Are Millennials the shoppers to target?
They might be first in line for the newest technology and the latest crazes, but brands and retailers could be focusing on Millennials at their peril, especially when it comes to online shopping.
While Millennials may live much of their life online, fewer commitments and higher levels of disposable income mean many actually prefer to shop offline, especially when it comes to food.
It’s the time poor, cash strapped family market and the older, time rich shopper, who could hold the key to commercial success.
As outlined in our previous whitepaper, Age Repackaged, the 65+ age group is spending more and more time shopping online. The WGSN Report on Silver Shoppers stated that 59 per cent of 65-74 year olds shopped online over the previous 12 months, versus 81 per cent of the total population. However, there is a key difference – device. Research conducted by Bronto Software found that only 14 per cent of 55+ consumers shopped via mobile phone. However, tablet usage for shopping among this age range is higher in the UK (22 per cent) than in the US and Australia (both 11 per cent). This generation is just as likely to own a smart phone as a tablet, so this could be as simple as font size issue – which is obviously bigger on a tablet,and so mobile app layout and design is key.
In fact, if you are looking to cater to a younger demographic, it’s Centennials, or Gen Z, who are next in line to the over 60s’ spending crown. By 2020, it’s predicted that this group will make up more than 25 per cent of the workforce and will see a surge in spending power. They shop online at least seven times a month, and 62 per cent say shopping online is a way of alleviating boredom. So, there’s potential to enrich the shopping experience and build brand engagement.
However, many experts believe focusing on demographics in one location is thinking too small. With new technologies knocking down geographical borders, there are vast new markets to tap in to. And, as always, the first place to look is China.
Although China’s online grocery market currently only has a 3.1 per cent share (lagging behind the UK’s 7 per cent), the IGD expects this figure to jump to 6.6 per cent over the next three years, and continue to grow apace – especially as smartphone use continues to expand. And with the nation aiming for annual ecommerce sales of $5.7tn by 2020 and $10.1tn by 2025, it’s a market that’s set to explode at a rate far and above predicted growth in the rest of the world.
"There is a rising population of young, middle class shoppers leading busier lives, In turn this is creating a class of aspirational shoppers who want to access grocery products at the click of a button, and who are increasingly looking to source international goods."
Shirley Zsu, IGD's Asia Programme Director
And this thirst for international products has led some UK food and drinks businesses to secure listings on Chinese grocery marketplaces in a bid to secure a place in this expanding market. In 2015, Sainsbury’s began working with Alibaba to sell a limited number of products on Tmall, with Waitrose following suit in 2016, listing 30 products including English wine. At the time, the supermarket predicted that China would become its biggest international market over the next three to five years.
But it isn’t just the Far East driving ecommerce growth. The original land of opportunity, the USA, which currently lags behind in terms of online grocery sales, is predicted to cover as much as 70 per cent of consumers by 2020. If that particular prediction comes true, online shopping will equate to 20 per cent of all spending on food and drinks – more than five times the current figure.
So as geography becomes less of an issue and logistics are geared more to ecommerce delivery, retailers could access whole new markets, not just market segments, though competition will be, unsurprisingly, fierce.
Find the full story by downloading our whitepaper on online shopping here.