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Analyzing the pressures facing the world of retail and how businesses need to tackle challenges by prioritizing the needs of Gen Z and millennials
In the aftermath of the pandemic and the global economic strain, Gen Z and millennials have become the integral cogs who account for the mass consumer base. Together, these cohorts represent around $350 billion of spending power in the United States alone.
Paired with the enhancements in digital transformation and consumers preference for e-commerce, retailers have had to rethink their strategies and embrace new technologies. According to a survey by McKinsey, nine in 10 Gen Z and millennials changed how they shopped, where they shopped or the brands they bought from in the previous three months.
Businesses are now competing to provide the most seamless online experiences, as customers seek an effortless buying process. With the spending power of digital-natives only growing, retailers need to ensure they provide the personalized and tech-infused experiences these generations seek if they wish to succeed in the challenging economic landscape. As consumer expectations rapidly transform, it’s paramount that retailers adapt and focus on providing faster, simpler and safer solutions by leveraging trusted tech partners that can assist them in optimizing processes.
Strain in the Supply Chain
The aftermath of the pandemic has been strewn with challenges, across all industries. Inflation and the lingering cost-of-living crisis have resulted in lower spending power from consumers. Additional vexing impediments to supply chains have caused further issues, as retailers struggle to meet the levels of stock they need and deal with slowing delivery times. Not only is this preventing growth for retailers, but it also leads to poor customer experiences.
Retailers can therefore capitalize and overcome challenges by prioritizing their customers and paying attention to what it is that consumers want. Close to 64 percent of customers wish that companies would respond faster to meet their changing needs, and it’s the innovative retailers that embrace digital transformation and make strategic changes that will win the remaining wallet share in the customer experience revolution. Sharing one of our success stories, a large e-commerce company based in Singapore deployed a strategy which helped the customer to connect with only point of contact for any escalations. This unique solution reduced executive escalations by 70 percent and improved customer stickiness.
The Growth of E-Commerce
With Gen Z and millennials craving to constantly be immersed in a digital world, it’s no surprise that e-commerce has taken off. Online shopping has become the preference of choice for many, with its convenience, speed and simple navigation.
Today, Gen Z and millennials seek out instant gratification. They want a simple checkout process; free, speedy shipping; and informed tracking. By adopting new technologies such as generative artificial intelligence (AI), retailers can provide these experiences through their e-commerce platforms. Part of our clientele, an e-commerce company in Germany, deployed conversational commerce-powered by AI Digital Assist which was integrated with the company’s social media accounts. The AI provided a buying guide, 24/7 sales support, and a marketing assistant. The solution reduced customer touchpoints for service and converted Facebook ads to strengthen sales. $1 million in revenue was generated through the solution.
Seventy percent of shoppers abandon their carts. Retailers therefore need to simplify the online shopping experience and make it as smooth as possible. With the growing demand for alternative digital channels, the consumer of today wants to be able to move between mobile and desktop seamlessly, but all too often applications are inconsistent and involve filling out long forms or creating an account. It’s essential to enhance the checkout process, focusing on simplicity, speed, and keeping the buyer informed about the status of their order.
For instance, an Indian e-commerce company saw a sharp decline in sales due to a rise in cart abandonments. A well-trained and equipped customer engagement team was formed to call shoppers with pending carts over a specific monetary value. The engagement team addressed consumer queries on the products and provided customized product offerings as per customer preferences. This helped to reduce the cart abandon rate by 25 percent and resulted in both increased sales and happy customers.
A Preference for Personalization
E-commerce offers retailers access to a whole new realm they wouldn’t have been able to enter before. Customer behavior can be monitored to produce insights and analytics, creating a personal profile based on each individual customer’s preferences and spending habits. Through this valuable data, retailers can create a personalized experience, forming specific algorithms tailored to everyone so that the products they’re most interested in come up first on their shopping feed. The tech-native generation don’t want to spend endless time looking through pages of clothes to find that last-minute outfit they need — they want personal recommendations based on previous outfits they’ve bought or the latest fashion trends.
Through data analytics, retailers can also prompt customers to regain interest when they do abandon their carts. For example, a retailer could send a reminder push notification to a customer’s phone, a personalized email, or perhaps offer a limited-time coupon through SMS, depending on each customer’s preferred mode of communication. This will encourage a customer to return to their cart and complete the checkout process. This adds to the feeling of personalization and will make a customer feel valued.
Additionally, generative AI can rapidly create new designs based on what’s trending or which items are getting the most clicks. This allows brands to stay on top of the latest trends and optimizes the entire design-to-store process.
Shopping Via Social Media
With the growth of social platforms, “social shopping” has taken off as a hybrid of e-commerce and social media. Social media supports retailers to reach their customers in the ecosystem where they spend most of their time.
Many Gen Z and millennial consumers now turn to Instagram or Facebook to find inspiration for a new outfit. When they do see something they like, they don’t want to spend hours scouring the internet trying to uncover where to purchase it from. Rather, retailers can provide direct links to each product through their social media platform so that a customer can be taken to the checkout page to buy it with a simple click. This simplifies the customer’s purchasing journey and eliminates a disjointed experience with unnecessary steps.
Driving Loyalty
Through embracing the migration to e-commerce and providing the seamless, personalized services that customers want, it will be easier for retailers to maintain loyalty — and this is what will drive business growth during a challenging economic time. Embracing social media will allow retailers to reach a larger audience and make checkout processes quicker. Customers will feel more connected than ever if retailers are able to provide next-generation experiences, despite their ever-changing behaviors.
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