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Shoppers have “zero tolerance” for poor retail

By Danielle Wightman-Stone


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New research from payments provider Klarna has revealed that 40 percent of shoppers say that just one bad experience would stop them from returning to a brand, showing that it is a struggle for retailers to retain customer loyalty as today’s shoppers increasingly have a “zero tolerance for a poor retail experience”.

The research conducted by Censuswide, polled 2,000 UK consumers and over 250 retail decision, and revealed that a third (32 percent) of consumers say shopping isn’t as fun as it used to be, with 36 percent feeling that what shoppers today have gained in convenience, they’ve lost in experience.

Shoppers are demanding more from retailers, with loyalty running much deeper than a transaction or offer, and when it comes to what drives disloyalty, a bad returns process (30 percent), and a drawn-out online checkout without payment options (21 percent) rank much higher for shoppers than retailers perceive them to be.

Retailers are recognising this shift, adds Klarna, and they are starting to evolve the way they think about loyalty, with 41 percent of retailers agreeing that loyalty is no longer solely driven by rewards and 76 percent adding that they have to work harder than ever to retain customers, while 33 percent state that they are struggling to keep pace with consumer expectations around experience, as they are being held back by outdated tech (33 percent) and a short-term focus on sales (30 percent).

“Experience is the new loyalty” according to new research from Klarna

Whilst the traditional drivers of loyalty remain important, it is no longer enough to only deliver value for money, quality products and a good online user experience, with 40 percent of shoppers stating they want to shop with brands whose values they align with, while 35 percent want human engagement and 26 percent express a need for flexible payment options.

This is especially true of millennial and Gen Z shoppers, notes Klarna’s research as they care less about value for money, and more about brand image - 20 percent, compared to 13 percent of over 45 year olds and with regards flexible payments - 30 percent, compared to 25 percent of over 35 year olds.

How can retailers keep pace? According to Klarna, forward-thinking retailers need to invest in “newer” elements of experience - such as a smooth online user experience, additional payment options, a curated experience and brand content.

Luke Griffiths, managing director at Klarna UK said in a statement: “Loyalty is no longer a ‘points’ programme. It’s clear that consumers want to align themselves with brands who can offer them a deeper connection and understand how they want to shop.

“Retailers need to be investing in the right drivers of loyalty for their customers - whether that’s flexible payment options that fit with their lifestyle or curated experiences that put the fun back into shopping. As consumer expectations continue to grow and the role of experience becomes increasingly important, getting this right will be vital to success in a competitive retail market.”

Andy Mulcahy, strategy and insight director at IMRG added: “Shopper confidence appears to be in a suppressed state and many retailers are under pressure to enhance the customer experience they offer to keep ahead in a tough environment. The problem is that ‘customer experience’ is a term that can technically cover every aspect of a retailer’s proposition. Identifying where to focus resource is a challenge. This research shows that understanding the drivers of loyalty that will work for a specific retailer is important for keeping ahead today.”

Image: courtesy of Klarna