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What: We spoke to Steve Barr, Consumer Markets Leader at PwC, about consumers’ shopping behaviors during this year’s holiday season.
Why it matters: Thanksgiving and Black Friday are the busiest shopping days of the year; however, traffic has declined from previous years. PwC’s insights provide valuable information to engage consumers more effectively.

PwC’s 2018 Holiday Outlook report reveals findings from a national survey of 2,071 consumers, offering details about where and when consumers shop, what drives their purchasing decisions, their holiday travel, and movie-going plans and how retailers are preparing for the season. Economic growth in 2018 is poised to be the strongest since 2005.

Consumers told PwC they would spend an average of US $1,250 each on Thanksgiving on gifts, travel, and entertainment, an increase of 5% over last year. Thanksgiving and Black Friday are still the busiest shopping days for stores, but traffic is declining.  In 2018, it fell as much as 9 percent from 2017.

More people went online since stores put their best deals on their websites. Online sales for Wednesday through Black Friday was 26% higher than in 2017, estimated Adobe Systems. In 2017, online sales rose 18%, according to Adobe Systems Inc. Sales hit a record of US $7.9 billion. 40% of these purchases were done from mobile phones.

Black Friday is part of the holiday shopping season. According to the National Retail Federation, sales during the last part of the year will be up 4.1% when compared to 2017.

We talked to Steve Barr, Consumer Markets Leader at PwC, about what brands can learn from the new shopping trends and how to target consumers in the best way.

Portada: What can brands learn when looking back to previous years?

Steve Barr: Consumers continue to prefer an omnichannel shopping environment, and innovation is key to staying relevant in this increasingly competitive retail landscape. Additionally, brand trust continues to be an important factor for consumers when making purchase decisions, a trend that we’ve seen in the past and that continues to prevail. Finally, experiences are critical. Shoppers want to have an enjoyable and stress-free experience, whether in-store or online.

Portada: Why do you think U.S. Hispanics are spending more than non-Hispanics?

S.B.: Hispanic consumers are the second fastest growing ethnic group in the US, and constitute almost one-fifth of the overall population in the US. As true omnichannel shoppers, Hispanic parents prefer to seek ideas and inspiration in stores, while also being ahead of the curve on mobile shopping and smart payment. This holiday season, more than half (57%) of Hispanic parents will be shopping in stores.

Portada: What is your view on what is coming in 2019? 

S.B.: Retailers should continue to keep an eye on the impact of trade and tariffs as we move into 2019. A decent consumer sector and strong consumer sentiment in Q4 – consistent with the outlook for holiday spending – will be positive for growth overall, but it’s unlikely to prevent an overall slowing from the Q2 and Q3 pace. If they were looking for a GDP “pop” from holiday sales, I’d say that is unlikely – it’s probably going to be more of a stabilizer.  The one upside risk to that is, if it looks like we are going to see existing tariffs move from 10% to 25% on January 1 – or tariffs expanding to all US $500bn of Chinese imports – consumers may be incented to pull demand forward, to near the price increases.

Portada: Can you tell me more about the methodology of the study? 

S.B.: Every year, PwC releases a holiday outlook report that compiles responses from consumers about their shopping habits during the holiday season. This year we surveyed 2,071 individuals. The methodology behind the report is to showcase trends impacting consumers around the holidays. This year’s report focuses on different trends and demographics, and found that consumers will spend 5% more this holiday season than in the past.

  If retailers are able to reach Millennials and Gen Z consumers, they have a lot to gain. Combined, the number of individuals making up these generations is clearly bigger than any other generational consumer grouping.

Portada: What should brands do in order to leverage the opportunity in Holiday Shopping and stand out among the fierce competition? 

