Covid-19 hit the reset button on consumer behaviour. Retail brands quickly realised that it was no longer business as usual after the pandemic set in, and marketing plans, execution, creative, and channels had to be re-thought wholescale. But it is not just the initial seismic shifts in consumer behaviour that have thrown down the gauntlet for retail. The continuing knock-on effects and consumer landscape transformation have left brands scrambling to find ways to maintain pace and stay relevant.
nt. There’s no shortage of behavioural data that gives brands the answers to who their customers are, what they buy, where they buy from and howthey buy. But many brands are only just scratching the surface when it comes to really understanding why consumers behave the way they do. This leaves the obvious question: how exactly has Covid-19 altered consumers? The answer is deceptively simple. Two fundamental aspects of consumer behaviour have changed. Consumers are shopping with purpose, and consumers are shopping for purpose. Understanding these two changes is the key to unlocking how to connect with the purposeful consumer. Shopping with purpose How consumers shop has radically changed and effective targeting in retail means coming to grips with the detail of those changes. Consumers are engaging in more deliberate shopping behaviour. They are browsing with increased purchase intent; they are spending more time researching. The changes are widespread. Globally, 49 per cent of consumers choose to shop online more than they did pre-Covid, and according to Australia Post, they have doubled their purchase volume per shop. Business Insider Australia reported growth across all demographic categories, but that consumers aged 65 and older are now the fastest-growing group of online buyers, spending 49 per cent more online than the year prior and increasing their purchase volume by 40 per cent. Not only is this growth occurring across most segments, but it is also occurring across product categories from essentials through to discretionary purchases. Aaron Fidler, head of retail and commerce account management at Mastercard Australia, says the company’s latest Recovery Insights research shows that “roughly 20-30 per cent of the global Covid-related shift to digital is expected to be permanent. For grocery and discount stores, we anticipate 70-80 per cent of this e-commerce surge to stick around for good.” Shopping is also increasingly enabled by technology, according to the latest digital report by We Are Social. Mobile commerce shopping has boomed and is up 45 per cent according to PwC, and there is a clear shift towards social commerce, especially among the younger generations: Statista reports that 48 per cent of consumers aged 18-34 have purchased via social commerce. DoubleVerify found that content consumption has doubled during the pandemic. This is being supported by augmented reality (AR) and virtual reality (VR), which are being adopted rapidly across the retail sector. The AR and VR category is expected to reach USD $72 billion in 2024. Speaking recently on these accelerated changes at the Australian Retailers Association (ARA) Leaders Forum, David Jones CEO Scott Fyfe said: “Running a 182-year-old business, we have probably learnt more in the past 12 months than we have in the past 12 years.” Consumers now, more than ever, expect brands to be where they are, but also to be there when they need them. There is a revolution occurring in how consumers shop. Omnichannel is the bare minimum. Omnipresent is a far more accurate reflection of what is needed from brands in this retail renaissance. These changes are not temporary or fleeting. The year-long experience that consumers have had shopping online has reset perceptions and attitudes. While consumers are presently dedicating 16c in every dollar to online spend, by conservative estimates, this is set to increase to 22c by 2022. What we once termed an online ‘trend’ in 2020 driven by Covid-19 consumer anxiety and fear is now in 2021, a firmly entrenched behaviour driven by consumers’ perceptions of convenience and value. New habits have been adopted, consumers expectations have been reset, and consumers are shopping with purpose. However, the changes in consumer behaviour are not isolated to how consumers shop. They extend to why they shop. Shopping for purpose Despite the growth rates in online retail, there lies a somewhat surprising and contradictory tension under the surface. A huge 91 per cent of consumers report that they want to shop in-store. CommBank has reported that 2021 has also seen a resurgence in consumers wanting to shop locally: 85 per cent of Australians intend to buy from local brands and businesses to help them on the road to recovery. Consumers are visiting their local suburban shopping centres and stores more often in 2021 than they did pre-pandemic. But why? The pandemic has shone a spotlight on superordinate goals. Psychology tells us that these goals require cooperative achievement. They also require us to think of ourselves as one larger superordinate group. On the one hand, the mass public threat and ensuing anxiety that we have witnessed stripped us of our autonomy. On the other hand, Covid-19 has brought us together. Our overarching goals are now common and shared: safeguarding and protecting our community and our future. We are collectively galvanised against the Covid-19 enemy. Superordinate goals are powerful motivators of behaviour, but most importantly, they drive behavioural change. Self-determination theory tells us that in a bid to regain control, consumers adapt. They seek connection, meaning and most importantly, they seek purpose. We have seen it in the cocooning nesting behaviours of consumers created by lockdowns. We have seen it in consumers returning to legacy brands in a bid to seek out stability. We have seen it in brand campaigns that have leveraged off of retrospectively romantic values, transporting