Shifts in retail: Why generational targeting isn’t working

As retailers face the challenges of tightening consumer budgets amidst factors such as inflation and geopolitical tensions, the role of customer experience (CX) in influencing buyer decisions has taken a front seat. Even the slightest hiccup in the shopping journey can prompt customers to abandon their carts or ditch a favorite brand.  

While navigating these challenges, retailers are pressured to deliver seamless, personalized experiences. To better calibrate their customer engagement, many prioritize customer segmentation, starting with the preferences of each generation. After all, knowing what resonates with different age groups is vital to crafting top-notch retail journeys. 

But is this approach still effective?  

We collaborated with Retail Economics to survey 2,000 consumers across the UK to gain fresh insights about what shoppers want in retail. Following a persona-based approach, we discovered that the boundaries are blurring between younger and older generations, thanks to widespread digital adoption across all age groups.  

Read on to learn more about each generation’s expectations from retail brands and how communication plays a key role along their shopping journey. 

Customer engagement often begins with segmentation, where we group customers based on shared traits. While variables like occupation, location, and income are pivotal in this process, generational targeting is frequently the starting point. 

Businesses often view younger generations as digitally savvy, prioritizing customized messaging strategies across age groups. Let’s look at the typical categorization in the generational approach: 

But generational targeting might not be as black and white as it might seem.  

Just look at how younger generations are embracing nostalgia. Vinyl record sales are shooting through the roof, 80’s music is making a comeback, and many Gen Zers are ditching fast fashion for vintage clothing. Who knows what’s next? Will we see Gen Zers dumping their smartphones for old-school phones like the Nokia 3310?  

Considering the unexpected ways things change, targeting by age might not be as precise as it seems. So, in the spirit of personalization and conversational CX, we adopted a persona-based approach in our study.

In a world where customers are growing used to hyper-personalization, it’s essential to grasp what they want in finer detail. That’s why we developed four typical shopper personas, each with unique traits that shape the retail experience in distinct ways: 

Using our personas to zoom in on our 2,000 respondents, we could better understand how shoppers think and act. We also uncovered valuable insights about their shopping habits, communication preferences, and their tolerance for friction in CX, to name a few. 

Let’s dive into what we found. 

Our findings identified shared frustrations between all personas that are not as complicated as one might think. Retailers can easily take on these five common pain points to improve the shopping experience: 

Paying for returns: Over a third of exacting and busy shoppers have stopped shopping with brands that charge for returns. Additionally, unclear or confusing return processes contribute to brand abandonment.

Stock availability: The availability of products directly impacts customer satisfaction, sales, and repeat business.

Communication during pain points: Effective communication during pain points like delays is crucial in maintaining trust and transparency throughout the customer journey. Poor communication can lead to dissatisfaction and jeopardize customer relationships.

Delivery options: Limited delivery options have a negative impact on customer satisfaction and loyalty.

Delivery tracking: Providing delivery tracking builds customer confidence and trust. Notably, 22% of exacting shoppers are particularly sensitive to the absence of delivery tracking, ceasing to shop with retailers that do not offer this feature. 

One of the standout themes throughout the report is the significant correlation between consumers’ tolerance levels and their propensity to shop online (for example, online shoppers are more intolerant). We discovered that: 

The mix of generations in all four shopping personas highlights how diverse consumer preferences and behaviors are across different age groups. Instead of sticking to generational stereotypes, it’s crucial to consider every shopper’s needs.

One of the most surprising findings from this study is that digital adoption across generations is challenging assumptions about their communication preferences. This potentially has profound implications for retailers seeking to connect with customers, making targeting shoppers more difficult. 

In our effort to drill down on the finer nuances between consumers, we discovered irregularities in how retailers communicate to different generations and vice versa.  

Interestingly, the majority of all generations prefer to communicate digitally. But what’s more surprising is that retailers often overlook the widespread preference for online chat during the customer journey: 

Millennials are less likely to pay attention to text messaging than retailers think: 

Retailers are also too skewed toward text in their targeting of Gen X and Baby Boomers:  

Shoppers across the board – digital adopters and digital natives – are starting to embrace the conversational capabilities of chatbots and AI. As a matter of fact, over one in four of our respondents have indicated that they are comfortable engaging retailers through chatbots and artificial intelligence. 

Retailers wanting to build brand loyalty should adopt AI technology to offer personalized, conversational experiences throughout the entire shopping journey. Channels such as WhatsApp enable you to set up a chatbot that shares product catalogs and collects payments from one app – giving consumers a hassle-free way to complete their purchases. 

Looking at the different income levels of our shopper personas, we found that income is irrelevant to their communication preferences.

We noticed similar shopper personas across all income groups – whether less affluent, middle-income, or most affluent. This suggests that income-based segmentation may also be less effective than retailers think.  

Our research shows that retailers should look at the bigger picture when segmenting their customers. Understanding the different types of shoppers, regardless of income, will help to understand each individual’s needs better. 

The traditional ways retailers target their customers are becoming less relevant in a sea of hyper-personalization. Rather than relying solely on generational divides and levels of income, forward-thinking retailers are embracing a new paradigm—one centered on understanding individual customer preferences. 

By providing personalized experiences throughout the customer journey, retailers can master these complexities and build lasting customer relationships. 

This shift from demographic-based segmentation to a more personalized approach enables retailers to forge deeper connections and foster long-term loyalty. 

To future-proof your customer engagement strategy, three proactive steps will steer your CX in the right direction:

By embracing these strategies, you will not only exceed the expectations of your customers, but also thrive in an era defined by personalization and connectivity.