S.B.: Millennials and Gen Z will be shopping this holiday season – online, on their phones and in stores. Our Holiday Outlook Report revealed these younger consumers (17-35) plan to spend more or the same as the last holiday season, and consumers across the board will spend 5% more this holiday season. If retailers are able to reach Millennials and Gen Z consumers, they have a lot to gain. Combined, the number of individuals making up these generations is clearly bigger than any other generational consumer grouping. They also yield a lot of retail power.

Portada: What role do you think technology is playing?

S.B.: Technology plays a huge role in how consumers shop during the holiday season. Mobile devices like smartphones and smartwatches will continue to dominate how consumers pay for their holiday purchases. In fact, among Gen Z-ers who plan to do all their holiday shopping online, half will use their smartphones. Overall, 30% of consumers will use smart payment in stores in the holiday season – 24% will pay by smartphone and 16% will pay via a wearable device.

Portada: Do you have any info on what categories will benefit the most from the shopping frenzy?

S.B.: Streetwear – a style of casual clothing that blends diverse global elements is currently valued at upwards of US $100 billion. More than 70% of both Gen Z and Millennials wear streetwear, while 54% of millennial dads and 44% of African-American consumers responded they plan to purchase the stylized form of clothing this holiday. Today, streetwear attracts attention from both private equity and couture, forging a variety of creative alliances with luxury brands.

Images source: PwC

What: Energy BBDO has published the results of a study conducted to find out the true impact of the new government administration in Hispanics’ shopping and spending habits.
Why it matters: The truth couldn’t be farther from the rumors that started after the new administration: Hispanics are shopping and spending more than ever, and will likely continue to do so.

As soon as the new administration took office, a wave of anti-immigration policies spurred predictions that Hispanics would start spending less. Companies across the country wondered how this would impact them as headlines all over reported that Hispanic communities would stay home more and spend less often. Therefore, Energy BBDO decided to conduct a study to go beyond those headlines in order to find out exactly how the administration change impacted Hispanics’ minds and shopping habits during the last year.

Energy BBDO conducted more than 1000 surveys of documented and undocumented Hispanics, as well as of non-Hispanics for comparison. The quantitative research was supplemented by in-depth focus groups in Chicago and Los Angeles, and the work was supported by data from Kantar, Univision, and Pew Research.

The main takeaways from the study, explained below, proved the exact opposite of what the headlines foretold: not only did Hispanics not slow their shopping or spending, 49% of survey respondents reported shopping more often than the previous year.

 

Even Undocumented Hispanics Are Spending More

According to the study, even though headlines predicted Hispanics would spend less after the change of administration, 49% of documented respondents reported shopping more often than the previous year, while 56% of their undocumented counterparts, who could feel more threatened by the new administration, responded the same way. And since shopping is necessarily linked to spending, the increase goes hand in hand. 60% of Hispanics claim they are spending more than the previous year, just as 68% of undocumented Hispanics, vs 45% of non-Hispanics. The reason for this could be, quite simply, that “life goes on and family needs remain, no matter the political climate.”

Hispanics Aren’t Shopping Less; They’re Shopping Different

According to survey respondents, there has been a shift in the retail channels Hispanics go to. For example, outlets such as mainstream grocery and convenience stores have seen slowdowns, while preferences have shifted towards a more value-centric experience. Therefore, Hispanics have been spending more at mass merchandisers, club retailers, and dollar stores, as well as Hispanic-owned stores or community bodegas. As the study suggests, “This change in behavior seems to be the sole data point that suggests a shift generated by the current socio-political atmosphere, as Hispanics may be consciously staying within their communities for everyday purchases.”

The Real Shift Has Taken Place in Hispanics’ Attitude

U.S. Hispanics are known, among other things, for their optimism. A group that has expressed a positive mindset in spite of hard circumstances is suddenly doubting its place in the new America. Energy BBDO’s research has revealed that 50% of Hispanics have more doubts about their place versus a year ago, and 70% report an increase in prejudice displays since the last election. To quote the study, “Hispanics do not feel free to be themselves, at least not out in the open. They feel pressure to limit expressing their cultural heritage and identity. This, in turn, is causing them to find comfort in what’s familiar and welcoming within their communities.”

