After a year defined by cost-of-living pressures and cautious consumer spending, peak season arrives at peak time for Australian retailers.
A spike in activity is expected as Aussies tap the excitement of Black Friday and Cyber Monday, stock up from Christmas and take advantage of the traditional Boxing Day Sales. However, the size of that spike and success in the coming weeks and months will be influenced by the extent to which retailers can understand, and then cater to, the needs of their shoppers.
Lightspeed’s 2024 Retail Insights and Shopper Sentiment research* sought to understand how Aussies are shopping as peak season arrives. Is eCommerce exploding, or is in-store making a comeback? What are Aussies looking for from retailers beyond their products? How should businesses approach their bricks-and-mortar operations? And is ‘support local’ as strong as ever?
First, it’s key to understand the differences in how we shop. eCommerce, in-store and omnichannel are providing masses of ways for shoppers and retailers to engage with one another, but the way consumers interact with brands is often dictated by age. Interestingly, for example, Gen Y shop online more frequently (27% multiple times a week) than Gen Z (12%). Those aged 60+ are shopping significantly less online, meanwhile, but far more frequently in-store.
Then there’s income and location. Lower-income households are shopping less frequently, and it’s particularly prominent online, with just 48% of those earning $60,000 or less shopping online more than once a month compared to the national average of 67%.
Perhaps unsurprisingly, those in regional towns shop at physical stores and online less frequently than their counterparts in metro capital cities. Interestingly, 13% of respondents in regional towns say they never shop online, while 22% say they never shop on marketplaces like Amazon, Facebook and eBay – both of which were double their metro counterparts.
Retailers should clearly define and segment their core audience, because everything that follows is dictated by knowing who their shoppers are and how to meet their needs.
eCommerce reached record highs in the pandemic, as shoppers and retailers made up for physical store closures. While those record peaks have softened, online is here to stay. That’s not instead of, but in addition to, the physical store – which is still incredibly popular according to our research.
Lightspeed’s research reveals that 76% of consumers shop in physical stores at least once a month, 45% research a product online and purchase in-store while 17% frequently shop in-store and purchase online. In the age of omnichannel commerce – when retailers unify their in-store and online, back-end and front-of-house operations – tapping into both channels is essential. Clearly, the appeal of in-store shopping is not diminishing – so retailers should throw their highstreet doors wide open.
Above and beyond
Getting them into a store or onto a website is one thing, converting them is another. Two in five (39%) favour stores with loyalty programs, so retailers should think about how they can use that as a retention and repeat revenue strategy. The most coveted service among 42% of shoppers is the ability to check stock availability online before making their in-store visit. Retailers should ensure their in-store inventory is visible online and accurate.
One in seven (14%) value services such as repairs, alterations, personalisation etc. This underscores the significance of tailoring strategies to meet diverse consumer preferences and expectations based on retail offerings and categories. Meanwhile, 15% appreciate buy-now-pay-later options, while 21% are drawn to gift cards.
Clearly, in-store still holds a significant pull for Aussies. Physical shopping is tactile and personal, with 56% of respondents drawn to physical stores to view products in real life – including samples and trials. What’s more, a further 46% of shoppers value the ability to compare similar products within a tangible retail setting.
Returns are an inevitable part of retail, especially during peak season when gifting is high. Over half (53%) consider free returns as standard practice for in-store shopping. So with in-store returns and a flexible returns policy weighing heavily in the purchasing decisions of many shoppers, retailers should consider how it can aid both their customer acquisition and retention strategies.
One in three shoppers believe in-store is more expensive than online, so to retain and attract in-store shoppers, it’s important for retailers to address these concerns by implementing transparent pricing strategies and, when feasible, offering price guarantees.
Local retailers might not have the budget of big box competitors, but they do have a competitive advantage: the support for local. While price is crucial – especially during cost-of-living pressures – for 34% of Aussies, the concept of community and ‘supporting local’ is a compelling attraction.
One in three (34%) value access to deals and offers for ‘locals’, 25% prioritise unique and locally-sourced or made products, and 24% favour businesses with whom they have shared values. So, where applicable, businesses should take pride in the local nature of their products, consider if they can use their physical store to create locals-only incentives, and use their values and mission to build a more meaningful connection with their shoppers and community.
While peak season, naturally, should see a spike in activity, the true measure of success during this critical period hinges on retailers’ ability to understand and respond to the evolving needs of their customers. Economic considerations remain, but by understanding their audience and unifying their approach, optimising their operations and tapping into their ‘local’ sentiment, retailers will be better placed to enhance their customer relationships and their business strategy.
*Lightspeed’s 2024 Retail Insights and Shopper Sentiment was carried out amongst a nationally representative sample of 804 Australians, seeking to understand their shopping habits and behaviours.