Heather Thomson on why digital presence is no longer an option in retail

The current economic climate looks completely different than it did even just a few years ago. Important pre-pandemic shifts in consumer mindsets have taken a huge leap forward. And according to Consumer Behavior Expert Heather Thomson, this acceleration is a good thing. It’s a long overdue wake-up call for agencies and the local businesses they serve: Digital presence is no longer an option. It’s a necessity.

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Consumers want and expect a high-performing digital experience. If local businesses don’t deliver, someone else will. There is no shortage of online retail options to choose from.

In her Conquer Local Connect keynote, Heather Thomson shares her perspective on why it’s a pivotal time to be analyzing trends and data in the online retail world. Thomson uses this data to craft authentic and innovative digital presence strategies to supercharge businesses and capitalize on changing consumer mindsets and behaviors.

Thomson breaks down five trends that should inform the way agency owners position themselves to serve their local business clients. These trends are:

1. Consumer mindsets are more digitally savvy than ever, since the pandemic forced everyone online. There is no going back.
2. The definition of the marketplace has expanded. Since online retail is ubiquitous and convenient, local businesses need to create special in-store experiences that add value alongside a strong digital presence.
3. Adopt a consumer channel mentality and move away from spending on creating “bricks and clicks” and omni-channel strategies.
4. Customer service is king. Exceptional customer service can take the form of a positive digital experience or an in-person exchange. Either way, it has the potential to put local businesses on par with big box companies.
5. Consumer motivations have changed. The consumer mindset has shifted from predominantly value-driven (looking for bargains) to purpose-driven (emphasizing quality and service).

Read on to see how Thomson expands on these points.

1. Consumer mindsets have shifted towards the digitally savvy

Perhaps it comes as no surprise that consumers today are digitally savvy. Many consumers had already shifted towards a preference for online retail and seamless digital experiences well before 2022.

However, the pandemic has triggered a complete overhaul in consumer mindsets for even the most technologically unsure. Everyone now has some sort of digital presence online.

Thomson provides a quick statistic about online retail to illustrate this.

• Pre-pandemic, 55 percent of baby boomers (born between 1946 and 1954) shopped online.
• In 2022, close to 85 percent of baby boomers shop online consistently.

Tools such as QR codes, which may have been a digital experience baby boomers never had pre-pandemic, have now become familiar and commonplace. In 2020, you couldn’t get your eyes on the menu at your favorite restaurant without scanning one, after all.

And even if the precaution is no longer needed, the use of QR technology persists. Consumers not only welcome new, digitally savvy tools but are actively excited by them. Our everyday lives are touched by their digital presence.

Thomson points out a few fun, innovative examples of how consumer mindsets have shifted. These technologies were launched right before the pandemic, demonstrating that the shift was already in progress.

• Online retail with an in-person element: virtual grocery shopping via QR code in the subway in Korea, thanks to Samsung-Tesco (Medium).
• An innovative way to skip the line: Sobeys introduces Smart Cart technology for contactless shopping that eliminates checkout, powered by Caper (Sobeys).

At the end of the day, the pandemic contributed to the democratization of digital. Small to medium-sized local businesses were able to play catch up with big-box organizations that already had a digital presence. Why? Because they had to get online or shut their doors—like thousands of businesses ultimately did.

However, businesses that did manage to create a digital presence (and often with reduced friction due to government grants) should recognize that it is only the beginning of their digital experience journey.

Business owners are at risk if they think they are all set with their website, social media, and Google Business Profile.

Investing in your digital presence is an ongoing process and that tech adoption gap is continuing to close.

Your digital-savvy consumers expect it from you.

2. There is an expanded definition of the marketplace

Marketplaces aren’t some new concept. For most of human history, we’ve been beholden to our geographical area and have relied on marketplaces to fulfill our needs in one place.

But now, the global marketplace is a digital experience right at our fingertips. That means any large, physical retail infrastructure relying on distribution as a model for success is going to struggle.

Department stores are no longer special or convenient. Consumers can have an excellent online retail experience buying directly from the manufacturer. Is the physical presence of a marketplace made obsolete by the existence of a digital presence in retail?

According to Thomson, no. You can (and in most cases should) have both a physical and digital experience for your customers. You just have to be more thoughtful about how you are using physical commercial and retail space to add value.

Brick-and-mortar retail is actually growing, especially post 2020. When people recognized how devastating the pandemic was for local economies, consumer mindsets shifted.

• Pre-pandemic, 40 percent of consumers went out of their way to shop locally.
• In 2022, 70 percent of consumers shop in a way that supports local businesses.

But do not take this shift for granted. At no point do consumers have a responsibility to shop local (contrary to what a good marketing campaign might have you believe). As business owners, it is your responsibility to make sure they want to.

And that means being thoughtful and strategic about what you bring to the marketplace, whether it’s a physical or digital experience.

