Millennials are more loyal to specific brands than any other category of shoppers, a new survey shows, debunking the stereotype on shopping in this age set.
With the increased usage of smartphones and internet-supported devices, the Millennials’ needs and expectations have been a nightmare to businesses as they seek ways of attracting customers in this demographic.
A KPMG survey, however, shows that millennials — those born between 1982 and 1999 — buy the same product repeatedly, a trend which it says decreases with age.
In the survey covering more than 20 countries globally in September and October 2019, loyalty to specific retailers is consistent across all age groups in all product categories.
This is with the exception of apparel, footwear, accessories category and cosmetics or personal care products, where Millennials are more likely to have preferred vendors.
The report showed that 62 percent of the population would stick to a brand of apparel, footwear and accessories while 53 percent would pick a brand from food, beverages and groceries.
About 51 percent would buy one brand of cosmetics or personal care products and 38 percent shop for one brand of beer, liquor, wine and other alcoholic drinks.
Households and luxury goods hold the lower-end of loyalty, with on only 31 percent and 26 percent of the population respectively saying they buy the same brand of goods.
Out of the 18,520 consumers surveyed, 41 percent were Millennials, 33 percent were Generation X (born between 1965-1981), 17 percent were born between 1946-1964 while four percent each were born before 1945 and after 1999.
KPMG, however, stated that retailers have much do to hold the Millennial group, since technological advancement offers exposure to more choices.
Because of this, retailers need to device new ways to keep appealing to emotions and not necessarily offering bigger rewards or freebies.
This includes providing avenues that allow customers to donate their loyalty points to charity.
This adds to the revelations that 69 percent of Millennials find it difficult to join and to earn rewards, despite being used by millions of shoppers across the world.
Six out of 10 Millennials also said they prefer to donate their loyalty rewards to a good cause rather than redeem them, compared to 40 percent of those born between 1946 to 1964.
“Some companies that have acted have merely tinkered with programmes that were established years ago when consumer expectations and competition were incredibly different,” the Netherlands-based firm said.
“Many consumers are choosing truly purpose-driven brands over their less purpose-oriented competitors, paying a premium for their products and services and coming back as loyal customers.”
The reports said that Millennials were more likely to describe corporate transparency and honesty, environmental commitment and innovation as very important loyalty factors than points and rewards.
The announcement sets a different tone from what has been commonly used across retailers using loyalty cards.
Supermarkets, fuel stations and other shopping outlets over the years have adopted the loyalty cards as one way to push for high-margin products.
“If you’re trying to build brand loyalty today, an emotional connection is no longer a nice-to-have, it’s a need-to-have,’’ said René Vader, Global Sector Leader, Consumer and Retail, KPMG International.
And while acquiring new customers has been said to be an expensive affair for most businesses, positive customer review and references from loyal customers is a guarantee for repeat business and revenue growth.
About 86 percent of customers surveyed said they would recommend a brand they are loyal to to family and friends.
A further 66 percent are likely to write positive online review after a good experience, while 46 percent will still remain loyal even after a bad experience with a brand.
Customers in the age groups have remained loyal to product brands highly due to product quality and value for their money with 74 percent and 66 percent of the customers citing these indicators for consideration respectively.
Price ranked last as a key consideration whereby only 54 percent of the consumers surveyed indicated price as a factor.
“Therefore, retailers need to shape their brands in ways that appeal to customers’ minds and hearts and eventually their wallets by providing experiences that differentiate them in a rather competitive retail environment”.
The report also shows Millennials have a strong connection to physical outlets and stores, presenting good news to stores that would put padlocks to their doors and likelihood for upturning the property market.
KPMG stated that the set of consumers needed to have a touch and feel of the product prior to buying and discover new products.
Across categories, 50 percent said they shop mainly or exclusively in physical stores, compared to 14 percent who shop mainly or exclusively online.
Food, beverages and groceries hold the most preference for physical stores at 68 percent, with 64 percent visiting liquor stores for their products.
Online shopping is concentrated on luxury goods and sporting goods and equipment as only 38 percent and 36 percent Millennials shopped for the items from physical stores.
“Millennials are digital natives but they retain a strong affinity with brick and mortar. What Millennials are prone to use the internet for is to browse online reviews, discover what their favourite influencers are saying and gauge sentiment on social media,” the report added.
The group is said to have limited cash and, therefore, would like to spend it on products that they know will be worth their money which makes them seek online reviews, test products in stores, and then seek out reviews by their peers about a product before making a purchase.
“In the future, the relationship between a consumer and the company they buy from is less likely to be binary and transactional and more likely to be multiple and relational, which means that anything that happens in any part of a brand’s operations can impact on customer loyalty.”
