No Match Found
In today’s challenging marketplace, it is vital for companies to connect with consumers higher up the purchasing process and address the point of decision.
In a world where it’s hard to get more out of existing consumer spending, converting or finding new customers takes on new urgency. Our June 2023 Global Consumer Insights Pulse Survey of 8,975 consumers in 25 countries and territories reinforces a clear imperative for companies seeking a competitive advantage: empower your consumers by providing them with the necessary tools, information, technology and support for their decision-making.
The theme of the previous Global Consumer Insights Pulse Survey, published in February 2023, was removing frictions at the point of sale or in the purchase experience. This June edition speaks directly to removing frictions before the purchase experience, and offers a road map on how to reach consumers at crucial points of decision. What follows will amplify the voice of the consumer in areas that have long been important, but that are evolving against a backdrop of heightened pressure and innovation: how to leverage technology such as generative AI and chatbots; where to invest in customer relationship management (CRM), mobile apps and social media; where to build out direct-to-consumer (D2C) and subscription capabilities; how to meet customers where they are on issues of environmental, social and governance (ESG) and sustainability; and where to capture growth in consumer spending in the coming months.
By bringing greater focus and resources to the point of decision, businesses can get closer to their customers, fostering both paid and earned loyalty. And by doing so, they can contribute to a more efficient, responsible and profitable marketplace.
Half of those polled intend to boost their online spending over the next six months
More than half of consumers rank search as their top source for pre-purchase information
A majority of consumers (63%) have purchased products directly from a brand’s website
Eight out of ten consumers said that they would pay up to 5% more for sustainably produced good
Today’s consumers are tech-savvy. By the time they unload their shopping cart—either at the end of an in-store queue or on an e-commerce website—they have already made a lot of crucial decisions. The decision-making starts when they reach the point of deciding they need to make a purchase. This is followed by a series of pre-purchase behaviours, usually technology-enabled, that ultimately result in experiences they regard as frictionless and effective.
In our most recent survey, consumers told us that they begin by scouring the internet to amass information about a particular product or service, compare prices, read reviews and consider retailers. This marked the first time we asked consumers to identify their research preferences. More than half (54%) ranked search engines as the top source of pre-purchase information. E-commerce aggregator Amazon came in second, at 35%, followed closely (33%) by individual retailers’ websites, which are also used by 31% of respondents to pore over customer reviews. Sites that specialise in price comparisons are visited by 29% of pre-purchasers—a majority of whom are gen Z (see chart below).
And although online marketplaces for buying and selling used or upcycled clothing, crafts, electronics and other goods have flourished globally, only 18% of the consumers surveyed said they utilised such websites and apps for pre-purchase research.
Question: In general, where do you typically research the items/products that you intend to buy?
|All regions and generations||Western Europe||Western Europe||Africa and Middle East||Americas||SEAC||China and Hong Kong||Gen Z: 25 years and below||Millennial: 26-41 years||Young millennial: 26-30 years||Core millennial: 31-35 years||Mature millennial: 36-41 years||Gen X: 42-57 years||Baby boomers: 58-74 years||Greatest generation: 75+ years|
|Price comparison websites||0.289||0.281||0.31||0.289||0.253||0.304||0.267||0.217||0.292||0.269||0.286||0.321||0.34||0.318||0.192|
|Social media (e.g., Facebook, TikTok)||0.308||0.222||0.348||0.392||0.259||0.481||0.424||0.433||0.351||0.38||0.37||0.303||0.212||0.095||0.058|
|Search engine (e.g., Google)||0.544||0.521||0.567||0.53||0.532||0.578||0.302||0.477||0.536||0.541||0.538||0.531||0.597||0.598||0.577|
|Customer reviews on retailer websites||0.314||0.271||0.335||0.359||0.288||0.427||0.317||0.31||0.325||0.339||0.326||0.31||0.318||0.269||0.346|
|Speaking to other people (e.g., friends, family, colleagues)||0.298||0.336||0.275||0.34||0.272||0.311||0.267||0.323||0.294||0.314||0.298||0.272||0.267||0.334||0.231|
|Websites/apps that sell resale, upcycled or previously used products||0.175||0.161||0.155||0.238||0.19||0.191||0.133||0.189||0.196||0.188||0.218||0.182||0.146||0.128||0.154|
|None of the above||0.02||0.026||0.024||0.003||0.015||0.014||0.025||0.021||0.008||0.01||0.005||0.011||0.028||0.043||0.077|
Next, we asked what devices consumers decide to use when they access these sources. Unsurprisingly, more than half of surveyed consumers answered that they almost always or frequently rely on mobile devices—especially smartphones—and apps for pre-purchase research (56%) and reviews (54%). And they increasingly rely on mobile devices when they themselves are mobile. Four in ten consumers use their phones while walking up and down store aisles to access online product information and comparisons. More than a third (36%) use them while standing in front of a product to compare the price on a competing retailer’s outlet or website.
