CONSUMER SPENDING AND PURCHASE PATHS - CHRISTMAS RedEye ABBIGAIL KNOWLES

Transcription

1 CONSUMER SPENDING AND PURCHASE PATHS - CHRISTMAS 2014 RedEye ABBIGAIL KNOWLES 1

2 CONTENTS PAGE Introduction 3 Participant Profile 4 Budget 5 Location 7 Research & Browsing 8 Device 9 Improving the Experience 10 Time to Target 13 Conclusion 14 Research conducted by 2

3 INTRODUCTION RedEye has commissioned this research to identify KEY FINDINGS consumer purchase behaviour over the Christmas period The research was conducted to help improve marketing activities and campaign effi ciency. THE REPORT IS DIVIDED INTO 7 PARTS: Participant Profi le Budget Location Research & Browsing Device Improving the Experience Time to Target 82% are looking to spend the same or more online as last year Over 1/3 of consumers will go straight to a store they trust 97% will be using both online and offl ine channels The report identifi es if consumers are looking to change their budget, where they are likely to purchase from, how much research they intend to do before fi nal purchases are made, which devices they will be using and what can deter them from making their fi nal purchases. 72% browse for ideas 84% plan to purchase online with a laptop/pc 44% said free delivery would improve the customer experience before purchase 3

4 PARTICIPANT PROFILE The sample used to conduct this research consisted of over 500 participants aged , located across the UK. The majority of participants were aged and 71% of the sample had children. Participants were mostly from the South East and North West of England and refl ect varying levels of socioeconomic status. This sample has allowed for a fair representation of how consumer spending will present itself this Christmas. Figures 1-3 show the breakdown in profi le from the participants surveyed. FIGURE 3 REGION FIGURE 2 AGE FIGURE 1 GENDER 51% 49% Female Male 2 31% 34% 15% Over 65 15% 14% 12% 9% 9% 8% 8% 8% 7% 5% 4% 1% South East North West South West West Midlands East of England Scotland Yorkshire London North East East MIdlands Wales Northern Ireland 4

5 BUDGET Identifying the budget consumers set aside for their Christmas purchases gives an indication of their actual spend. The research states that 57% of the sample intend to spend the same as last year (see fi gure 4) with the majority looking to spend Additionally, 44% of participants spending 600+ plan to spend more online than they have done previously. FIGURE 4 COMPARED TO LAST YEAR S CHRISTMAS GIFT SHOPPING, DO YOU THINK YOU WILL BE SPENDING MORE OR LESS ONLINE THIS YEAR? 25% 2 15% Those in the North West are planning to spend the most, with 3 looking to spend Figure 5 shows a breakdown of how much participants plan to spend online split by region. FIGURE 5 HOW MUCH DO YOU PLAN TO SPEND ONLINE AT CHRISTMAS? (DATA SPLIT PER REGION) 1 5% South East North West South West West Midlands East of England Scotland Yorkshire London North East East Midlands Wales Northern Ireland 25% 9% 57% 9% More Less About the same Don t know Under Over 600 5

6 BUDGET Unsurprisingly those with children are more likely to spend more online, with 28% saying they would increase online spend over Christmas this year, 9% more than those without children. Those in the year old bracket are most likely to increase their online spend with 36% saying they plan to do so. When looking at the age of participants cross referenced with location of purchase the research suggests that age can determine how consumers will purchase their gifts. Those aged between years plan to purchase the most online, with 57% of this age group planning to spend over 5 of their budget online. Additionally, 8% of this age group plan to do all their purchasing online and 36% stated they are most likely to increase their online spend. This suggests they are a worthwhile segment to target. The next biggest online spenders are those aged years with 49% spending more than half their Christmas budget online, of which 5% plan to do all their purchases online. Therefore, the research suggests that it is the middle age groups that are more likely to purchase online compared to those and 65+. This is refl ective towards their budgets and also their current family dynamics. Figures 6-9 show the breakdown of spend for each age bracket. FIGURE 6 A BREAKDOWN OF HOW MUCH BUDGET IS SPENT ONLINE BY YEAR OLDS FIGURE 7 A BREAKDOWN OF HOW MUCH BUDGET IS SPENT ONLINE BY YEAR OLDS FIGURE 8 A BREAKDOWN OF HOW MUCH BUDGET IS SPENT ONLINE BY YEAR OLDS FIGURE 9 A BREAKDOWN OF HOW MUCH BUDGET IS SPENT ONLINE BY 65+ YEAR OLDS 9% 34% 49% 7% 1% 10 > % 11-24% < 1 8% 49% 28% 13% 1% 1% 10 > % 11-24% < 1 5% 44% 35% 12% 4% 10 > % 11-24% < 1 9% 33% 38% 15% 5% 10 > % 11-24% < 1 6

