The PwC Irish Retail and Consumer Report 2019: Investing in Experience reveals that consumer behaviour is rapidly changing in a number of areas, with brands seeing growing pressure from online retailers and providing quality customer experience likely to pay dividends for those who get it right.
The survey was carried out globally in Autumn / Winter 2018, and the report is the analysis of the inputs of over 1,000 Irish consumers.
John Dillon, Leader, PwC Ireland Retail and Consumer Practice, said: “While the store remains front of mind, it remains under pressure from online competition, along with more demanding consumer expectations. Therefore, the need for stores to create a compelling proposition has never been greater. Stores need to constantly evolve and innovate in order to satisfy consumers who are clearly interested in store shopping, albeit in a different way. Retailers need to rethink how they engage with customers while fully embedding technology in every element of their business models.”
Pictured (left to right): Bobby Healy, CEO and founder, Manna; Declan Ronayne, CEO, Woodie's DIY; John Dillon, Partner, PwC; Rosy Temple, Sales Development Manager, Magee 1866; Michael Killeen, Chairman, The CX Company; Owen McFeely, Director, PwC; and Grace McCullen, Senior manager, PwC.
“The survey highlights that consumers are willing to pay for a seamless shopping trip and investing in the area of customer experience is key for the future of retail. Those who can invest in the right areas have the potential to achieve a quantifiable return on experience.”
Owen McFeely, Director, PwC Ireland Retail and Consumer Practice, said: “Retail is experiencing significant disruption, driven by emerging technologies, economic factors and growing consumer expectations. With Brexit uncertainty continuing and likely to cause even more disruption, it is those retailers and brands who provide the right product at the right price combined with superior customer experience who will be the most successful in the years ahead.”
Given Brexit uncertainties, the survey suggests Irish consumers to be cautious. Just a third (33%) of Irish survey respondents are confident about their personal finances and expect to spend more in the next 12 months. A further 42% expect their shopping spend to remain around the same.
Retailers are working in a highly competitive environment which is forcing them to continually adapt and enhance their offerings. Looking locally, we see an Irish retail sector which is very proactive in building an improved consumer offering which, despite all the challenges on the high street, is keeping the store very much at the forefront of consumers’ minds. This year’s survey reveals an increasing trend in frequency of purchasing in-store which may be linked to robust economic conditions and near full employment levels. Over half (54%) of consumers confirmed that they shop in-store (excluding grocery) at least weekly.
"Irish shoppers expect seamless and frictionless shopping experiences. The easier and better the experience, the more consumers will positively engage with the brand and ultimately spend. Consumers are seeking a seamless purchasing journey – both retailers and brands can satisfy this need through the development of on integrated store and digital strategy," said Dillon.
With consumers spending, albeit cautiously, delivering a superior customer experience is key. Over one in two (57%) survey respondents are happy with their ability to quickly and conveniently navigate the store but this has fallen from 63% last year. Only half or less than half are happy with other key in-store shopping experiences. According to the survey, attributes that would significantly improve the in-store shopping experience are the ability to quickly and conveniently navigate the store (47%), sales associates with deep product knowledge (34%), quick and easy payment methods (34%) and in-store Wi-Fi (25%).
Similar to global levels, nearly a third (30%) of Irish respondents buy products online weekly or more often, up from 25% last year. Popular product categories for online shopping (buying most of their annual purchases) are: books, music, movies, video games (26%); clothing and footwear (18%) and health and beauty (12%). The survey suggests that other categories such as consumer electronics, toys, DIY and sports equipment remain largely in the bricks and mortar domain.
Regarding online purchasing, a large majority (88%) stated that they are willing to pay for delivery charges. Achieving short delivery windows is critical with nearly half (48%) only willing to pay for deliveries beyond three days. The most important factors for Irish consumers when considering the delivery process are the availability of free returns (45%), knowing the exact delivery date at point of order (44%) and the ability to return items to a store (29%).
The frequency of purchasing via a smartphone has doubled as a growing number of consumers see the convenience of mobile payments. For example, 20% of respondents stated that they buy products via their mobile phone or smartphone at least weekly, up from 10% last year. But this is still behind the UK and the US experience of 23% and 25% respectively. Furthermore, when shopping in-store, over a fifth (22%) of consumers paid for their purchases using their mobile device, up from 16% last year. Again, Ireland lags the global trend: 34% of global consumers paid for their purchases using their mobile device when shopping in-store, up from 24% last year. A growing number of consumers are also availing of advance ordering and paying using these devices, and collecting in-store later.
Social media has become a very important shopping influencer. In addition to using digital technology, consumers are looking to their trusted communities and other experts. 53% of Irish consumers are influenced by social media for their purchases, either as inspiration or following positive reviews. 15% have made a purchase directly from social media. Conversely, less than 20% of consumers say they’re likely to buy a product because of a celebrity or influencer.
Owen McFeely, Director, PwC Ireland Retail and Consumer Practice, commented: “Mobile shopping is experiencing exponential growth, boosted by improved mobile enabled websites. In addition, mobile technology is having a significant impact in the area of in-store payments where contactless options are growing. The integration of the store and the online environment is a real business challenge that all retailers and brands are facing—seamless integration of both is key to future success—and getting it right is imperative. Moving beyond the business operations, having a social media strategy aligned to the business strategy is also critical.”
Similar to global trends, four out of ten (41%) Irish consumers are happy to pay a premium for sustainably produced products. Looking to food, Irish consumers express greater interest in this area and are willing to pay a premium for locally produced food (68%); organically produced food (56%) and for food items with sustainable packaging (49%).
The survey shows that Irish consumers are generally more interested than global counterparts about product packaging issues and understand the influence that their purchasing decisions can have on production, marketing and packaging. For example, on plastics, 52% avoid the use of plastics where possible (global: 41%); on packaging, 49% buy items with less packaging (global: 37%).
Irish consumers are acutely aware of the impact that their purchasing power has on the Irish economy and actively seek to support Irish producers where possible. 67% stated that buying Irish has a positive effect on the Irish economy, an increase from 62% last year.
The survey highlights that the Irish consumer is open to new technological innovations. For example, many Irish consumers either own or plan to purchase smart home entertainment devices (69%) and smart home energy meters (50%).
Based on PwC international research, it is likely that AI-powered voice assistants will have the potential to be the new ‘mobile’. For example, 26% and 20% of US and China consumers respectively currently own smart home voice assistant devices. Despite year-on-year growth in Irish ownership of smart home voice assistants (13% in 2019 from 8% in 2018), nearly half of respondents (47%) are currently not planning to purchase this technology at all. Only time will tell how this new and still emerging technology will develop into the future.
Grace McCullen, Senior Manager, PwC Ireland Retail and Consumer Practice, said: “The bar for brand leadership will continue to shift as organisations launch ever-more friendly consumer technologies. The importance of smart devices will only grow in the next five years and Irish retailers need to continually seek out opportunities to further digitise their business.”
Nearly a quarter (22%) of Irish consumers would like to have an autonomous vehicle today, and a further 21% would consider one in the future. In healthcare, 39% are using healthcare, wellness or fitness apps on their mobile devices (Global: 44%).
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Corporate Communications, PwC Ireland (Republic of)
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