Conclusions

Now is the time to consider a more direct and custom approach that reaches out directly to the Hispanic community with empathy and recognition. […] Also, look for ways to show an authentic and long-term commitment, not an opportunistic one-off.

Based on the projected growth of the Hispanic population, and seeing that they’re younger than other demographics, it is likely that they will continue to increase their spending and shopping. However, they tend to prefer value-centric shopping trips as well as community-owned stores. Moreover, even though Hispanics will not stop spending, there is a lot brands can do to make up for the feelings of loneliness and not-belonging caused by the increased prejudice climate. Energy BBDO recommends that brands 1) stay true to their values, 2) celebrate inclusiveness, and 3) show empathy. “Now is the time to consider a more direct and custom approach that reaches out directly to the Hispanic community with empathy and recognition. […] Also, look for ways to show an authentic and long-term commitment, not an opportunistic one-off. Trying to fit something into Hispanic Heritage Month probably won’t have the desired effect.”

[All images by Energy BBDO]

What: Despite the fact that Hispanics have adopted e-commerce at a faster pace than the general market, marketers are struggling to effectively target the demographic on e-commerce platforms and lack effective measurement tools for conversion and attribution.
Why It Matters: Hispanics as a whole represent $1.5 trillion in annual spending power, but few companies have proactively targeted them in the e-commerce realm. As shoppers increasingly head online to make purchases, some in the industry are predicting a “Hispanic targeting renaissance.”

Today there are 55 million Hispanics with $1.5 trillion in annual spending power in the United States. They skew younger than your average demographic (80 percent are Millennials or younger), are digitally savvy and love shopping online after comparing prices and doing their research.

E-commerce in general is picking up steam across the country as people abandon physical stores in favor of the convenience of shopping online. According to a according to a report from the Grocery Manufacturers Association, in 2018, online sales of CPG products will hit $35 billion, up from $8 billion in 2013. And a Univision study found that Hispanics are a driving force in the adoption of online grocery shopping: 50 percent of Hispanic shoppers (and 60 percent of Millennial Hispanics) have bought a grocery item online in the past year, versus 40 percent of the general US market.

Now, marketers must untangle the behavior and preferences of an increasingly diverse demographic, and master the art of attribution and conversion across a purchasing journey that can involve multiple devices on and offline.

Get Ready for a Hispanic E-Commerce Renaissance

Lee Vann, the founder and director of Hispanic marketing agency Capture Group, emphasized that marketers should not be surprised that Hispanics are active on e-commerce sites, “as they tend to be more active across most Internet activities.” The surprising thing is that until now, “few companies have proactively targeted Hispanics via e-commerce, despite a clear opportunity,” Vann said.

Vann suggested that we may be on the brink of a Hispanic e-commerce renaissance, as retailers like Amazon increase their offerings for Hispanics. As the big players throw their hats in the ring, Vann suggested that we should “look to others to follow.”

Few companies have proactively targeted Hispanics via e-commerce, despite a clear opportunity.

Katie Thomas, a Regional Manager at Bush Brothers, asserted that “large retailers are doing a better job of segmenting stores based on demographics (Latino, African American, etc.),” but that “it is one thing to identify these stores but another to actually market different products in these stores to meet consumer’s needs.” According to Thomas, “the retailers that are doing this will win in the marketplace.”

E-Commerce a ‘Double-Edged Sword’ for Attribution and Conversion Models 

Some would assume that the increasing popularity of e-commerce among Hispanics means that marketers should have a wealth of data points from which to collect insight on their preferences and behavior. But Vann warned that “e-commerce can be a double edged sword when it comes to attribution and conversion models.”

