The start of a new decade brings many changes – including the ways in which people make purchases. As more companies offer subscription options or purchases in portioned monthly payments, millennials and generation Z’s are paying attention and taking advantage of the benefits. Younger generations are embracing the new way of purchasing thanks to the revolution of point of sale financing as a way of purchasing products in an affordable, transparent and responsible way. How are consumer buying habits going to change in this new decade?
Barriers to purchase – exchanging cash, entering pin numbers, even waiting for credit approval – are starting to disappear, and making purchasing more frictionless than ever before. Consumers are now able to buy with the click of a button through a digital wallet, or tap-and-go with contactless credit cards and now for some large purchases, getting credit is instantaneous and completely integrated into the product purchase. With more customers expecting a seamless experience for every purchase, we’ll see a growing number of ways to buy and not just with everyday purchases — imagine buying a kitchen upgrade with instant credit while your contractor is in your home!
Value Over Price
Consumers are increasingly willing to pay more in order to buy something they consider valuable, which can mean many things in this new decade. Consumers have an increasingly sophisticated knowledge of value and many weigh value before price when considering a purchase. For example, many consumers now join Costco to access Kirkland Signature products over leading name brands because the Costco brand is synonymous with value and quality. Despite price transparency, customers choose value over price. You can also see the increasing importance of value in the growth of companies who focus on sustainability, environmental impact and niche services provided to consumers. REI co-op is a great example of providing value to members through thoughtfully sourced products, environmental purpose and unique outdoor advice and services.
Products as a Service
Last decade saw the rise of subscriptions through the now ubiquitous Netflix, Amazon Prime and Spotify – and this decade will see the expansion of subscriptions into more consumer products. This trend has already started in electronics: Microsoft now offers an Xbox All Access Subscription package, bundling a console with services and game passes into a low monthly subscription price, offered through Amazon. This represents the first time a lender, manufacturer and retailer have come together to offer a seamless way for consumers to buy. Apple also offers the iPhone as a subscription – by integrating credit approval into the point of sale purchase process, customers can pay for their new iPhones on a monthly basis, interest-free. This allows consumers to afford premium, quality products while always seamlessly upgrading to newer models at a consistent monthly cost. This decade will see many more “Product as a Service” categories emerge, such as fitness equipment, outdoor equipment, home goods and appliances, travel and entertainment.
Experiences First, Channel Next
Consumer purchases are becoming less tied to the channel they buy through, as customers prioritize customer experience over channel. Apple, which continues to be at the forefront of adaptation to buying behavior, used to see those who wanted a new iPhone line up in-person. But with customers caring more about receiving the product than purchasing in-store, Apple now offers a variety of ways to purchase the new highly anticipated iPhones, including pre-ordering through the Apple App, which then can be shipped or held at a nearby store.
As this decade progresses, we will see further advances, such as brands offering next generation financing and loyalty programs that can be accessed wherever the consumer is shopping, both in captive sales channels, as well as third party retail distribution. Virtual credit cards combined with digital wallets and loyalty programs, are enabling technologies that can be accessed anywhere and used for purchases wherever Mastercard or Visa cards are accepted. This will provide transformative opportunities for consumer brands to build stronger relationships with the end consumer, regardless of the independent retailer channel used to fulfill the experience.
With all these new buying habits and purchasing methods thanks to technological advances, consumers will have to consider fraud protection more than ever when making purchases in the future. We will likely see consumers gravitate to retailers, lenders and payments companies that are sophisticated enough to meet new buying behavior, while making sure data, digital behaviors and the customer are protected and fraudulent shopping behavior is prevented.
While there is a clear roadmap for the future of many elements of consumer buying behavior, this decade will certainly bring unexpected changes as technology continues to innovate and disrupt the industry. Companies on the forefront of embracing and adapting to changes in consumer purchasing habits will be the ones who capture this decade’s growth opportunities.