Blurred Lines: Younger Consumers Demanding an ‘Omnichannel’ Experience (October 2013)
By Adam Perrotta, Assistant Editor
Millennial consumers present a wealth of opportunities for mobile payment providers and merchants, but the demographic is a demanding one, with several expectations that must be met by companies looking to gain a foothold with the segment.
One of the audience’s key demands is for a shopping and payments experience that enables them to move seamlessly between multiple channels. That was among the key findings of a recent study by Vantiv Inc. that illustrated the massive potential of the Millennials for mobile payments—and how today’s payment providers can realize that potential.
The study, conducted in conjunction with Mercator Advisory Group, polled 1,200 consumers about how they are making payments now and how they plan to in the future. In addition, several dozen payments industry and retail executives were asked about how they are enabling payments. A key concept emerging from the data was the idea of the “omniconsumer,” which the report defines as a consumer who expects smooth, seamless payment experiences across multiple channels, including mobile, Web and in-store. Millennials—those between the ages of 18 and 34—comprise a large percentage of such omniconsumers, the report found, typically being quite comfortable moving between channels. For example, younger consumers are more likely to embrace mobile banking, but they are also heavy users of ATMs and bank branches.
|Source: Vantiv 2013|
Despite a reputation for being mobile-centric, Millennials aren’t strangers to brick-and-mortar stores, either. Ninety-one percent of Millennial consumers polled said they go to a department store at least once a month, while 41 percent reported doing so even more frequently. In-store visits, however, often are just one phase of the shopping process for Millennials, who are much more likely to engage in “showrooming”—exploring products in-store and then buying the product online. Thirty-one percent of survey respondents ages 18 to 34 had used a smartphone while in a brick-and-mortar store to compare prices and subsequently bought the product online. Of respondents over 35, just 16 percent said they had done so.
The Hybrid Shopping Experience
“Consumers have been gaining more information and more control for years,” Donald Boeding, president of merchant services at Vantiv, said in the report. “But now, mobile technology in a multichannel world is taking that control to new levels.”
Showrooming can present a problem for retailers that lose sales to competitors, since 29 percent of younger consumers had used their phone while in-store to compare prices and then bought at a competing retailer. But merchants are experimenting with approaches to limit the negative effects of showrooming, such as equipping salespeople with tablets to help customers find, research and purchase products online.
Some merchants have established omnichannel stores that incorporate kiosks and mobile devices to create a hybrid shopping experience, for instance, enabling customers to enter their shopping lists on a mobile device that then displays where in the store to find each item. Others have distributed POS tablets on the retail floor so that salespeople can combat showrooming by checking inventories, offering discounts or shipping direct-to-consumer.
More Channels, More Chances to Engage
The study found several other examples of the multichannel preference among younger consumers, including using coupons received on their phones, which 21 percent of young consumers reported doing, compared to 15 percent of older consumers.
The more channels a consumer uses, the more opportunities for a company to develop a relationship with that consumer. That opportunity extends to payment providers, too. Prepaid cards, for instance, are considered an ideal complement to mobile, especially among young audiences, according to the study. Overall, 29 percent of consumers ages 18 to 34 had purchased a GPR card, compared to just 19 percent of those ages 35 to 64. Forty-seven percent of younger consumers, meanwhile, said they planned to increase their purchasing of retailer-specific prepaid cards. And one of the most commonly cited advantages of prepaid cards by Millennials is security—something seen as lacking by those young consumers reluctant to adopt mobile payments. By incorporating prepaid products into mobile payment apps and wallets, payment providers can overcome such concerns.
“By combining [prepaid and mobile], you are bringing the positive qualities of prepaid into the mobile world,” Dean Seifert, senior vice president of product strategy, Vantiv, noted in the report. “You can make the mobile platform more attractive to more consumers, and help overcome the doubts some of them have about it. At the same time, you can make prepaid accounts more attractive, because you’re giving consumers more ways to access their prepaid funds.”