Cookies, for example, are one of the most popular tools for tracking consumers’ purchasing journey. However, data has revealed that they are not always effective. According to Nielson OCR Norms, 58 percent of cookie-based measurement is overstated, targeting in cookie-based measurement is only 65 percent effective, and 12 percent of conversions are missed with cookie-based measurement.

Brands shouldn’t be timid to drive consumers to e-commerce sites with cultural relevant and/or in-language advertising.

What’s more, in a world where shoppers often start their journey online and end it offline or on a different device, it’s hard to know whether the people looking at products online are actually buying. Last-click attribution models ignore the fact that many shoppers follow a windy path involving different devices and visits to physical stores before making an online purchase. “Marketers must look across the Omnichannel path to purchase and ensure they capture the impact of the digital channel on sales that may have started online but ended offline,” Vann said.

Marketing strategist and consultant Daniel Villaroel emphasized that in this case, brands must take on the responsibility of experimenting until they get it right: “Optimization is always the responsibility of the brands to maximize sales.  It behooves them to see what works and what doesn’t work.”

He continued: “Brands shouldn’t be timid to drive consumers to e-commerce sites with cultural relevant and/or in-language advertising.” He added that instead of worrying about which language Hispanics are more comfortable speaking, brands should “test, see what works and optimize.”

Brands Struggling to Implement Measurement Tools Effectively 

It isn’t that brands are lacking measurement tools — it’s that they themselves are not confident that they are using them correctly.

Bush Brothers’ Thomas admitted that brands are still grappling with some of the most basic aspects of understanding Hispanic consumer behavior. “Bush uses measurement tools on our key brands but we have not done a good job of utilizing these when it comes to the Hispanic Shopper,” Thomas said.

While location-based data is an effective tool for getting Hispanics inside a physical store, brands need more when it comes to e-commerce since they must put extra effort into understanding what specific products Hispanics want. Thomas elaborated: “Large retailers are doing a better job of segmenting stores based on demographics (Latino, African American, etc.), but it is one thing to identify these stores and another to actually market different products to meet consumer’s needs,” said Thomas.

This turns into a complicated task when one considers that Hispanic shopping patterns vary greatly based on factors like age and assimilation level. According to a recent report from ThinkNow Research, nearly a quarter of Bicultural Hispanics say they would go to another store to purchase their favored brand, while only 18 percent of less acculturated Hispanics said the same. That seven-point difference cannot be ignored when marketers are developing Hispanic e-commerce targeting campaigns.

For some marketers, it may start with accepting what they don’t know. Think Hispanics are more loyal across the board? Think again. The same report by ThinkNow Research found that less acculturated Hispanics — those that have not fully assimilated into American culture —  are no more brand loyal than other segments. Bicultural Hispanics — those who are generally first  or second-generation Americans who identify with both the U.S. culture and their Hispanic heritage — are considered more loyal across several CPG categories.

Targeting: ‘Not Doing Anything is the Primary Issue’

tech.infocustechnologiesOne thing is certain: this is a hugely powerful demographic, and retailers and brands must find a way to capitalize on the fact that Hispanics are making e-commerce a regular feature in their shopping routines.

According to Villarroel, “not doing anything is the primary issue,” and that despite the fact that we are in the age of digital, brands are not delivering “micro-targeted content that’s meaningful,” and “sometimes content is still served up as a one size fits all.” This means that retailers must aid brands in forming an accurate picture of the people visiting their e-commerce sites.

The savviest marketers will make Hispanic e-commerce part of their long term plans and ensure that their products are presented in a culturally relevant way.

Vann added that to connect with this attractive demographic, brands will have to come ready with “Spanish language product information and meta data, culturally relevant imaging and messaging, and proactive marketing to drive sales.”

Brands looking to drive Hispanic e-commerce sales must start with forming a more complete picture of Hispanics, not just as consumers, but as people whose different experiences and cultures give shape to their decisions. “The savviest marketers will make Hispanic e-commerce part of their long term plans and ensure that their products are presented in a culturally relevant way,” Villarroel said.

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