Older shoppers to drive online spending growth
A great deal of time, energy and research dollars have gone into cracking the so-called millennial code in recent years, as retailers everywhere update their offerings against the wave of change sweeping the industry.
For many, that focus has meant picking the low-hanging fruit: e-commerce. The world of online retail has thus become synonymous with the 22-35 age bracket, within which around a third of all online purchases take place.
But while millennials and Gen Z (ages 16–21) consumers represent the bulk of the online industry, widespread adoption has led the younger side of the market to a state of saturation.
That’s the view of Commonwealth Bank’s retail industry manager Jerry Macey, who last week released new data that has some interesting implications for orthodox assumptions about the typical online shopper.
CBA surveyed 1,531 shoppers in July across five different age brackets to pull what it calls nationally representative data on consumption behaviours across intergenerational lines.
It found that older, rather than younger, shoppers will drive e-commerce to dizzying new heights over the next year, with uptake amongst those aged 51 and over set to skyrocket before the end of 2018.
Digital shopping adoption among consumers aged 70+ (called Pre-Boomers) is expected to increase by 18 per cent in the year to July 2018, more than three times the rate of growth among millennials (five per cent) and well above Gen Z (10 per cent).
Adoption among the relatively affluent Baby Boomers (51-70) and Gen X (36-50) shoppers is expected to increase by 10 per cent and 11 per cent respectively, with Boomers expected to make around one-in-five purchases online over the next nine months.
The reason? Macey says it’s a familiarity thing: digital shopping has penetrated the mainstream, and in doing so, has opened the floodgates on the most lucrative part of the Australian market.
Those aged 36-70 account for the majority of all Australian consumers and have by far the most disposable income, with Gen X bringing home $1,280 per week on average and Baby Boomers earning $1,052.
This compares to the $897 average weekly income of millennials and the $310 earned by Gen Z, according to Roy Morgan data for the 12 months to June 2017.
However, differences in income also come with differences in preferences and shopping habits and unsurprisingly older consumers don’t want the same things as younger ones during their shopping experience.
Cracking the mature code
Macey says retailers will have to work harder to capture the discretionary dollars of older shoppers, with twice as many millennials saying they ‘love’ shopping as boomers, especially given that the vast majority of shoppers aged 36 and over still prefer bricks-and-mortar to online.
One of the first steps, he says, is to actually include older shoppers in user experience testing and cross-apply lessons learnt in-store about the behaviour of older demographics.
“We know that older generations tend to prefer a good customer experience and an easy checkout…as you get older, you tend to want to try before you buy a little more, so having that omnichannel experience is relevant,” Macey explains.
Frances Esteems, owner of Esteem Boutique, an online clothing store targeted at mature shoppers, says accessibility and being upfront about the details has been key in growing her business.
“The big thing is to build up a trust. On our website, we’ve always made sure there’s a telephone number so someone can always speak to a person,” Esteems says.
Esteems has opted to communicate details like postage fees on the landing page of Esteem’s website, listing her own phone number as the go-to customer service line for any shoppers with questions or concerns.
While many other brands, particularly in apparel, are investing heavily into Instagram as a key marketing tool, Esteem puts most of its marketing budget into Facebook, listing the site as its only social media platform.
“We trialled [Twitter and Instagram] but it hasn’t worked as well, so in terms of marketing, our dollars are spent on Facebook,” she says.
Esteem Boutique also has a store located in Coolangatta on the Gold Coast, but Esteems has decided to adopt varying ranging strategies, having noticed that plus-size product lines and natural fabrics are particularly popular amongst customers online.
“Fabric is far more important when customers are shopping online, because they can’t touch and feel it,” Esteems explains.
Price and service
In terms of price, despite being the most affluent generational group in Australia, Gen X shoppers are price-conscious, with 59 per cent of those surveyed by CBA saying price is the main influencer on their shopping decisions, while 76 per cent said they regularly buy products when they are on sale.
Pre-boomers, who are on average much less affluent, also view price as a key factor and are much less likely to research products extensively than the 51 per cent of Boomers who say they like spending a lot of time researching before buying.
Macey says Pre-boomers, nine-out-of-ten of whom are retired, are likely to be on fixed incomes, but their growing interest in online could be an opportunity for brands to develop generation-specific promotions.
“While boomers tend to be in a fairly good place in that they’ve probably paid off their mortgage and their children may well now be looking after themselves and they can feel a bit more flush…that’s not true of pre-boomers – finding ways to make offers directly to that cohort would be good,” Macey says.
But there’s no replacing good-old fashioned customer service, with 37 per cent of Boomers and 44 per cent of Pre-boomers saying helpful and knowledgeable shop assistants are key factors in their in store experience – a useful insight for online retailers looking to incentivise consumers to make the jump.
Brendan Shaw, CEO of online meal and grocery delivery business Aussie Farmers Direct, says that service isn’t just important online, it’s also important at the point-of-delivery, particularly with older customers.
“Through our franchisees that do deliveries or through our call centre, having that voice at the end of the phone or a face to the name helps break down some of those barriers that come with internet shopping and knowing that everything is Australian-based,” Shaw says.