New Study Reveals Rising Demand for Digital Services Among Millennials

Research conducted by Wunderman Thompson Commerce has revealed that, in the rush to reach vulnerable consumers during lockdown, brands and retailers must not forego the near half (44%) of millennial consumers who now prefer their online purchases to be digital and instantly downloadable, rather than physical.

The company’s latest Future Shopper report - which surveyed over 14,000 people in seven countries across the globe - in the current commerce landscape, found that close to a third (28%) of consumers' annual spend is on digital services, such as streaming music and films, rising to 34% amongst millennials (those aged between 25 and 34). This figure is likely to increase further still as more consumers look for new ways to keep themselves busy indoors.

The study also revealed that 65% of consumers expect to use digital shopping channels more in future, rising to 72% for those aged between 16 and 24. With no sign of lockdown measures being lifted anytime soon, these numbers are only likely to increase.

When it comes to service Amazon continues to set the benchmark, with three-quarters (75%) of consumers wishing more brands and retailers offered the same level of service. More than half of UK consumers (57%) now subscribe to Amazon’s flagship loyalty programme, Prime, up from 49% the previous year. Amazon still leads when it comes to inspiration and search too; with the majority of consumers (52%) looking to Amazon the most for inspiration and 63% starting their search there. Overall, consumers purchase from the company an average of seven times a month. This is more than other marketplaces (five times), retailer sites (four times), social platforms (three times) or the website of the brand they want (three times) each month.

While online shopping - and shopping on Amazon in particular - is a popular choice across most industry sectors (including Health and Pharmaceutical, Entertainment and Toys), 30% of those purchasing luxury products and 40% of those buying groceries would never buy these products online. But with lockdown measures still firmly in place for most countries, consumer resolve is likely to be tested and loyalty to physical stores waning. For now, however, Amazon doesn’t win out on everything and supermarket loyalty programmes are incredibly popular; three quarters (74%) belong to a grocery loyalty scheme, making them more popular than Amazon Prime membership (55%). Globally, membership of supermarket loyalty schemes is higher amongst women (78%) than men (68%). 

What's more, two thirds (67%) of shoppers would still rather visit a supermarket website or physical stores to buy groceries than go to Amazon, with just 10% saying they would order their groceries from the retail giant. Despite supermarkets struggling to cope with the surge in demand caused by COVID-19, it's clear they remain the outlet of choice for consumers, regardless of the lockdown measures.

New technologies are changing expectations and consumers are crying out for more innovation in their shopping experience, with innovation and technology now key considerations for almost half of consumers (47%) when choosing where to shop, and over half (52%) wishing brands would be more innovative in how they use digital technology to improve their overall experience. Social commerce is also a key ingredient in the retail mix, with 42% of consumers actively recommending products to their friends through direct messaging or tagging on social media.

Neil Stewart, CEO at Wunderman Thompson Commerce, says: "With many countries still in lockdown as a result of the pandemic, brands and retailers are having to find new revenue streams online to ensure they're not being left behind. This means having a balanced strategy in place that incorporates direct-to-consumer, B2B and B2B2C business models, plus marketplaces and retailer.com to maximise exposure. Whilst the lockdown measures have benefited Amazon, the need for other brands to evolve quickly in response will likely foreshadow how they respond to changing demand in future. After all, consumers are increasingly looking to buy digital products in place of physical ones and will be looking to a new generation of brand and retailer to fulfil that demand."

In China, consumers are even more excited by eCommerce and seemingly more prepared for this retail landscape under Covid-19, as 93% of Chinese consumers expect to increase their use of digital shopping channels in the future. What’s more, 85% are excited about the idea of the future heralding cashless payments (vs. 44% internationally), 84% use social media to tag friends for products and over half (54%) use or have used devices to automatically re-order products (compared to only 24% for the international average).