MONTEREY, Calif. (BRAIN) — One dominant "brutal truth" that emerged at this year's Bicycle Leadership Conference, which wrapped up Thursday in Monterey, was this: The industry is struggling to keep up with, adapt to and embrace changing consumer behaviors.
A few major things are impacting retail nationwide, including a demographic shift from baby boomers who are no longer booming to millenials with vastly different habits and priorities making up the majority of the population's buying power, and channel and digital disruptions shaking up traditional buying models.
But it is the changing consumer attitude and behavior that has perhaps the biggest impact on retail. Priorities are changing, and the way people research, buy and acquire goods changes seemingly by the second — just look at the reports of numerous recent closures of big-box retail, foot traffic in brick-and-mortar stores, including the IBD, and shopping malls across the country.
"A paradigm shift has taken place at retail. We've lost control. Today's consumer is now dictating the path to purchase," said Pat Hus, Interbike's vice president and moderator of a panel held Wednesday titled "The Consumer in Charge: We've Lost Control."
According to Dr. Kit Yarrow, a renowned consumer psychologist who spoke at the BLC on Thursday morning, consumers are not only no longer rational, but how they are not rational has changed — it's not your imagination.
"If you're a businessperson and you've been in business for 10 years, you might be flummoxed right now," said Yarrow, who has written multiple books on the subject and teaches at Golden Gate University in San Francisco. "It's now an irrational way of doing business. That economics theory you learned in college that the only objective we have is to maximize our gain and minimize our loss — that doesn't apply. We make decisions based on relational transactions. It's emotional, and how customers are psychological has changed."
Yarrow attributes much of that change to technology and what it does to the brain — a change that has happened so quickly we've barely had time to register that change.
For example, if you said the word "Amazon" 20 years ago, Yarrow noted, a person would think "tall woman" or "the rainforest."
Today, the first thing that comes to mind is the Amazon of the e-retailing kind, its black-and-yellow logo firmly imprinted on the psyche.
According to Yarrow, our technological fantasies have, in a way, all come true. From self-driving cars to computer watches and phones with superpowers, we're all at once delighted and completely overwhelmed by these advances in technology.
"So we're not stopping to think. But it's pervasive and there is no way to escape (technology's) profound effect," she said. "We are all thinking and acting like millennials. It's just a question of degree."
(Long pause.)
That's right, she said: All of us — no matter our age, whether we like it or not — if we have an internet connection, a smartphone or a laptop, consumer behavior is not what it used to be.
"We take in information differently now. Our brains our malleable and the parts we use become more powerful. And the way our brains work changes," Yarrow said.
The tech-bombarded human brain receives five times more information than it did in 1986. It's too much to deal with, so we skim. But today we also need five pieces of proof to believe something is true; in 1986, we needed only two. As marketers this means more information has to be presented and in a more creative and captivating way — words alone don't cut it anymore. And it has to be short and simple because people aren't digesting as much.
"There is a lower tolerance for complexity and people get bored more easily. People believe graphs because they can understand it — it's visual. Research shows that instructions using pictures and thumbnail directions also bump performance," Yarrow said. "But also look at the cooking world. We don't open a cookbook and browse for a recipe anymore. We want a 60-second video that shows you exactly what to do. People believe what they see, so a primarily pictoral post is an avenue to trust."
And trust is a big factor in changing consumer behaviors. Technology and the steady stream of information it delivers has made people not only more anxious but has made people wary. Yarrow said millennials are less trusting than older generations and are more engaged in what their phone and the internet tell them. This puts pressure on business owners to continually re-earn a customer's trust.
"But deep down inside, we want to trust. When we know we can trust a company, we feel less anxious and relieved," Yarrow said. "So standing behind words and doing the right thing is another way consumers today learn about what companies do, and the way to earn a consumer's trust. I don't believe customers are as loyal to a brand or retailer as they are to people. Consumers may love and be loyal to a brand, but they're always looking for a way to cheat because they're always looking for newness."
Pre-emptive strategies like righting a wrong before the consumer even realizes it's wrong and transparency will help consumers feel retailers are on their side. Yarrow said this kind of reassurance reduces consumer anxiety and gives them a perception of control, which builds trust.
And our culture of narcissism is one where everyone gets their say but people increasingly feel invisible. Yarrow said it's less about fitting in and more about standing out.
"It's a great opportunity for everyone because people don't want the same thing everyone has. They want unique pieces that are interesting. When you feel invisible you will buy a product that will help you be seen," she said. "They want to belong to something, and feel they are with you when they are not with you so you also have to augment with ways people can connect online."
Finally, just be nice. With rudeness on the rise, Yarrow said nothing builds consumer trust like kindness.
"Build that connection in a well of safety," she said. "Consumers connect with companies they perceive to be nice and are doing the right thing."
