New study finds businesses disregard new consumer psychology at their peril

New study finds businesses disregard new consumer psychology at their peril

A report published today by accountants and business advisors BDO unveils a new breed of consumer that is taking over the UK High Street, rendering retailers vulnerable should they fail to evolve with the post-credit crunch consumer mindset.

As the UK emerges from the depths of the economic downturn, the report – Transitions to the New Consumer – comes amid predictions that more than 26,500 retailers will fail by 2015, which include around 6,300 bars and restaurants and 1,500 homeware retailers. It urges retailers not to join the future ranks of failed High Street businesses, but to act now and adapt to the changing mindset of their customer base. This will mean taking new steps to build brand loyalty in the fight for survival on the UK High Street.

Consumers demand tailored value

Crucially, the study pinpoints the post-crunch consumer as having shifted to a more reasoned and thoughtful form of consumption. Demand for individualised service now dictates consumer spending, with shoppers less impressed by size, volume or even variety of product, and instead make their purchasing decisions based on individualised service and personal shopping experiences.

Overall, BDO forecasts that consumer spending is expected to recover and continue to grow, with growth in retail spend forecast to edge up from 2.6% to 2.8% next year. Yet only those businesses that heed the habits of the increasingly canny consumer will safeguard their success in the years ahead.

The report also provides guidance to businesses on engaging with the new consumer mindset. For example, it advises retailers to re-think who their customers are and who they want them to be; and to re-visit what great service looks, feels and sounds like. It also suggests continuously reviewing customer spending data and using it to provide a bespoke personal experience, while considering the international dimension. Moreover, it says to develop and invest in multichannel, with a focus on what customers want and need rather than product range variety.

Treat customers as individuals

Don Williams, BDO head of retail, commented: “One size no longer fits all. Businesses will not survive and thrive if they do not take steps to understand the psychology of the new consumer. The recession has been a catalyst for change and people are becoming much more demanding – they want a personalised experience without paying a premium for it. That means consumers want to buy from retailers who target and treat them as individuals.

“The High Street needs to redefine the concept of the personal shopper – only the personal touch will allow retailers to profit from this new breed of consumer. There are several ways to do this, but just through effective data capture businesses can start the journey to truly tailoring their approach to customers to activate purchasing.”