Times have changed, and businesses either need to change with them or die. Long gone are the days of niche brick-and-mortar stores, and as Millenials and GenZ consumers start to earn more money, the e-commerce market world needs to shift as well. In order to survive, stores became brands, enticing their customers to remain loyal and shop with them even when they could find better deals elsewhere.
But that isn’t enough anymore. Brands were forced to become “experiences”, and customer satisfaction is the driving force behind these large changes currently reshaping retail. As customers seek out increasingly personal shopping experiences, they are having to trade their sensitive personal data — is there a better way?
An Evolving Business Landscape
It wasn’t too long ago when stores focused on a single area of sales, both in regard to their physical location and the product they carried. Imagine how Walmart, for example, started as a department store and now is one of the largest e-commerce marketplaces, selling everything from bread to health insurance.
These shifts in business are driven by data, and companies like Walmart, Amazon, and Alibaba have access to more personal data than anyone is comfortable admitting. This data is key to understanding customers, as it provides insights into exactly what the customer wants to buy, their spending habits, when the best time to target ads at them are, and much more.
It is often reported in the news that “‘Millenials killed Applebees,” and this sentiment seems to be repeated every year with a new restaurant or business. But what if Millenials aren’t actually killing these businesses, but rather these businesses are failing to adapt to a changing market? Millennials and GenZ appear to be avoiding brands that refuse to change, brands that refuse to grow from a business into a brand and eventually into an experience.
What makes Applebees different from TGI Fridays is a question Applebees failed to answer, but this type of question requires an answer that shopping ecosystems like Walmart and Amazon are racing to provide. If you can build an experience around your customers, they will have no reason to look elsewhere to fulfill their needs.
Can the Market Sustain this New Way of Doing Business?
Businesses turned brand have now grown into experiences, entire ecosystems where we can have all our needs met — but the cost of figuring out what members of the Millennial and GenZ generations actually want isn’t cheap.
In 2018, it was estimated that almost $100 billion dollars were spent on digital advertising. This would seem like a lot more until you realize that the e-commerce sector was worth $3.5 trillion dollars in 2019, a number that will almost certainly continue to grow as more consumers shift away from shopping at physical stores.
But moving into a completely digital sales funnel may not be the most efficient plan for modern stores. Amazon is doing the opposite by having started out as an entirely online sales platform. Only now are they slowly moving into brick-and-mortar stores.
Their reasoning for this is that they understand that the future of retail is blended, and by giving consumers, especially Millennial and GenZ shoppers, a chance to shop both online and physically at your store you can capture far more of their wallet and interest.
Brands that have seemingly endless amounts of money, like Walmart and Amazon won’t take as hard of a hit if consumers don’t get on board right away. Smaller brands, like H&M, need to be more careful with their planning as we enter into a new era of shopping.
H&M has been drawing customers to its stores for over half of a century, but when you look at its recent projections and marketing plans you can see that H&M understands what’s at stake — they need to create a personal experience for their customers or close up shop.
The Brand Evolved
Retailers that don’t have millions of dollars to invest in marketing may struggle, especially if they’re a local business trying to reach a larger audience. Take H&M for example, even though it isn’t a small regional brand, it still has to compete with giants like Walmart and Amazon.
H&M has plans to open fewer new physical stores in the future; they instead want to focus their attention on building up their e-commerce presence. This method may pan out if H&M is can hyper localize their customer’s experiences to be both rewarding and engaging without being too intrusive.
In 2017, H&M reported that approximately 12% of its sales were online, but at the same time, online sales had a profit margin of almost 23% compared to 18% in physical stores. In the same report, H&M goes on to list some of the key ways they plan on revolutionizing their brand:
- “Trend detection and design support”
- “Demand forecasting, quantification and allocation”
- Integrate “RFID, 3D” technology
- “Partnerships with online platforms, social commerce”
- Improve product “design, quality, price, and relevance”
Although some reports indicate that H&M is starting to turn the tides of their three-year slump into earnings, their massive inventory levels are still causing the company stress by carrying the burden of debt. To connect with Millennial and GenZ consumers the company could benefit from making a few major changes.
Consumer data is readily available, and the more a customer can benefit from giving away their data the happier they tend to be. Here are some aggressive approaches backed up with statistics to highlight the different ways businesses can attract Millennial and GenZ shoppers.
