In a year filled with myriad uncertainties and economic challenges, it should come as no surprise that shoppers are putting more thought into the decision-making process when it comes to shelling out on retail goods.
According to buy now, pay later solution Klarna, 2020 has underscored consumers’ hunger for value. New data published Monday shows that for the majority of shoppers (67 percent), getting bang for their buck has become a priority since the pandemic began.
The survey of 4,000 consumers across the U.S., U.K., Europe and Australia also showed that 60 percent of respondents have come to prioritize promotions and deals, while an equal number now consider a brand or retailer’s reputational standing and trustworthiness more than they did in the past. More than half (58 percent) of shoppers look to retailers that offer a wide range of products—“perhaps fueled, in part, by shortages on the shelves earlier in the year,” Klarna said.
These qualities have become non-negotiables over the course of 2020, but there are subtle differences between shopper “tribes,” it added. “Merchants must keep a finger on the pulse of their customers’ wants and needs, and adapt their products and service offers accordingly,” said Luke Griffiths, chief commercial officer for the Swedish fintech firm. Doing so builds “a connection with shoppers to drive loyalty and, ultimately, sales.”
“This year’s events have transformed the way we browse and buy, reinventing our relationships with brands and retailers and accelerating change at an unprecedented rate,” he added.
Related Stories
According to Klarna’s research, modern shoppers tend to fall into one of five categories. Family Firsts, as their moniker implies, tend to prioritize their families and home life over purchasing for themselves. Only one-third are loyal to brands and retailers, and 30 percent are likely to be indifferent to who they buy from. That’s because 62 percent of this group believes value is important, and retailers must work hard to keep them coming back.
Aspirational Achievers, by contrast, are financially comfortable and willing to invest their time in shopping around. They tend to buy premium products, Klarna said, and this tribe is most likely to profess loyalty to brands, with 45 percent saying they return to well-loved and trusted labels within each category they shop. More than half (57) percent of this group—more than any other tribe—prioritizes quality in their purchases.
The next class of shoppers tends to make more impulsive decisions. Here and Nows live in the moment, spending what they earn on whatever they desire—and that often includes products they find on social media platforms like Instagram. Well more than half of this group (58 percent) said they want to treat themselves to fun purchases during this time of limited social interaction, and almost one-quarter pulls inspiration from ads they see while watching their favorite shows.
Somewhat like-minded Savvy Fashionistas earn less than they’d like, but seek out inspiration on the web, and look for hacks to help score discounts on products. In fact, 45 percent of respondents from this cohort said they were more likely to buy from retailers that offer deals, and an equal number said merchants that carry a wide range of products were at the top of their shopping lists. Ever conscious of budget, more than one-third of this class of shoppers considers it important for brands and retailers to offer flexible payment options, saying these services enable them to shop regularly and buy more products.
On the flip side, Conscious Consumers are more focused on shopping sustainably and investing in experiences than on obtaining trendy products. Because of their eco-friendly mindset, 36 percent of this gang of shoppers ranks retailer or brand websites as their source of inspiration, likely because they tend to delve deep into a company’s ethos before making a purchase.
According to Natalie Berg, retail analyst and founder of NBK Retail, brands would do well to play to the individualized needs of different consumer groups as they look forward to a post-pandemic future.
“The retail industry is no stranger to disruption, yet nothing in our lifetime has jolted the industry like Covid,” she said. Navigating the “new normal” will require resilience and agility, she said, and “the days of being everything to everyone are well and truly over.”
“In order to find their tribe, retailers need to be bold about who they are and what they stand for,” she added.
There are some things that tribes can agree on, though, when it comes to the modern retail experience. More than half (55 percent) of respondents said that an easy returns process has become more important this year, while 51 percent said same-day delivery options are paramount. Those stats coincide with the near-equal contingent who said they were doing more of their shopping online this year—and two-fifths bumped that assessment up to “most” or “all” of their purchasing.
Recent data from Klarna released after the post-Thanksgiving shopping holidays also showed a significant shift in what consumers are shopping for during a year filled with unprecedented circumstances.
According to the company, after months spent cocooned on the couch, consumer spend on “intangible” experiences and services, like travel and leisure, climbed 4 percent during Cyber Week versus the week prior. While shoppers are still spending on apparel, accessories and footwear, “style and product preferences have changed: comfort is now a priority,” Klarna told Sourcing Journal.
App data from Q3, leading up to the holidays, showed that athleisure styles made up more than 90 percent of the top wish-listed items leading into the holiday season. Sneakers also made the cut, topping many shoppers Klarna’s wish lists this year. “Nike Air Force Ones have consistently been the most wish-listed shoe in the Klarna app,” the company said, noting that Converse Chuck Taylor All Stars, Vans Canvas Old Skool, and Adidas Lite Racer Adapt styles have gained traction, too.
Amid the spike in e-commerce, flexible payments have also become more appealing to 45 percent of shoppers, Klarna’s data revealed. In fact, the option to pay in installments has the ability to make or break a sale, with 42 percent of shoppers saying they prefer to shop with brands or retailers that partner with payment solutions providers, and almost one-third saying they won’t shop with those that don’t.
No doubt with those insights in mind, Klarna announced a new strategic partnership with payment and commerce solution Verifone on Monday, enabling the service’s customers to use Klarna at retailers that employ the Verifone Cloud Services platform in the U.S. and Europe.
The integration allows shoppers access to Klarna’s features, like interest-free payments, in stores where Verifone point-of-sale solutions are used. To use the payment option, shoppers select Klarna as the payment option on the Verifone device, scan a QR code, and verify their ID.
“We truly believe that there is a role for the physical store within the future retail brand experience,” said Klarna’s Griffiths, adding that today’s shoppers desire flexibility, transparency and convenience now more than ever.
Jeremy Belostock, Verifone’s head of alternative payments, said the company has been working to enable alternative payment options on its in-store devices over the past few years. “Klarna is particularly interesting and unique in that merchants will have access to new, larger revenue opportunities through its flexible payment options,” he added. “Retailers of all sizes have seen massive success with Klarna online, and with Verifone, they’ll see the same success in store.”