3. Create a consumer channel

When considering their in-person and online retail experiences, businesses might distract themselves with crafting strategies around terms like “bricks and clicks” (Fundera) and “omni-channel” (TechTarget).

In reality, you do not get to choose your channel anymore. There is only one—the consumer channel.

Increased competition and choice has made consumer mindsets veer towards the extremely selective. Consumers want a seamless digital experience for their online retail needs paired with a fun, beautiful, easy in-store experience.

And they want them blended together.

Let’s go back to expanding the notion of a marketplace. IKEA is a business with a great online retail component, but the brand has also cracked the code on making their physical retail space special.

Trips to IKEA are unique; they begin with walking miles through room mock-ups you feel like you can actually live in and conclude with some 60-cent Swedish meatballs. What digital presence can compare to that!? However, IKEA understood that it’s not feasible to have a store with hundreds of thousands of square footage in every market.

Merging their digital experience with a physical one, IKEA created the Planning Studio. Consumers enter this exponentially smaller 1,500 square foot space to get one-on-one help from an IKEA employee to design complete rooms in augmented reality with the IKEA Studio App (Wired). Then, when satisfied, they can order the furniture online.

Talk about an impactful way to move forward with a consumer channel mentality!

Here are some of Thomson’s examples of what consumers want, and which businesses are delivering.

• Integrated. IKEA adopting an approach that adds value to its physical location by using tech tools and bolstering its digital presence in the meantime.
• Beautiful. A cafe utilizing beautiful architecture and design for both its website and its physical location.
• Connected. Loyalty programs such as Indigo’s tiered membership benefits (Indigo).
• Easy. Amazon making purchasing from them quicker and easier than any other online retail experience.

4. Customer service is king

It sounds obvious, but it bears repeating in our increasingly automated world: Connecting with customers is key.

In fact, offering exceptional customer service is one huge way that small businesses can compete with big box retailers or organizations. Good customer service can take many forms, including a digital experience via customer support over live chat. Effective customer communication is a powerful tool.

When businesses integrate their digital presence with their physical brick-and-mortar sensibilities, the definition of customer service is more exciting and expansive.

Thomson offers five quick insights about the importance of customer service.

1. Customer retention is a lot cheaper than customer acquisition.
2. Connecting with customers leads to better upselling, which ultimately makes their lives easier.
3. Great customer service leads to gathering valuable data on customers to better serve them.
4. Offering exceptional service will boost your digital presence and positively impact a brand’s online reputation through positive reviews for company clients.
5. Make sure client-facing employees feel valued and happy, so they can make customers feel that way too.

5. Consumer motivations have changed

For a long time, the most prominent type of consumers have been value-driven. In other words, the dominant consumer mindset was focused on looking for the best bargain.

On the other hand, there is also the purpose-driven consumer mindset. These consumers care about quality, service, and experience.

Up until 2019, the value-driven consumer reigned supreme. But in 2020, things changed. Purpose-driven consumers became a much bigger part of the consumer makeup (40 percent), placing them neck and neck with value-driven (41 percent) consumers.

Only one year later, purpose-driven consumers pulled into the lead. In 2021, 48 percent of the consumer market was purpose-driven.

Why is this significant? People are making more intentional choices about how they spend their money, whether in the context of a digital experience or not.

Today’s consumer mindset is geared towards:

• Better products
• More convenience
• Exceptional customer service
• Personalized touches
• A digital presence that caters to savvy customers

There will always be value-driven consumers. But the race-to-the-bottom model of business is not long for this world.

Thomson provides a snapshot of four key demographics to delve even further into consumer mindsets.

Boomers (1946–1964): Consumer mindset

• 82 percent of boomers have a digital presence on social media
• Boomers care about customer service above all else
• Boomers have, per person, more wealth than any other generation
• They do not spend their wealth as freely as millennials

Millennials (1981–1997): Consumer mindset

• 143 billion dollars in spending power
• Will inherit 30 trillion dollars
• 90 percent appreciate aesthetic and will pay a premium for it
• Value a slick, well-designed digital presence and place stock in online first impressions (DSN)
• Millennials are more confident about their money and financial goals
• They aren’t motivated by sales

Gen Z (1997–2012): Consumer mindset

• Connect via digital experiences and tools
• 4.5 hours/day on their personal digital device
• 82 percent make purchases based on peer reviews
• 81 percent prefer in-store shopping over online retail, more than any other generation (Quadient)
• 72 percent are more likely to purchase from a company they follow on social media
• Love collaboration

What does this shift to a digital presence mean for the agencies serving local businesses?

In closing, Thomson reiterates that these trends are not just a matter of opinion. The need for local businesses to amp up their digital presence, craft compelling digital experiences, and make online retail integrate beautifully with brick and mortar is based on data.

The human psychology that informs the study of consumer mindsets is an important educational piece that agencies can provide for their local business clients.

Agencies want their clients to be successful, profitable, and vibrant. Understanding where the flow of consumer money goes and why is a crucial step in the right direction.