Why it matters:
- This holiday season, more than half of shoppers – 58% — said they plan to buy additional gifts with the money they save through deals, according to e-commerce company Rakuten. On Small Business Saturday, businesses can lean into this ‘stretch theory’ mentality by highlighting how consumers can use savings and loyalty rewards to make holiday budgets go farther.
- Businesses would be wise to lean into consumers’ FOMO (fear of missing out) instincts, particularly when it comes to targeting coveted demographics Gen Z and millennials, who are more likely to buy something if they’re afraid it will sell out, or if they spot someone else buying it. Business can tap into this behavior by alerting shoppers to items that are likely to vanish from store shelves and online shopping sites.
- According to research firm Gradient, 82% of retail brands have significantly increased their budgets for in-person events and experiences over the last three years, as many consumers have become inured to the deluge of digital content. Small businesses can tap into this shift by offering in-person product demonstrations and activities such as cooking classes and speaking events related to what the business is selling.
In addition to surveys about how consumers will be spending this holiday season, researchers have been busy studying broader consumer behaviors as they head into the crucial time of year for small businesses.
The findings demonstrate that psychology can play as big a role as dollars and cents in convincing someone to decide to make a purchase.
Here are some insights into consumer behavior that can help your business connect with customers on Small Business Saturday and for the rest of the year.
Lean into the ‘stretching’ mindset to spur add-on sales
A recent survey by fintech and e-commerce company Rakuten discovered a phenomenon that Rakuten has dubbed “stretch theory.”
Rakuten found that customers end up spending more money when they feel they have scored a great deal on a purchase. Consumers, Rakuten reported, are putting money they save by snagging a good deal toward additional purchases.
More than half of shoppers – 58% — said they plan to buy more gifts with the money they save through deals. Businesses can lean into the “stretch theory” mentality by highlighting how savings and loyalty rewards can be used to make holiday budgets go further.
Leverage that FOMO feeling
The Rakuten survey also found that consumers, particularly the coveted Gen Z and millennial demographics, are more likely to buy something if they are afraid it will sell out, or if they spot someone else buying it.
FOMO – fear of missing out – is a driving force businesses should be aware of. Fifty-nine percent of Gen Z consumers, and 43% of millennials, said they bought something because they were afraid it would sell out.
Among shoppers of all ages, 43% said they bought something after seeing a stranger put the item in their shopping cart. That FOMO tendency was highest among Gen Z, at 63%, and millennials, at 52%.
Business can tap into this behavior by highlighting bestselling products, and alerting shoppers to items that are likely to sell out.
Know who your customers’ key influencers are
Research by management consulting firm Bain & Co. found that the youngest shoppers – Gen Z – and the oldest – boomers – had the same answer when asked what influenced their decisions to shop at a particular store or business. Both groups said recommendations from friends carried the most weight.
Millennials and Gen X ranked recommendations from friends second, behind Google or other search engines. Gen Z ranked Google and search second, and boomers ranked it third, behind retailer location.
Only Gen Z and millennials listed social media and influencers among the top five factors that determined where they shopped, with Gen Z ranking them third and millennials placing them fifth.
Depending on their target demographic groups, businesses should make sure they are showing up well on search engines and encourage customers to recommend them to friends. Businesses can offer discounts to customers who bring a new customer to a store event. They also can post reviews from local customers in their stores.
More than half of shoppers – 58% — said they plan to buy more gifts with the money they save through deals. Businesses can lean into the “stretch theory” mentality by highlighting how savings and loyalty rewards can be used to make holiday budgets go further.
Experiences matter — from product demos to speaker events
Research by Gradient, an experiential marketing firm, found that 82% of retail brands have significantly increased their budgets for in-person events and experiences over the last three years.
That surge, according to Gradient’s report, reflects a fundamental shift in consumer behavior.
“Consumers are growing tired and indifferent to ads and digital content. What they want is new and unique ways to interact with brands, where they don’t feel like just another customer, but a participant that matters,” Anthony Coppers, founder and head of innovation at Gradient, said in releasing the report.
Small businesses can tap into this behavioral shift by offering in-person product demonstrations, customer appreciation events with new product reveals, and activities such as cooking classes, crafting, speakers, or other events related to what the business is selling.
Wellness sells
According the Global Wellness Institute, wellness-related products, services, and travel have grown into a $5 trillion-plus economy worldwide, with close to $2 trillion of that spent in North America. In North America, spending on wellness grew at an annual rate of 14% between 2020 and 2022.
This trend has prompted businesses ranging from dating apps to architectural firms — not typically thought of as wellness-related — to include self-care messages in their marketing and highlight how their products promote mental health.
Just as big retailers like Ulta, and big brands such as Dove, have campaigns encouraging customers to do things that spark joy or make them feel good about themselves, small businesses can remind shoppers about the health benefits of their products, whether they are products that promote exercise or serenity, or peace of mind from being well-made, or simply spark joy through the power of shopping therapy.
The U.S. Chamber of Commerce Foundation is partnering with American Express to support small business. Are your customers proud to Shop Small? Order your complimentary "Shop Small" stickers through the below link and share them with your customers on November 30th. Order your complimentary stickers here by November 20, 2024. Stickers will be shipped to your store. While supplies last.
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