Retail CX Insights: Factors Influencing Customer Behaviour (Part 2)

In an era where e-commerce is dominant and has removed boundaries and further increased competitiveness, brick-and-mortar stores are also fast evolving to meet the changing needs and expectations of consumers. Our recent market study called Retail CX Insights 2024: Driving In-Store Sales sheds light on the current state of in-store shopping behaviours, customer segmentation, and the factors driving satisfaction and loyalty.

Now, let’s delve into the key findings and explore what they mean for retailers looking to thrive in this dynamic landscape.

Drivers of customer satisfaction and loyalty

Before we dive into the drivers of customer satisfaction and loyalty, let us first explore the key mindsets shaping retail shopping today:

Our study identifies key factors that drive positive in-store experiences and build customer loyalty. Price competitiveness stands out as a crucial factor for Traditionals. Meanwhile, NEOs, though less price-sensitive, respond strongly to loyalty-linked pricing strategies—such as exclusive discounts—that make them feel valued and elevate their overall experience. The significance of other factors varies depending on the customer’s mindset.

Read: Retail CX Insights: Understanding Consumer Mindsets in 2024 

For NEOs, who represent a more modern and flexible shopping mindset, brand reputation ranked as the most important factor, followed closely by ease of finding product. This suggests that NEOs are more likely to be influenced by a store’s image and perceived quality. In contrast, Traditional mindsets placed higher importance on price competitiveness, product availability and promotions, indicating a more practical approach to shopping.

To see the full insights, pre-register: Consumer Insights Report: What CX is Driving In-Store Conversion 2024

Biggest frustrations and pain points

Common frustrations and pain points varied slightly among both NEOs and Traditionals. However, some issues were universally problematic:

1. Overpriced products: This was the top concern for Traditionals.
2. Long checkout lines: A significant pain point across both mindsets, indicating a need for improved efficiency at the point of sale.
3. Insufficient parking: This is the most frequent pain point among NEOs, emphasising the need for investment in parking spaces.
4. Limited product range: This issue was particularly concerning for Traditionals.

NEOs were less sensitive to overpriced products but more concerned about insufficient parking, suggesting that convenience plays a crucial role in their shopping experience.

Traditionals, on the other hand, place high importance on affordability and convenient checkouts, among others.

To see the full insights, download: Consumer Insights Report: What CX is Driving In-Store Conversion 2024

Factors that cause customers to switch to another store

Now, that we understand their biggest frustrations and pain points, what would drive NEOs and Traditionals to switch from one store to another?

For NEOs, inconvenient store layouts and difficulty finding products are main reasons for switching stores. They value ease of navigation and product accessibility and are less tolerant of confusing store layouts.

Traditionals, on the other hand, primarily switch due to overpriced products. But like NEOs, they are also put off by inconvenient store layouts, emphasising the need for easy-to-navigate stores. High prices are the most significant deterrent for this group, indicating a strong preference for competitive pricing.

Difficulty finding products is another critical issue for both NEOs and Traditionals, as it directly affects their shopping efficiency. Limited product range also contribute to their decision to switch, underscoring the importance of stock availability and variety.

To see the full insights, download: Consumer Insights Report: What CX is Driving In-Store Conversion 2024

So what can we learn from this information? Retailers can use these insights to tailor improvements in pricing strategies, store layout design, product accessibility, and staff training to meet the specific needs of each customer mindset. By addressing these key areas, retailers can reduce churn and enhance the overall shopping experience for both NEO and Traditional customers.

The dream in-store experience

When it comes to creating an ideal shopping environment, both NEOs and Traditionals showed interest in technological improvements. However, the level of enthusiasm and specific preferences varied significantly.

Data shows that the NEOs are the group most interested in technological improvements in their shopping experience. On average, each NEO mentioned 4.1 different technological improvements they would like to see. This means they are keen on adopting new technologies to enhance their shopping experience, such as interactive product displays, augmented reality product testing, and virtual assistance.

In contrast, Traditionals were more focused on practical technological enhancements like digital price comparisons and self-checkout options.

The willingness to pay a premium for an enhanced shopping experience also varied. While 80% of Traditional mindsets were unwilling to pay any premium, 80% of NEO mindsets were willing to pay at least a 5% premium, with 30% of them open to paying 15% or more. This stark difference highlights the potential for retailers to offer tiered experiences or loyalty programs that cater to different customer preferences.

Factors that encourage customers to spend more time in stores also differed among mindsets. NEOs showed interest in additional services, environmental initiatives, and immersive experiences. Traditionals, however, were more likely to be influenced by an expanded product range and the availability of knowledgeable staff.

Influencing unplanned purchases

Understanding what drives unplanned purchases is crucial for retailers looking to maximise sales opportunities. The study revealed that current promotions and deals were the primary factors influencing impulse buys across both mindsets. However, the impact of other factors varied.

For NEOs, product displays, salesperson availability, and peer influence or recommendations played a more significant role in driving unplanned purchases than Traditionals. This suggests that creating an engaging in-store environment with well-trained staff could be particularly effective in encouraging additional spending among this group.

The preference for self-service options versus staff assistance also varied among customer segments. NEOs showed the highest agreement with self-service options but also valued staff assistance at various touchpoints throughout their shopping journey. Traditionals, on the other hand, showed the least agreement with self-service options and prioritised staff assistance for practical needs such as checkout and returns.

In a nutshell

The retail landscape of 2024 presents both challenges and opportunities for brick-and-mortar stores. By understanding the diverse needs and preferences of different customer segments, retailers can tailor their strategies to create more engaging, satisfying shopping experiences.

The study also highlights the importance of understanding customer segmentation and creating experiences that appeal to consumers with different mindsets. Retailers need to balance competitive pricing, technological enhancements, and quality customer service to satisfy diverse customer needs. Addressing common pain points like long checkout lines and difficulty finding products will position retailers to thrive in the evolving retail environment.

Looking ahead, further research into the impact of emerging technologies, changing consumer values, and the long-term effects of recent global events on shopping behaviours could provide additional insights for retailers.

By staying attuned to these evolving trends and continually refining their approach to customer experience, brick-and-mortar retailers can ensure their continued relevance and success in the years to come.

Check out Part 1 of our retail blog to learn more about consumer mindsets.

Check out Part 3 of our retail blog to learn more about what you can do as a retailer to enhance the customer experience.

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