer buying behavior is where they shop. Brick and mortar isn’t dead, and in fact, in-store shopping has seen some comeback this year as stay-at-home consumers more fully enter the market. The National Retail Federation predicts overall retail sales will reach $4.86 trillion this year, up 6-8%. But e-commerce sales will drive this growth, likely increasing between 11% and 13%.
Mobile commerce (m-commerce), a subset of e-commerce, measures sales made on smartphones and tablets. Insider Intelligence reports that m-commerce sales reached $359.32 billion last year, up 15.2% from 2020. And they predict that by 2025, those revenues will more than double. , reaching $728.28 billion, or 44.2% of US e-commerce sales.
Your retail website should be top-notch and optimized for e-commerce and mobile sales if you are a retailer. A recent QuickBooks Commerce Small Business purchase report showed that:
• 48% of consumers have stopped shopping at a store they frequented before the pandemic because the company did not have an online store
• 53% considered using a business, but changed their minds because they didn’t have a website.
Social purchases: Social media is another channel that consumers are turning to more. Social commerce – buying products directly from social media platforms is growing rapidly. Influence Central reports that 45% of consumers were “open to making holiday purchases directly from a social media platform” last holiday season. Their top social channels of choice were Instagram and Facebook.
A report from Accenture, “Why Shopping’s Set for a Social Revolution,” says it expects global social commerce sales to grow from $492 billion in 2021 to $1.2 trillion by 2025. ) gives social commerce a 17% share of the e-commerce market (from 10% previously).
Retrade: are second-hand merchandise sales, and they are growing rapidly, driven by second-hand clothing sales. According to Chain Store Age, second-hand clothes, shoes and accessories are already a $36 billion market. It will likely reach $77 billion over the next four years. Recommerce is expected to grow 11 times faster than first-hand apparel retail sales. Consumers are more likely to shop at businesses that allow them to trade in old clothes for store credit (43%) and offer used clothes alongside new merchandise (34%).
But recommerce isn’t just about clothes. In 2020, the home category has become the fastest growing resale segment. Zillow reports that sales of used furniture and decor are strong. Statista predicts the furniture resale market will grow 70% from 2018 to 2025.
And a report from Chairish says they expect recommerce revenue to grow 127% by 2027. Recommerce, like most retailers these days, is powered by Millennials and Gen Z, 31% of whom say the pandemic has increased their interest in buying used, vintage or antique furniture, especially online.
BOPI: “BOPIS,” or Buy Online, Pick Up In Store, is part of the Click and Collect phenomenon, which has seen sales grow from $22 billion in 2018 to more than $83 billion in 2021. About 75% of shoppers in line have used the BOPIS or curbside pick up at least once in 2021.
Merchants love Click and Collect for several reasons:
• You can monetize your existing business footprint
• It requires fewer resources than delivering goods
• It is less dependent on third-party vendors
• You can launch a Click and Collect option quickly using existing resources
The International Council of Shopping Centers reports that more than 50% of adult shoppers use BOPIS, and 67% of them have added additional items to their shopping carts.
Consumers like to click and collect because they don’t have to wait for items to be delivered; they don’t pay shipping. This is very convenient for buyers in a hurry.
Social objective: The pandemic has reminded consumers how vital small businesses are to their cities and towns. More people say they are motivated to support local businesses. But the QuickBooks survey mentioned above also shows that consumers don’t just care about the products/services they buy. They want to know that ethical practices, sustainable materials, and other considerations are in place. And that these companies have morals that match their own and will do business with these companies over other even cheaper options.
The social purpose is underscored by a report from CompareCards, which says, “The social purpose is no longer just a ‘nice to have’. Having a social purpose is essential today. Millennials and Gen Z view consumerism as a “channel for change” and are activists when it comes to their buying behaviors. At any one time, more than half of these generations are boycotting at least one company.
The NRF agrees, saying today’s consumers expect companies to stand up for something and want to do business with companies that care about their employees, have made inclusivity a priority. and are committed to being a better company.
To make sure your business attracts these buyers, ask yourself:
• What does my company represent?
• What kind of culture do I want to create?
• How am I having an impact beyond improving the bottom line?
Who is going shopping ?
Two generations have drastically changed their shopping behaviors in recent years – Baby Boomers and Gen Z’ers.
Amid the pandemic, The Washington Post reported that consumers over the age of 65 were the fastest growing category of e-commerce buyers. This means that your website should be appealing and accessible to older people, and you should provide Click and Collect options.
Generation Z, ranging in age from teens to early 20s, contributes approximately $830 billion to the US economy. They are part of a financially conscious generation and are price sensitive. So to attract those buyers, you’ll want to offer deals and discounts.
What do consumers want? :
Gen Z isn’t the only consumer group looking for deals. According to Influence Central and Adtaxi’s “Data, Digital Trends & the Reopening” report, online shoppers want:
• free shipping (96%)
• a free and easy return policy (93%)
• loyalty bonuses (74%)
• Most (92%) expect some type of discount, especially percentage discount and free shipping promotions.
Overall, these reports bode well for small business owners. This report from QuickBooks indicates that nearly half of consumers are now more likely to try new businesses than before the pandemic, which means you need to make sure you’re reaching these potential customers through your marketing efforts.
Remember to be patient; today’s consumers are taking longer to make purchasing decisions — what used to take days/weeks can now take months. Shoppers are thinking more consciously about durability, value, quality and speed.
Need help understanding these shifts in consumer behavior? A SCORE mentor can help.
Dean Swanson is a volunteer Certified SCORE Mentor and past SCORE Chapter President, District Director and Regional Vice President for the Northwest Region.