consumers back to a time when life was simple and carefree. Wanting to return to shopping in-store and to shop locally is no different. It is another signal that consumers want to regain their sense of control, autonomy, and normalcy. Consumers have a deep-seated desire to return to a less anxiety-filled period in their lives when they didn’t have to contemplate QR code check-ins, the availability of touch-free checkouts, social distancing and disinfectant regimes. There is now a very strong nostalgic connection and reflection on the past. Paradoxically, the more things change, the more things stay the same. Herein lies a huge opportunity for retailers. Emotions are powerful, persistent and pervasive. Carefully crafting a brand message with an emotionally driven narrative that speaks to consumers’ experiences and targets motivational emotions is the key to achieving connection. Emotional stimuli often bypass the neocortex component of the brain (and logical analysis) and trigger strong automatic emotional responses. Brands can appeal to consumers’ deep emotions and shape purchase behaviour by tapping into the limbic system, the part of the brain responsible for processing emotion. When consumers are emotionally attached to a brand, they defend it, fight for it and protect it. That’s the power of neuromarketing. This emergent consumer, marred by pandemic burn-out and continued residual Covid anxiety, actively searches for an emotional connection, balance, familiarity, and deeper meaning in their lives. And this is where retail brands have the opportunity to step in and step up. Does purpose matter? In an era of rapidly evolving consumer choice behaviour and choice, every retailer’s job is to understand when and why the consumer will choose them over a competitor. Countless studies on consumer engagement (my own included) emphasise the importance of retail brands as trusted relationship partners. Consumers look to authentic brands for meaning, connection, reassurance, guidance, hope and vision. McKinsey has identified millennials and gen Z as the most conscious consumers leading the brand purpose b(r)andwagon. They live and breathe purpose. They seek out connections that closely align with their beliefs and values. Relationships with brands are no different to relationships with people. Brands are anthropomorphic in nature. We perceive them as having personalities and human qualities. That’s how we as consumers connect with brands. From a retail perspective, connection through purpose pays. The Zeno Group found that consumers were four to six times more likely to purchase, protect, champion and trust a brand with a strong brand purpose. Sprout Social found that when customers felt connected to a brand, more than half (57 per cent) increased their spending with that brand, and 76 per cent actively chose that brand over a competitor. How can retailers create real brand purpose? Consumers expect brands to offer individual product and service solutions and a broader collective social, environmental, and economic impact. Brand purpose connects a brand’s role in society, to its long-term value, aligning brand identity with a sustained commitment to stakeholders. Purpose drives purchase. Deloitte found that 39 per cent of consumers would buy more from brands that responded effectively during the pandemic. Speaking at the ARA Leaders Forum, Catherine Ross, COO at i=Change, pointed out that “purpose is increasing EDM open rates, it is increasing engagement, and it is increasing conversion” for brands. “Customers are motivated to shop with brands that have a clear purpose. The brands that were giving back, supporting the community and addressing those challenges,” she said. On the flip side, consumers actively avoid brands that are inauthentic ‘fakeholders’ when it comes to taking real responsibility on important social issues. Talk is cheap. Tokenistic brand purpose at the expense of demonstrable visible action on key societal issues risks alienating consumers: 71 per cent of customers said that brands that placed profit before people during the pandemic would lose their trust. That is especially dangerous during an era of cancel culture. Consumer power and persuasion have grown through social media. No brand anywhere is safe, and if a brand takes a misstep, many consumers will be ready to “blow the whistle”. Brand apologies are common and costly. Deloitte reported that one in four consumers will walk away from a brand that gets purpose wrong. Brands who ignore purpose do so at their peril. The upshot is that retail brands cannot afford to not be in the purpose game. There is a clear expectation that brands should be rooted in empathy, concern and the public interest. Brands must strive to be genuine, authentic, accountable and trustworthy. They are not inanimate objects. In consumers’ minds, they are anthropomorphic. Customers look to their brands to lead by example. Brand purpose must permeate all brand communications. All brands know what they do. Some brands know how they do it. How many brands know why they do it? Why is the raison d’être: the cause, the beliefs, the values. What resonates with consumers is when brands know their reason for being and when they consistently put that front and centre. Paul Bradbury, CEO TBWA Oceania, said at the ARA Leaders Forum that “consumers don’t just buy now based on price and product selection. They care about the brands and companies they choose to purchase from: what they say, what they do and what they stand for.” They are shopping for purpose. Genuinely step up, help out and give back. As a retail brand, ask yourself, how do you contribute to the social fabric? How do you think about sustainability? How are you bringing something new for your consumers every time they choose you? How are you ensuring that you are omnipresent in your consumers’ lives? There is a clear warning for all those who think brand purpose doesn’t count: tread carefully. Now, it does.