Marketers and retailers continue to expand their use of social media—and social media use has important implications for the decision-making process. Targeted advertising and promotions have captured the attention of 31% of respondents, a number that jumps to 43% among gen Z. When asked what types of ads influence pre-purchase decisions, 37% of respondents say they prefer those that directly link them to offers and promotions for their favourite brand or product. About a third (34%) are attracted by sponsored ads on social media. And in a signal that the demise of traditional TV may be greatly exaggerated, 35% of respondents say their decisions are still influenced by that medium. Not surprisingly, nearly half (49%) of that (TV-watching) cohort are baby boomers. Furthermore, this indicates potential ad growth on streaming platforms targeted to these audiences as they further embrace digital media (see chart below).
Another platform for visibility, the metaverse, promises to deliver the ultimate in frictionless shopping technology, though that immersive virtual world in which your avatar does the work is still unfolding in complexity and usage. Once again, consumers were asked about their metaverse activities over the past six months. Although usage is hovering at around 10%, awareness and interaction have grown. An additional 32% of respondents are at least familiar with the metaverse, though they’ve never used it.
In the rapidly evolving world of e-commerce, retailers are continually seeking innovative ways to enhance the pre-purchase decision-making process for customers. Generative artificial intelligence (AI) is a transformative tool that holds immense potential for businesses. By leveraging generative AI, e-commerce retailers can revolutionise the way consumers explore, evaluate and ultimately decide on their purchases.
Notably, only 4% of respondents say they interact with chatbots. Considering today’s exponential growth in generative AI platforms, widely anticipated as game-changing tools for both marketers and consumers, that single-digit number is certain to grow.
Shoppers seem eager to have chatbots act as their digital assistants—but they are less enthusiastic about receiving communications from them (see chart below). When asked about how the rise of AI functionality might affect their near-future shopping behaviours, a substantial 44% of consumers say they would be interested in using chatbots to search for product information before they make purchase decisions. Only about a third, though, would look to chatbots for retailers’ customer service support (35%), sending alerts about delivery times and product availability (34%), personalised communications (31%), and assistance in writing assignments for work or school (30%). Because AI exemplifies cutting-edge technology, it’s no surprise that the percentages among a group of early adopters we call tech embracers are considerably higher for each of the scenarios (see ‘Tech-enabled decision-making’ below).
We have identified four distinct groups of consumers based on their utilisation of tech. Embracers, comprising 17% of those polled, not only are passionate about every new technology that comes along but also actively use tech to buy items, including in physical stores.
Almost one in three are either enthusiasts (31%) or acceptors (30%)—all of whom ultimately use tech for shopping—whereas 22% are avoiders, who use it only if needed, or not at all.
Demographically, 57% of embracers and enthusiasts are millennials, whereas acceptors and avoiders are mostly baby boomers (71%) or from the greatest generation (aged 75 and older; 42%).
One salient finding from our survey is that consumers are increasingly making the decision to eschew traditional middlemen and marketplaces in favour of buying directly from brands. A majority of consumers (63%) say they have purchased products directly from a brand’s website, and we expect that number to grow. An additional 29% say that although they haven’t done so yet, they are considering the D2C option.
Firms would do well to capitalise on D2C trends; with the right marketing tools and technologies, they can connect more often with the end consumer, bypassing their retailer partners. Indeed, those who are able to maintain sophisticated e-commerce channels and optimise digital marketing technology have increased control over the customer experience, access to valuable customer data and insights, and improved profit margins and revenue opportunities.
To date, aggregators and e-commerce giants have had the advantages of scale, price and often ease of use. But it is clear that D2C brands and companies have their own advantages. Fully half of consumers say the main reason they’re drawn to D2C websites is the authenticity of products, particularly when they are shopping for clothing, electronics, and beauty and personal care items. Nearly as many (47%) cite the greater choice of products, and 43% say that competitive pricing and better availability of stock are key purchase drivers.
The two most popular D2C categories were clothing and accessories (44%) and electronics (40%; see chart below). What’s more, among those respondents who have taken the D2C plunge—70% of whom are millennials working full time—85% say they are significantly more likely to increase their spending across as many as 11 product categories over the next six months. In a finding that should be heartening to electronics brands, 82% of consumers buying directly from a brand’s website say they like to buy cutting-edge technology as soon as it’s available.
The decision to subscribe is, in effect, a decision to purchase a given product or service over a fixed period. And subscriptions have been popular. The subscription economy—for items as varied as underwear and audio books—grew more than 300% from 2012 to 2019, with three-quarters of D2C companies saying they would offer subscriptions by the following year. Then the pandemic hit, and subscriptions rose to even loftier heights. But now the bloom appears to be coming off the rose, as consumers take a second look at their discretionary spending and competition expands to more categories—with knock-on effects on brand loyalty.