7 LOCATION Determining a consumer s route to purchase allows the opportunity to provide more targeted campaigns. With the change in purchasing habits from the high street to online, it is important to identify how consumers plan to spend their budget. This helps companies decide where to target campaigns and determine the best avenue to focus on. When comparing the preference to online versus offl ine shopping, only 7% of participants are planning to do all their Christmas shopping online. However, this does not detract from the 42% of participants who plan to purchase over half of their presents online. According to the research the main reason consumers choose to shop online is due to the convenience of being able to shop anytime and anywhere (67% identifi ed this as the main reason for using an online store, see fi gure 10). Additionally, when later asked, where are you mostly likely to do your online shopping? 97% said at home and only 1% said they would do it whilst out and about. FIGURE 10 OVER THE CHRISTMAS PERIOD, WHAT WOULD MOST INFLUENCE YOU TO PURCHASE ONLINE RATHER THAN GOING TO A PHYSICAL STORE? Ability to shop at any time and anywhere (e.g. on your sofa/ using a mobile while out and about) Avoiding crowded high streets Ease of comparing prices Convenience of delivery Ability to fi nd unique gifts Not having to carry purchases Avoiding festivities in physical stores 7

8 RESEARCH & BROWSING Christmas shopping often includes deciding on the perfect present. According to the survey 72% of participants claim they browse for ideas or for the perfect gift. Therefore, knowing how consumers intend to research allows an ideal situation for targeted marketing campaigns. Identifying whether research is conducted online or offl ine will determine how campaigns are conducted. The most important fi gure to highlight is that 52% of participants research and browse online before making their fi nal purchase. As stated above, 72% of participants browse for ideas for the perfect gift, whilst only 23% are browsing for the lowest price. From this, the majority of participants researching gifts will then browse for a supplier rather than going directly to a supplier they know and trust. This indicates how consumers are becoming savvier to price differences across various industries. However, over a third of participants still go directly to a store they trust. Consumer preferences can be volatile, therefore it is essential to build brand loyalty and customer rapport to ensure recommendations via word of mouth based on experience. From the research, it is clear that browsing plays a vital role in the fi nal purchase for Christmas shopping. Research is predominately conducted online, however it should not be forgotten, that nearly 3 are adhering to a multichannel experience, either browsing online or purchasing in store, browsing in store and purchasing online, or purchasing in store while researching on a tablet/mobile. Only 3% of participants believe they go FIGURE 11 HOW DO YOU RESEARCH AND PURCHASE CHRISTMAS GIFTS? I research and purchase online I never research, I know exactly what I want and purchase both on and offl ine I research online and then purchase in physical stores I research in physical stores and then purchase online straight to the store they want (online or offl ine) and buy right away. (See figure 11 for a breakdown of how consumers research and buy gifts.) This indicates the need for retailers to acknowledge the full customer journey, and be able to produce relevant infl uential touch points as consumers browse for the perfect gift. I purchase in physical stores while researching/ comparing online (using mobile/tablet) I research and purchase in physical stores I never research, I know exactly what I want and purchase online I never research, I know exactly what I want and purchase in physical stores 8

9 DEVICE Determining what device consumers are using to make purchase decisions can highlight how to be specifi c in the promotional activities that are conducted to infl uence purchase decisions. With 97% of participants planning to do their online Christmas shopping at home, it is unsurprising that 84% plan to use a laptop/pc compared with 26% using a tablet and only 16% a mobile device (see fi gure 12). With 46% of participants using a different device to a laptop (and 3 using more than one channel across the purchase journey), to ensure optimal sales, it is important to tailor activities to the correct device used by the individual consumer. This involves engaging with users whilst they are on the move via mobile or tablet, engaging with users at home online and even effectively engaging them when buying in store. As previously stated, with the right brand equity behind a campaign, there is more reassurance of a fi nal purchase rather than browsing for additional suppliers. FIGURE 12 WHAT DEVICE(S) ARE YOU LIKELY TO USE TO PURCHASE YOUR CHRISTMAS GIFTS ONLINE THIS YEAR? PC/Laptop Tablet Mobile Online facility in a physical store 9

10 IMPROVING THE EXPERIENCE There are various reasons why a fi nal purchase does not take place with an intended supplier. Knowing what deters consumers from making their fi nal decision can allow for necessary seasonal alterations to various business activities. Additionally, identifying consumers early and by their preferences allows for the opportunity to personalise content and provide more targeted campaigns. FIGURE 13 WHICH OF THESE DO YOU FIND FRUSTRATING WHEN YOU ARE PURCHASING CHRISTMAS GIFTS ONLINE? The aspect most commonly identifi ed as frustrating when shopping online was high delivery charges at 64% (see fi gure 13), 48% of these participants determined it as the most frustrating aspect. However, women (37%) tend to be more frustrated by this issue compared to men (31%). Less surprising, more participants without children mark it as a top frustration at 51% compared to those that do have children at 46%. This can be taken as parents preferring to accept the additional cost on top of their purchases purely for convenience. Moreover, parents tended to be more concerned with products being viewed as out of stock. Although presenting Christmas promotions too early in the year was only viewed as frustrating by 17% of participants, from those that did, 43% marked it as the most frustrating thing High delivery charges Products viewed being out of stock Not enough product information Unclear or complicated returns policy Lack of images/bad quality images Complicated checkout process Lack of delivery options No offl ine support Diffi culty locating product(s) within the website Christmas promotions too late in the year Christmas promotions too early in the year 10

