© Prof. Moira Clark 2021

Where business comes to life

The Changing Face of Consumer Behaviour

Prof. Moira ClarkThursday 13th May 2021

© Prof. Moira Clark 2021

• How consumer behaviour is changing

• What we can expect going forward

The changing face of consumer behaviour

© Prof. Moira Clark 2021

© The Henley Centre for Customer Management 2021

Customers are becoming:

The 21st century customer

© The Henley Centre for Customer Management 2021

Ageing of populations

Source: United Nations Population Division; World Population Prospects (2006 Revision)

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lder

© The Henley Centre for Customer Management 2021

The world is getting older rapidly

A huge market of “over 65s” is emergingNote: Country position on the chart represents the year in which the over-65 group overtakes the under-15 group

Sources: United Nations; World Population Prospects (2017 Revision)

© The Henley Centre for Customer Management 2021

Over 60’s:• Mature economies - 22% to 33%

• Developing world - 9% to 20%

• 25% of China’s people over 65

• Japan alone has 30% over 60 now

- 64 countries will by 2050

In the UK by 2031:• 50% will be over 50

• Over 85’s double to 3.1m

• Those born in the:

– 1950’s expect to live to beyond 90– 1960’s onwards to live beyond 100– 2010’s expect to live to 110

Global ageing by 2050

Sources: UN ESCAP, Ageing Societies; Cancer Research UK, Demographics; AICPA.org, Global Forces

© The Henley Centre for Customer Management 2021

The performance of the brain for certain tasksslows from the age of 20

• Loss of grey and white cells in the prefrontal cortex, reduced volume of hippocampal

• Slowing processing speed

• Reduced working memory

• Declining long term episodic memory after 60

Healthy Aging Means:

Source: Hedden and Gabrieli 2004

© The Henley Centre for Customer Management 2021

Implications for Service Performance

Older Consumers

• Will seek interpersonal relationships

• Will delegate choices to trusted service providers

• Less able to multi-task

• Simple decisions will take longer

• Complex decisions are "rationed”

• Time pressure reduces decision making effectiveness

• Distraction (music / noise) will hamper decision making

Older Service Personnel have all the same issues

© The Henley Centre for Customer Management 2021

•

• Brighter lights

• Comfort

• Seating

• Parking

• Toilets

• Sound

• Time

Etc.

… and what do older people want?

Larger print

© Prof. Moira Clark 2021

Are your customers becoming more intolerant?

Yes

No

Uncertain

Poll

© Prof. Moira Clark 2021

Have you had more complaints since lock-down ended?

Yes

No

Uncertain

Poll

© Prof. Moira Clark 2021

Changing Consumer Behaviour

• Complaints declined during COVID

BUT

• Consumers are no longer tolerant of a poor customer experience

Source: EY Future Consumer Index, Mar21 and Ombudsman Services Action Monitor Report August 2020

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Customers are connected and in control

Informed, Disloyal & Time-poor

Driven by Experience Increasingly Passive

Socially Dependent

39% research before purchase

Mental Availability Automation

71% purchase on socialrecommendation

© Prof. Moira Clark 2021

How is customer behaviour changing?

© Prof. Moira Clark 2021

Changes in consumer behaviour – going digital

Source: WeAreSocial.com, Jan21

Flight to digital and omnichannel: Emerging E-commerce trends for 2021

© The Henley Centre for Customer Management 2021

Consumer behaviours are settling into a new normal, even as countries reopen parts of their economies

• Shift to value & essentials

• value remains the primary reason for consumers to try new brands as well as new places to shop

• convenience and availability are most often cited as top drivers of consumers’ decisions about where to shop

• quality and purpose (desire to support local businesses, for example) are the more important considerations when choosing new brands

Source: Forbes, ‘Changes In Consumer Behaviour Brought On By The Pandemic’, Jan21

Changes in consumer behaviour

© Prof. Moira Clark 2021

Consumer behaviours are settling into a new normal, even as countries reopen parts of their economies

Changes in consumer behaviour

• Shock to loyalty

• 60% of consumers who tried a new behaviour plan to stick with it post-crisis

• Value, availability, and quality or organic products were the main drivers for consumers trying a different brand

© Prof. Moira Clark 2021

Consumer behaviours are settling into a new normal, even as countries reopen parts of their economies

• Homebody economy

Changes in consumer behaviour

© Prof. Moira Clark 2021

• Gen Z grew up with technology seamlessly integrated into their lives

• Now that companies have their personal data, [customers] want anticipatory, personalized experiences across the entire customer journey

The desire for experience

• You are NOT competing with your competitors – you are competing with the last best experience your customer had

Source: Harvard Business Review, ‘10 Truths About Marketing After the Pandemic’, Mar21

© Prof. Moira Clark 2021

• Younger audiences are leaving many public-facing social platforms and flocking to smaller, more intimate online destinations – or ‘digital campfires’

• The biggest cultural moments to capture the attention of young audiences in 2020 happened on digital campfire platforms, not traditional social ones

Where are brands reaching Gen Z now?