What emerges clearly from our survey is that consumers are rethinking how and when they engage with brands. Roughly 12% of subscribers to the top four categories—clothing/fashion, grocery delivery, health products/supplements, and cosmetics—have cancelled subscriptions in the past. To glean more context on this topic, consumers were asked why they are currently signed up or plan to subscribe to a given product or service. Convenience (51%) was the primary reason, followed by cost-effectiveness (47%), lifestyle (42%), personalisation (41%) and trying new products (41%; see chart below). Conversely, when asked why they cancelled subscriptions, they gave as their top three reasons that they no longer needed the product or service (39%), the goods had become too expensive (39%), or they were unhappy with unexpected or increasing fees (31%).
Tech embracers, though, are hanging in there; an average of 33% currently subscribe in those four categories. And among all respondents who plan to sign up for any subscriptions in the next six months—specifically clothing/fashion, grocery delivery, and health products/supplements—30% are millennials.
Consumers have made up their mind about sustainability, and they are willing to pay a premium for it. In our February 2023 survey, more than 70% of respondents said that they were willing to pay more for sustainably produced goods ‘to some or to a great extent.’ This is a positive trend. Consumers get the benefit of aligning their social concerns with purchasing practices; companies, for their part, may get some much-needed pricing power.
Our June survey delved deeper, asking consumers just how much above an average price they’d pay for a variety of different goods, such as locally produced food at a farmers’ market, products manufactured with a lower carbon footprint and custom-made, or bespoke, items. Overall, eight out of ten consumers say that they would pay more: more than four in ten say they’d pay up to 10% above average, one in ten say they would go up to 30%, and nearly 7% say they would pay even higher prices. Millennials and gen Z, who typically espouse social consciousness and environmental justice, were the most open to spending more for the sake of sustainability (see chart below).
Another important decision point comes after the purchase. Returns have always been a fact of shopping life. With the evolution of e-commerce, however, returns have become a trickier issue for e-tailers than for brick-and-mortar retailers, mostly due to fluctuating shipping costs and logistics. The unexpected surge in online shopping during the pandemic only exacerbated the situation.
We posed a new question regarding e-tailers’ return policies, specifically about what factors would reduce the number of returns consumers make. Providing more accurate sizing information ranks on top for 45% of respondents, a percentage point above greater accuracy in product descriptions. Forty percent of those polled say reading other customers’ reviews would reduce the number of returns they make. Interestingly, 10% of online shoppers say they don’t typically return items.
Although the e-commerce landscape is in flux, amid increased competition and a decline in certain discretionary purchases, fully half of those polled intend to boost their online spending over the next six months, a significant jump from 43% in our previous survey.
That increase dovetails with consumers’ decision to do more business with retailers that offer efficient delivery service—a recurring sticking point across e-commerce—and to increase their use of click-and-collect options. At the same time, however, 50% of respondents also expect to continue shopping in physical stores, confirming the advent of the “phygital” consumer described in the February survey (see chart below).
Consumer spending within specific product categories in the coming months has significantly gone up, too. Nearly half of respondents (46%) expect to increase spending on groceries, up from 42%, perhaps anticipating an enduring rise in food prices. Asked about less essential purchases, they predict more dramatic increases in spending, indicating a willingness to buy what they want but do not necessarily need. More than a third (36%) of respondents say they’ll spend more for clothing and health/beauty products, an increase from 28% and 27%, respectively, in the previous two surveys.
The now-and-then comparisons are also sizeable among customers anticipating spending more on home improvement items, something retailers in that sector will be carefully watching, as their recent earnings reports show that consumers are focusing on basic versus discretionary products. The expected escalation in spending—about 7%—is almost identical to that in other categories, including consumer electronics, sports and fitness equipment, home entertainment, and virtual online activities. Travel, both domestic and international, will continue to generate consumer spending, up to 44% in this survey from 30% in the February survey. It seems obvious that “revenge travel,” noted in the last survey, is hardly waning, a trend manifested in higher revenues and employment reported by the airline and hotel/resort industries.
Through effective strategies, companies operating in consumer markets hold the potential to influence the critical decision points where customers make their crucial choices. Capabilities such as optimised SEO and D2C channels, together with investment in next-generation technology to deepen access to information, can capture customers’ attention and drive sales. By understanding and capitalising on these opportunities, companies can successfully intervene at key decision points and guide customers towards choosing their products or services.
The Global Consumer Insights Survey is a biannual study that seeks to keep a closer watch on changing consumer trends. For our June 2023 Pulse Survey, we polled 8,975 consumers across 25 countries and territories: Australia, Brazil, Canada, China, Egypt, France, Germany, Hong Kong SAR, India, Indonesia, Ireland, Japan, Malaysia, Mexico, the Philippines, Qatar, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Thailand, the United Arab Emirates, the United States and Vietnam. The respondents were at least 18 years old and were required to have shopped online at least once in the previous year.
 Nir Eyal, ‘3 Reasons Subscription Services Fail,’ Harvard Business Review, 11 Oct 2022, https://hbr.org/2022/10/3-reasons-subscription-services-fail.html