11 IMPROVING THE EXPERIENCE Interestingly, year olds showed the most concern for the lack of images or poor quality of images online. This could indicate the importance of providing an online shopping experience that can accurately refl ect the potential quality of products. 3 of year olds said a lack of images would cause them to stop using a site whereas under 2 of other age groups were concerned by this. When it comes to abandoning a purchase altogether, high delivery charges are the top reason for participants to stop purchasing from an online store (see fi gure 14). This was identifi ed by 33% of participants, who said it was the top thing that would stop them purchasing gifts from a particular website. Again, women seem to fi nd it more irritating with 75% claiming they would stop purchasing gifts due to this reason compared to 61% of men. FIGURE 14 WHAT WOULD MOST LIKELY STOP YOU PURCHASING CHRISTMAS GIFTS (1 ST CHOICE ANSWERS) 33% 16% 15% 9% 5% 5% 4% 4% 3% 3% 2% 1% High delivery charges Products viewed being out of stock Concerns about personal details being safe Not enough product information Diffi culty locating product(s) within the online shop Complicated checkout process Lack of images/bad quality image Lack of delivery options Unclear or complicated returns policy Christmas promotions too late in the year No offl ine support (e.g. customer services telephone number Christmas promotions too early in the year 11

12 IMPROVING THE EXPERIENCE Unsurprisingly, providing free delivery was the top suggestion of how companies can improve the online customer experience and stood out way above everything else. When asked how companies could improve the online shopping experience, 91% of answers given related to improving delivery. 75% put providing free delivery as one of the top three ways companies could improve the customer experience and 44% had it as the top way. Leading on from this 41% selected enabling me to select delivery time slots would improve customer experience, with 1 having this as their top way of improving the customer experience. The third most popular option was providing clear details on stock availability. 36% of participants had this in their top three ways for companies to improve the customer experience. Surprising, considering the focus on delivery, just 18% selected offering a Click and Collect service as one of the top 3 reasons to improve the customer experience, with only 5% rating it at the top. Of even less importance was providing gift receipts, free gift wraps and remembering payment details. A breakdown of how participants answered regarding ways to improve the online shopping experience can be viewed in fi gure 15. FIGURE 15 HOW COULD COMPANIES IMPROVE YOUR ONLINE SHOPPING EXPERIENCE? (1ST, 2ND OR 3RD TOP ANSWERS) Provide free delivery Delivery time selection Details on stock availability Online purchases able to be returned to physical stores stock availability Provide visible contact info Offer a click and collect service Provide free gift wrap Offer gift receipts with my purchase Remember my payment details Suggest related items I may wish to purchase Provide personalised suggestions Offer online ordering in-store 12

13 TIME TO TARGET Finally, it is important to consider when consumers are planning to purchase to determine when best to target campaigns. Most participants tend to start their Christmas shopping around November/December (see fi gure 16). Women do tend to start their Christmas shopping earlier than men with over 4 doing it either throughout the year or after the summer holidays. Only 35% of men start this early. Those with children also tend to start earlier than those that don t have children, primarily due to convenience and purchases. FIGURE 16 WHEN DO YOU START CHRISTMAS SHOPPING? 1% Other 2% Week before Christmas 4% January sales 18% After the summer holidays 23% Throughout the year 52% November/December 13

14 CONCLUSION RedEye It is often difficult to predict the behaviour of consumers at Christmas, especially as consumers in different locations and age groups have varying preferences. Nevertheless, this research has highlighted key areas of focus to ensure the highest return on targeted campaigns. Understanding the consumer is the most important aspect of effective targeting. Without understanding your customers, how do you know what will work? It has been acknowledged that whilst consumers budgets are maintaining or slightly increasing, this is not the case in every location. Therefore, necessary measures must be put in place to adapt. Purchase deterrents also play a key role in a consumer s route to purchase. Thus, it makes business sense to acknowledge and implement seasonal strategies to ensure a competitive advantage, especially at Christmas. Furthermore, there is a transition occurring with where purchases are made for Christmas. As previously suggested, it is important to engage with consumers early on whilst they are browsing and researching Christmas gifts and this may happen on a range of devices, both online and offl ine. With 46% of consumers planning to use a device different to that of a laptop or PC and 3 of participants integrating browsing and buying behaviour with online and offl ine activity; in order to communicate with consumers effectively you need to be aware of exactly how customers are interacting with your brand, through what device, and what time. Providing a fully multichannel or omnichannel experience is essential. FOR FURTHER DETAILS PLEASE CONTACT REDEYE... Guy.Darwin@redeye.com Grosvenor Gardens, Victoria, London, SW1W 0GT 14