Home Industry Market Online shopping booming, but loyalty declining

The number of Australian shoppers who say their last purchase was online has trebled in just 12 months.

But online shoppers are becoming much less loyal and much more likely to be critical of the services they receive.

The findings are contained in the Australian edition of a major IBM study of global consumer trends, released yesterday. The study reveals a significant downward trend in the number of inline consumers who can be described as ‘advocates’, falling significantly from 32% in 2013 to 13% in 2014.

At the same time, there is a surge in ‘antagonists’ from 5% in 2013 to 24% in 2014. IBM says these trends indicate a marked decrease in customer loyalty amongst Australian consumers. The impact for retailers is significant, as advocates have the biggest influence on friends and family, have bigger basket size and spend more.

The annual study of more than 1,800 Australian consumers also confirms that online shopping is growing rapidly in Australia, with 15% of customers saying their last purchase was online (up from 5% in 2013).

“As today’s tech-loving shoppers continue to embrace new technologies faster than retailers they have high expectations of customer service in line with global retailers,” said Margy Osmond, CEO of Australian National Retailers Association, commenting on the report.

“The challenge for Australian retailers continues: delivering a seamless shopping experience across in-store and online, that keeps pace with the rapidly changing expectations of the technology empowered customer, to drive increased loyalty.”

Key findings from the report:

  • More consumers shopping online –  in 2014 15% said their last purchase was online compared to 5% in 2013
  • Seamless omnichannel is essential to drive shopper loyalty and business performance
  • Consumers are more willing to provide all types of information in return for personalised service
  • 34% of consumers will share location based information, 18% in 2012
  • 32% of consumers posted about a retailer they had shopped with
  • Friend’s posts or pins about items purchased (51%) are the most influential.

“Consumers are entering stores with more information about the type of product they want to purchase than ever before,” said Osmond. “Aussie retailers have been vigorously investing in capabilities that will fundamentally change the customer experience over the next decade. These trends will enhance the shopping experience helping build long-term customer loyalty and attract new clients.

“We are time poor and technologically rich. As consumers we are looking for experiences and conveniences. There’s no doubt the internet has changed the way consumers shop and communicate with retailers.

”As retailers gain a greater understanding of the value and power these technologies bring to the shopping experience, they will be able to offer an even more individualised shopping experience’: said Osmond. “This is a must for building stronger relationships with consumers keeping spending onshore.”

Read on for more commentary on the report


The report finds that the disconnect between shoppers and retailers on what is an acceptable experience is widening. “Consumers expect seamless capabilities across all channels of engagement,” says the report.

“They are choosing where to shop based on consistent pricing and product offerings across all channels; in-store location of out-of-stock items and shipping home; loyalty programs with benefits both on-line and in-store and in-store returns policy for online purchases. 

The report finds consumer concerns around technology are rapidly declining. “With increased appetites for consumer empowerment, shoppers are embracing new technologies and innovation in retail, including mobile shopping and social networking.

“This presents a unique opportunity for retailers to get closer to its customers and interact with them 24/7 across multiple channels and touch points. Customers are now more comfortable than ever to hand over information; with 34% of Australians now willing to share location information versus 18% two years ago, and 31% willing to share their mobile numbers with retailers.”

Additionally 48% of Australian are visiting social networks multiple times a day, which gives them ample opportunities to comment on and advocate about the positive (or negative) retail experiences they enjoy.

The study identified four consumer groups based on their shopping expectations: traditional (38%), transitioning (39%), tech-intrigued (18%) and trailblazers (5%). “While today they represent a small proportion of consumers, trailblazers are the most vocal both on and off line, they are early adopters of technology, have greater spending power and place greater emphasis on seamless omnichannel.

“Their social proclivities and systems of engagement make them extremely influential to other consumers. Retailers who convert trailblazers into advocates will reap the rewards across all consumers groups.”

IBM’s Ian Wong said: “Customers want superior customer service, and retailers who deliver this through an integrated omnichannel experience are set to win customer loyalty and wallets.

“With customer’s rapid adoption of technology, and the use of this technology to engage, endorse and buy with retailers, the need for retailers to invest has never been so vital to their survival.

“Retailers need to focus their investment on energising the store experience using mobile and social combined with location based technologies; deliver on the promise of omnichannel - a seamless and consistent offering across in-store and online; and finally act quickly to meet the expectations of customers, benchmarking against the trailblazer shopper.”

For further information and to download the full 2014 IBM Smarter Consumer Study ‘Great Expectations: Consumer are asking for tomorrow, today’ go to http://ibm.co/1nKb1Q0

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

 

 

 

 

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