Adobe Commerce study highlights the importance of personalized experiences
With summer in full swing, consumers are gearing up for the season’s biggest sale days, like Prime Day, to save big on must-have items. Yet this year, retailers looking to attract consumers will have to navigate an increasingly dynamic commerce landscape. Not only do retailers face increased competition for consumer spend now that inflation has reached new heights, today’s consumers also expect shopping experiences to be tailored to their individual needs.
Adobe Commerce, powered by Magento, drives thousands of brands’ digital commerce strategies and powers the United States’ top retailers, recently surveyed 1,115 consumers from across the US to understand consumer sentiment about the economy and its impact on buying habits. The insights revealed the importance of providing personalized shopping experiences, especially for retailers looking to stand out and build loyalty with consumers during this summer’s shopping season.
Market concerns are impacting consumer spending
As the costs of goods and services continue to rise, consumers are less willing to spend money on discretionary items and are instead prioritizing purchases of necessity. But despite spending slowing down on “nice-to-have” items, new insights show online spend is likely to grow this summer as 61% of consumers are looking forward to summer holiday sales like Prime Day.
Of those planning to participate in summer sales, 76% say they will spend more or the same amount as last year. And the motivation varies — more than half (56%) of consumers say they save money by shopping on Prime Day, while others want to get ahead of their seasonal holiday (32%) and back-to-school shopping (23%).
Even though more retailers, like Target, report that they are overstocked and will be offering deeper discounts, consumers are wary of how much the discounts will be impacted by inflation. A majority (64%) believe discounts will be smaller than last year.
Notably, summer sales and Prime Day shopping could be impacted this year due to concerns about the economy. Nearly 24% of consumers surveyed said they don’t plan to shop on Prime Day because they have less discretionary money to spend due to inflation and the higher cost of goods. Others will not participate this year because they are:
- Worried about the economy and its impact on their financial situation (21%)
- Shifting spend to necessities (20%)
- Putting extra money into their savings (15%)
Online shopping continues to rise
Though consumers have started to return to in-store shopping, consumer spending online continues to see a modest increase with the latest Adobe Digital Price Index (DPI), powered by Adobe Analytics, showing consumers spent $78.8B online in May, over $1B more than the prior month.
It’s also likely online shopping will continue to grow given that a large percentage of consumers surveyed reported they shop online (93%), with 50% of Gen Z, 49% of Millennials, and 35% of Gen X doing most of their shopping that way.
Online shopping accelerated during the pandemic as more people found they liked the convenience of shopping from anywhere, whenever they wanted. Half (50%) of respondents said they are now more likely to make retail purchases on their phones, a big jump from the 26% who prefer in-store shopping and 24% who prefer shopping via their computer or desktop.
Consumers also recognize the opportunity to save money, turning to online shopping to take advantage of savings outside of major online shopping holidays. Availability of items makes a difference, too. More consumers were driven online when stores were out of stock, with more than half (57%) searching for and buying products online when they couldn’t find them in stores.
Moreover, whether consumers are shopping in-store or online, they are looking for the best deals. Seventy-six percent of consumers report that they search for better prices online first and read reviews before they make a purchase in a store, with 60% making price comparisons at other retailers on their phone before purchasing products. The generations that do this the most are Gen Z (86%) and Millennials (77%).
Consumers are seeking personalized, new experiences
In our digital-first world, consumers are expecting — even demanding — that experiences are personalized to their own individual needs and interests. This goes beyond just finding the best price. Consumers also want seamless shopping experiences that span the entire buying journey, across all channels, that cater to where they are and how they prefer to shop.
Buyers expect brands to understand what they are looking for and B2C and B2B brands are looking to AI-driven Product Recommendations so they can suggest relevant products based on customer behavior, product sales, visual elements, or popular trends. And rightfully so, as more than half (67%) of respondents say that, when shopping in-store or online, they would like to receive personalized promotions or offers based on their spending habits. Many consumers (61%) also say receiving these promotions will make them more likely to make a purchase. There’s variation in likelihood to purchase based on generation as well, with Gen Z at 72%, Millennials at 78%, and Gen X at 66%. Of those who have received personalized recommendations, 72% said this led them to purchase more goods than they originally planned.