Adopt a hyper-local Approach
Young shoppers tend to check online for a price before venturing into a store, and if they don’t like what they see then they won’t make the trip — this is known as “webrooming” and 88% of online shoppers do it.
Stores, even massive global entities like H&M, need to find a way to hyper localize their products and shopping experiences to not only better connect with their customer base but to drive sales through building stronger relationships.
By showing your customer base that you’re engaged with their community in a sustainable way can have a huge impact, especially when your supply chains are transparent.
Provenance is a blockchain company helping corporations become more transparent to potentially uncover more customer opportunities, demonstrate business impact through hard data, and overall engage with shoppers. This is done by integrating existing supply chains into a blockchain, to showcase proven sustainability claims both locally and internationally — something Gen Z and Millennial consumers are willing to pay more for.
Offer Comprehensive Rewards to Customers
Over 80% of online shoppers check at least one social media site before making a purchase, so when businesses can incentivize users to leave reviews with rewards it’s a win-win.
Additionally, 54% of online shoppers will purchase products they’ve put into a cart if those products are subsequently offered at a lower price. Rewards for customers need to be more than emails, and businesses that offer a reward experience instead of just a coupon to their customers can build loyalty.
Connect with Customers in Diverse, non-intrusive Ways
Over 90% of Americans reported that they want to receive promotional emails, and these days the majority of email users are opening them on their phones. If a customer opens an email in the middle of the night it may just get lumped in with all the other things clogging their inbox.
But, if they get a notification upon physically entering a store that contains a promo code they’ll probably use it.
Overall, Millenial and GenZ consumers just want to be rewarded for the time they spend shopping. With seemingly infinite options presented to consumers, brands can no longer rely on simply “being the best” to bring shoppers into their store.
On top of that, customers don’t want to have to manage dozens of perk programs, punch cards, discount coupons, email lists, shopping carts, wish lists, and more. This is where the new blockchain services comes into play.
Reckoon is a blockchain-based company that uses a “Global WishBasket Shopping Protocol” (GloWS for short) to give consumers the ability to keep all their stuff in one place. See a dress you like? Snap a picture and put it in your GloWS. Looking for a specific rice cooker or a carpet for your house? Add it to your GloWS.
Over time your GloWS will interact with businesses looking for customers, enticing them to offer you discounts and hand-picked items to get you into their stores (both online and in-person).
Imagine a giant brand like H&M that, when you walk in the door, you get a notification on your phone telling you exactly where the dress you want is and also letting you know that it’s 15% off for the next hour. Would you be more enticed to buy it?
OSA DC will help retailers eliminate waste by using AI protocols to connect customers to retailers, helping retailers understand exactly what customers want and more importantly, what they don’t want. Users will be rewarded for providing feedback in the OSA DC system, and all consumer interests are protected through smart contracts. One of the key features of OSA DC is the ability for the AI to monitor the customer’s decision tree, eventually understanding what led to them making a specific purchase.
Overall, you’ll probably be more enticed to physically visit stores, in general, knowing that a backend, blockchain-secured company is managing all of your data, promotion codes, shoe sizes, and color preferences.
When that data is used to help ensure products you like are in stock in your size, both the retailer and the consumer win.
With all this data running through machine-learning algorithms you never know when you might get a notification telling you the store nearby has the exact thing you’ve been looking for, ready for you to pick up.
Journeying with the consumer
Millennials don’t want to be sold, we want to be guided on a shopping journey where brands take our hand and show us exactly what we’ve been looking for. Don’t try and convince us it’s a good bargain, we’ll do the research ourselves.
Instead, build trust with us through social media engagement by giving us control over our data and very importantly, remember our birthdays.
Millennials and GenZ consumers have major purchasing power, and retailers that fail to recognize that are going to go the way of Applebees. Smaller businesses that want to survive need to become brands, because creating experiences for us to enjoy instead of just places for us to shop at is the only way you’re going to take business away from Amazon and Walmart.
At the end of the day, we want a business to treat us like we are special; because the bottom line is we have plenty of other options to buy the exact same product: make it worth buying it from you.
The author is not associated with any of the projects mentioned.