From increase in GenZ spending to channel switching, these consumer trends are driving growth in retail
Tech-savvy consumers are increasingly demanding a seamless blend of digital and physical channels to discover, research, compare, and purchase products at the best prices. With loyalty and trust more fluid than ever, shoppers are quick to switch to brands and retailers that offer the right mix of price, speed, and convenience through easily accessible channels.
To maintain your competitive edge in the year ahead, stay focused on sustainable growth while fine-tuning your business models to deliver the seamless experiences consumers have to come to expect, even demand.
Here are five key consumer-driven trends that will drive retail growth in the year ahead.
- Channel-switching behaviour continues to surge
Channel-switching behaviour is on the rise as consumers seek to combine the best of physical and digital channels for an efficient shopping experience.
Most start by browsing in stores and seeking recommendations from family and friends. They then go online to research via search engines, digital marketplaces, brand sites, and social media. For comparison shopping, they use both stores and online options, often using their smartphones to compare products and prices while in-store.
- Gen Z flexes its spending muscles
Millennials, currently in their peak earning years, are today’s top spenders. However, Gen Z consumers (17-25-year olds) are rapidly increasing their spending, with the 2023 holiday season seeing the highest year-over-year percentage increase among any age group.
Gen Z prefers to browse for gift ideas in stores (67% vs 58% overall) and on social media (41% vs 31%). They also favour social media for comparison shopping (34% vs 27%) and for learning about sustainable companies (70% vs 51%). Mobile payments are particularly popular with Gen Z (35% vs 21%).
Gen Z’s loyalty is a valuable opportunity for brands to cultivate. Although they are not yet heavily involved in customer loyalty programs, those who do participate outperform other age groups.
- Emerging tech enhances customer experience
A segment of diehard enthusiasts is embracing emerging tech in retail, from GenAI product advice to virtual customer service interactions. Although they only make up 20% of consumers, these high-earning big spenders have a strong preference for wellness-related products.
They exhibit significant brand loyalty, with 38% considering brand a very important factor in purchasing decisions, compared to 18% of consumers who don’t use tech-assisted shopping. These extended reality fans also spend more than twice the average consumer on entertainment.
Another 20% of consumers indicated they might use emerging tech help in the future, while 19% don’t know enough about it. This presents a significant opportunity to educate the nearly 40% of consumers who either lack knowledge about emerging tech options or are open to using them in the future.
- Female consumers power new level of growth
Female shoppers continue to drive economic growth, a trend that began in the summer of 2023 with record-breaking attendance at movies, live concerts, and sporting events, often supporting other women.
They are highly value-focused, scouting deals more diligently than men and prioritizing price, free returns, convenience, and speed. With less brand loyalty than men (59% vs. 67%), women are more willing to switch loyalties based on values that matter to them.
To cater effectively to this influential demographic, adapt your strategies to emphasize price, convenience, personalization, brand values, and digital transformation. Meeting the evolving expectations of female consumers will help maintain their loyalty and engagement.
- Home delivery reigns supreme
Home delivery remains popular across generations, while in-store and curbside pickup have stabilized after their pandemic-era surge. Consumers now want the flexibility to choose a mix of physical and digital channels for each shopping trip.
Key priorities include the certainty of timely delivery (83%), easy-to-use tracking (80%), and flexible delivery times (68%). For pickup, proximity to home and convenient curbside options are important.
Retailers should enhance their digital supply chains to accommodate channel-shifting consumers who desire a variety of delivery and pickup options.
Based on a recent analysis by PwC