Consumers are also looking for new, unique shopping experiences. For example, 37% of consumers surveyed are open to the idea of augmented reality experiences, 28% are interested in immersive and interactive shopping experiences (like shopping in the metaverse), and 26% have already participated in live-streaming shopping events.
Payment and delivery flexibility matters
Today, consumers also want flexibility in how they make purchases, how those orders are fulfilled, and even in how they make returns.
Most consumers (82%) want the option to choose how they pay for the goods they purchase online, ideally being able to choose between credit cards, a bank account, PayPal, Apple Pay or Venmo. To address this need, Adobe Commerce has partnered with PayPal to make it easy for merchants to accept popular payment methods including credit cards, debit cards, and Venmo. In addition, they can access PayPal payment innovations, including cryptocurrency transactions and emerging payment methods.
One of those emerging payments is Buy Now, Pay Later (BNPL), which is gaining traction, especially among Gen Z and Millennials. Almost half (43%) of survey respondents said they are more likely to purchase from a retailer that offers BNPL because it’s easier to make payments (62%), they want to take advantage of delayed payment (45%), there is more flexibility for making purchases (49%), or because of low or no interest rates when making payments (22%).
Most consumers (85%) tend to use BNPL for purchases of $100 or more, with top purchases being clothing/apparel and computers/electronics.
What’s more, after making purchases using BNPL, 42% of Gen Z, 48% of Millennials, 43% of Gen X, and 24% of Baby Boomers plan to use this payment method again.
After items have been purchased, it’s no surprise that most consumers want to receive their items quickly, with 72% reporting they want the online purchases delivered the same day or via two-day shipping. If a retailer does not offer delivery that is less than a week or two, they also are less likely to make a purchase from that retailer and instead look for a retailer with shorter shipping times. This is why Adobe Commerce has partnered with FedEx to give merchants the option to enable features like free two-day shipping, easy returns, and seamless checkout to their storefronts.
Retailers are cutting down fulfillment time through Curbside or Buy Online, Pickup in Store (BOPIS) options. According to Adobe Analytics, in 2022, so far curbside pickup has accounted for 19% of all online orders (for those retailers who offer the service). And as more retailers look to find ways to shorten fulfillment timelines, adding curbside or BOPIS offerings like those enabled by Store Fulfillment for Adobe Commerce by Walmart Commerce Technologies can help to quickly deliver purchases by turning physical stores into pick-up points.
BOPIS is also gaining traction among consumers, with 57% of respondents reporting they use BOPIS and 80% of users leveraging this form of fulfillment two or more times. Consumers like BOPIS for a variety of reasons. Most (79%) like it because it’s convenient, while 49% say it helps them get orders faster than if they were shipped and 29% like that it allows them to get items that day.
As for returns, if the items purchased online don’t work out or are no longer needed, 90% of consumers want the option to return their item(s) for free. If the retailer charges a fee to return an item they purchased online, over half (57%) are more likely to not buy from that retailer again, and 46% are likely to purchase the item from another retailer. Consumers also want to have the option to return their item(s) at the retailer’s store location (60%), via mail (56%), or at another return location that is close to where they live (46%).
Brands need to adapt as consumers evolve
Retailers should take note — personalization is an opportunity to drive revenue growth, increase customer satisfaction, and build customer loyalty. Additional research from McKinsey shows companies with a deep focus on personalization drive revenue growth 40% more than those who do not.
Adobe Commerce is committed to helping brands deliver meaningful, personalized experiences in the moments that matter. As the demand for personalized experiences increases and more brands accelerate their omnichannel strategies, Adobe Commerce enables B2B and B2C businesses to be resilient in an ever-changing commerce market so they can succeed in today’s digital first economy.
The Adobe Commerce Study was conducted by Advanis in June 2022 with 1,115 consumers in the US surveyed to help us better understand how shopping preferences and spending habits are evolving.