Source: HBR, ‘Where Brands Are Reaching Gen Z’, Mar21

© Prof. Moira Clark 2021

According to research in the Henley Centre for Customer Management, customers will expect:

• Entertainment/innovation

• Immediacy

• Omnipresence

• Proactive service

• Automated service

• Rich interaction

• Transparency

• Customer co-creation

• Customisation &

• Personalisation

Increased customer expectations

© Prof. Moira Clark 2021

1. Digital innovation and omnichannel experience

• Greater investment in digital assets to boost acquisition of customers

• Companies making the digital experience is ‘easy’ and as frictionless as possible

• Use of brand hosted communities to build sustainable and long-term relationships with customers (e.g. Under Armour)

• Improve and prioritise the use of Apps

© Prof. Moira Clark 2021

Digital innovation and omnichannel experience• Enrich the digital experience as far as possible i.e. samples,

videos, AR

Source: McKinsey

© Prof. Moira Clark 2021

Disruptive technologies are shaping consumer behaviour

The Internet of Things

• In 2012 companies spent $20 bn on technologies linked to IoT.

• By 2030 expected to exceed $700 bn

• IoT could contribute $14 tn to the world economy

Artificial intelligence and customer interactions - Conversational commerce

• 2021 – 1.5bn virtual assistants installations

• By 2023 - exceeds 8.0bn.• Could bots be the future

commerce platform?Conversational commerce?

© Prof. Moira Clark 2021

• AR and VR could form a $150bn market, disrupting mobile by 2030

• 1.3bn mobile AR apps by 2025

Next phase of mobile

Source: Overdigital, Augmented Reality

The end of the smartphone era?

• Less need to touch a screen.

• 85% say wearable electronic assistants common in 5 yrs.

• 50% say holographic screens mainstream within 5 years.

http://www.kurzweilai.net/ai-will-replace-smartphones-within-5-years-ericsson-survey-suggests

https://cdn-images-1.medium.com/max/800/1*RDB7q2UG9KdBIANWiA0kgA.jpeg

© Prof. Moira Clark 2021

2. Click & Collect (with physical changing rooms)

• Customers can quickly try on clothes and return them easily if they are not quite right – benefits the customer and the retailer

• Online fitting rooms are also increasing in popularity

© Prof. Moira Clark 2021

© Prof. Moira Clark 2021

Served by humanoid robots/holograms

Acroid 1 Shakira 2 Clooney 1

© Prof. Moira Clark 2021

3. Shopping local

• Almost 3 in 5 shoppers have said they are more likely to shop at stores selling locally-produced goods once lockdown is fully lifted, compared to before the pandemic hit the UK (Source: Deloitte Digital)

• Department stores should embrace local – repurpose some of the store for local fulfilment

© Prof. Moira Clark 2021

4. Entertainment & al fresco dining

• A third of Brits say they’ll spend more on eating out than they did before lockdown

• Customers keen to use pub gardens rather than eat inside

• Peter Jones, Sloan Square (John Lewis): “more inspiration, surprise, fun. We’re going to build a huge bar and restaurant here with food from our Waitrose farms” – Sharon White Chairman of John Lewis Partnership

(Source: YouGov May 2020)

© Prof. Moira Clark 2021

70% of customers said they try to purchase products from

companies they consider to be ethical

90% of customers are willing to pay more for ethical retailers…

… whilst over a third feel it is more important that

the brand’s values match their ownSource: KPMG: UK Customer Experience Excellence Report 2020

57% of all consumers have made significant changes to their

lifestyles to lessen their environmental impact Source: McKinsey

5. Consumers are becoming socially and environmentally-minded

© Prof. Moira Clark 2021

• Innovation and technology is significantly impacting the future of the high street

• It’s about providing an approach that is seamless, personalised, transparent andengendering trust

• It could be an era where the customer has never had it so good!

Summary: Changing consumer behaviour

Data analytics

Robotics

Biometrics

AI & IoT

© Prof. Moira Clark 2021

Thank you!

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