Consumers are changing. Here’s how brands can adapt
This decade has already seen global lockdowns, the acceleration of eCommerce, and the rise of AI, writes Katrina Konstas, Country Manager, Afterpay Australia. However, consumer behaviour and technology will only continue to change, and brands must keep up to succeed.
In 2024, few aspects of our lives aren’t touched by algorithms. What we watch, what we listen to, which political messages and fashion trends we’re exposed to on social media… they are all determined by one algorithm or another.
This hyper-personalised flow of information was designed to be helpful. But for some, it’s achieved the opposite and led to a sense of ‘algorithmic overload’ that has flattened culture, leaving people to sift through an overwhelming sea of ‘sameness’.
For younger consumers in particular, the ‘trendification’ of culture, where algorithmically determined microtrends, cores and aesthetics emerge and fade faster than ever, has become exhausting. In fact, in Australia, nearly two-thirds of Gen Z report feeling fatigued by the volume of ‘new’ stuff that they are served up online.
This sense of fatigue is just one of the ways in which consumer behaviour is changing, according to Solving the Consumer Equation, a new report commissioned by Afterpay and produced by The Future Laboratory.
The report explores how advancements in retail, technology and finance can help forge create meaningful connections with customers, and ultimately drive more sales. And In a decade where retailers must not only keep up with cultural, economic, technological and regulatory change, but cut through the ‘sea of sameness’ consumers are facing, it offers valuable insights into how innovative brands can succeed.
Consumers are changing
As Solving the Consumer Equation makes clear – and as many retailers are already realising – consumer behaviour is evolving rapidly. In short, consumers have become more discerning and more demanding. They’ve transformed from passive consumers into active shopping participants, and they expect brands to keep up.
For businesses this can be challenging, as modern consumer behaviour is increasingly defined by opposing views.
For example, today’s shoppers – especially Gen Z and Millennials – place a premium on diversity and inclusivity, and gravitate towards brands that embody their values. But as cost-of-living pressures rise, many consumers can’t afford to live up to these values.
Shoppers have also come to expect high levels of personalisation, but many are struggling with what author Kyle Chayka has dubbed “algorithmic overload”, and feel overwhelmed by the volume and similarity of products served up by algorithms.
Plus, while most people view themselves in increasingly individualistic ways (whether that relates to ethnicity, gender or neurodiversity), there is also a growing hunger for a greater sense of community.
What does all of this mean for brands?
Cultivate a sense of connection
To stand out, retailers and brands must find ways to connect with consumers meaningfully.
For some brands, this might mean creating branded experiences or leaning into live retail or “shoppertainment”, which is currently gaining traction across Asia. For others, it will involve treating consumers more like members than customers, and giving them a more active role in the shopping journey. Still, others will forge deeper connections with consumers by helping them bridge the gap between their sustainability values and their behaviour. (Some innovative brands already do this by adopting web extensions like EcoCart, i=Change or AirRobe.)
Offer consumers equitable and empowering financial tools
To meet consumers’ needs, retailers will also need to consider how to support and enable spending while also addressing younger generations’ economic challenges.
There is a growing sense, especially among young people, that the financial systems built to support and enable individuals are no longer fit for purpose, and the report we commissioned found that a new wave of accessible, customer-centric tools and fin-tech metrics are on the horizon.
Brands will also need to keep abreast of new payment and credit services that offer visibility, choice and flexibility. They will also need to keep financial security and privacy top of mind and consider embracing next-gen currencies, like cryptocurrency, which provide new ways for people to spend, save and live.
Harness technology to drive ‘smartsumption’
Finally, as more complex purchasing journeys emerge, and commerce settles into a hybrid model that blends online and in-person shopping, retailers will need to work harder to acquire and retain customers. A crucial part of this will involve harnessing technology – especially artificial intelligence – to create hyper-personalised experiences.
This will likely result in increasingly sophisticated AI-powered chatbots, as well as products that leverage sentimental analysis to deliver personalised experiences, and, potentially, virtual flagship stores that offer immersive experiences.
As we look to this second half of this decade – and beyond – there’s only one thing that’s certain: change will continue. To succeed, brands and retailers will need to adapt and innovate.
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