Online retail demographics: the law of averages

Your average online shopper could be male or female, they are most likely to be in their 30s or 40s and reasonably likely to be of above average education and affluence. These are findings of the just-released online retail forecast from Forrester, and they are facts that raise more questions than they answer.

It will come as a surprise to few that it is no longer hermit-like men in their early 20s who are driving sales online and across multiple channels. After all, look at what the growth categories online are, such as fashion. But if this stereotype is now outdated, are there other consumer profiles that we can instead develop to understand who multichannel shoppers are and what they want?

While the appeal of online and multi­channel shopping has become mass market, it is clear from the research done both by analysts and retailers themselves that understanding the shopping trends among different demographic and geographic groups is crucially important.

The average online shopper in Western Europe is 40, they are almost as likely to be female as male, and they will undoubtedly be online regularly (on average 13 hours a week). The average time they have been buying online is four years.

But these topline figures hide some trends which those that are developing multi­channel services should watch carefully. Forrester Research vice-president and research director Patti Freeman Evans says that the prime online buyer demographic is in the 25- to 55-year-old age range, or as she describes “the meat of the population”.

“In general they are around 40, a little bit younger than offline shoppers, but not significantly younger,” she adds, referring to the statistic that the average European shopper overall is 46 years old.

Mixed appeal

Using the web as part of the shopping journey is mainstream for consumers in the UK now, with 54% buying online, says Freeman Evans. UK online shoppers outspend both their European and even US counterparts. But this does not mean that certain parts of a multichannel proposition will appeal to all shoppers equally.

The strongest age correlation for multichannel services is for those who use catalogues - quite simply, and intuitively, the older shoppers are, the more likely they are to use catalogues. “The catalogue is still part of the value chain,” says Freeman Evans, explaining that it is still a popular option for older shoppers.

This is backed up very much by anecdotal evidence from the home shopping retailers. N Brown, for instance, finds that increasingly its shopper base purchases online, but the sending out of the catalogues is an important driver of traffic to the website; suggesting that older shoppers are less likely to browse online, and unlike the majority of shoppers prefer to do their research offline.

Similarly, Shop Direct finds that 55% of its customers who choose to receive catalogues then purchase online. While big brands may be planning to move away from paper catalogues it is clear that they continue to play an important role in engaging older multichannel shoppers.

For other channels, and multichannel services, assumptions are less wise. For instance, the Nectar loyalty scheme is able to collect good data tying together shopper behaviour with the demographic information it collects when customers sign up for their loyalty card. While 25- to 44-year-olds are the most likely age group to shop online for groceries, which might be expected, 8% of online grocery shoppers among the Nectar card base are 65 or older.

This makes sense, of course, when you consider the mobility issues that older customers may have, but it debunks any assumptions that older consumers won’t buy online.

The population is ageing and, while those already in the over-65s group might not be adopting the internet in great numbers, the number of consumers who are multichannel shoppers moving into the over-65s segment of the population will continue to increase.

“The baby boomers are a tremendously important demographic to serve,” says Freeman Evans. She adds that services could be developed to target this group, and if they are useful they are likely to appeal to a much wider audience too. “Maybe deliver-to-car services could be put in place to market to those consumers - but they will be useful to everyone.”

Daren Fitzgerald, head of multichannel retail at IT and ecommerce services provider 20:20 Technology, refers to IBM research that says the most frequent UK online shoppers are aged between 24 and 35, whereas in the US the most prolific age range is 18 to 25-year-olds. He explains this by the differences in what people buy online in each country.

However, he adds that the growing trend for young adults to live with their parents is influencing the channels the whole household uses to shop.

This is backed up by the experience of John Lewis, which has found that it can get customers to repeat purchase online if it helps them through the process the first time by offering assisted sales in stores.

At the other end of the scale, while young shoppers might not be using the web to buy the most, perhaps because they are more likely to want to pay with cash than the general population, their attitude towards the internet, and particularly mobile, is interesting.

Freeman Evans says retailers need to consider that young consumers’ sense of connectivity is very different to that of older generations. “If you ask 13- to 18-year-olds how much time they spend online they don’t understand the question, as they are always online,” she says.

Those in their late teens are already the target market for much mobile marketing, and are also likely to be the future early adopters of the mobile channel for transactions and product research.

So if you focus on young consumers or older consumers, you have to think beyond mass-market appeal.

Fitzgerald says that retailers are interested in the demographic of their customer bases when they come to innovate around multichannel services. At present he is working for a large retailer on a project that is being completely driven by the customer and user experience.

Battle of the sexes

Nectar’s cardholder base is two-thirds female and one-third male. Relatively speaking, men are more likely to buy online from Nectar eStores. However, Nectar managing director Jan-Pieter Lips says that this is because men were early adopters, and recent growth in online sales is actually coming from women shoppers.

Nectar’s numbers show that where customers have the option of click-and-reserve home delivery for an online order, two thirds choose click and reserve. Lips says that the main driver for that is proximity to stores, and there is no male/female bias towards using click-and-collect as the fulfilment method.

But, interestingly, there is a small geographical bias. In Scotland, there is a slightly higher propensity to click and reserve, proving that this is a service that is attractive not just to those in dense urban areas.

Where consumers can better be characterised, however, is by the stage they are at in their life. Many retailers commented on the propensity for those with families to shop online, and online researcher ComScore last year highlighted the emergence of mothers as the ones making online purchase decisions.

Lifestyle fashion retailer White Stuff’s target customer is female and in the age range most likely to be mothers of children. Head of marketing Susan Crawford says: “White Stuff’s core

customer is female, aged between 35 and 44, and while 92% of online customers also shop in store, the 45-plus customer tends to shop in-store rather than online.”

Argos agrees that families are important within its multichannel customer base. “The majority of customers are aged between 26 and 55, but over index in the 36- to 45-year-old age group,” said a spokeswoman. “For the ABC1 profiles, Argos.co.uk customers are actually over index versus the average UK population, with this being particularly dominant in the ‘heart-land families’. They are more likely to have children.”

The overall Nectar bias is also towards 35- to 44-year-olds. Lips agrees there is a bias towards families, so it is not over-represented in older age groups, but as points collectors tend to be loyal, Nectar expects to keep them as they age.

In terms of customer service, Nectar also sees strong adoption of online channels across its cardholder base. This again suggests that it is wrong to assume how customers will be willing to communicate with a brand based on stereotypes. Lips says Nectar receives more than 10,000 emails and conducts 10,000 webchats each month, compared with receiving 5,000 to 6,000 letters a month. “It does show that the internet is properly mainstream,” he explains.

On the rise

Having reached mass-market adoption, the online channel - and by association multichannel services - are already being used by the majority of consumers who would be willing to use them. Forrester estimates that there are 31 million online buyers in the UK at present, and this will rise to 40 million in 2014. Total online retail spend is expected to rise more steeply from £22bn in 2009 to £36bn by 2014.

Lips concludes that internet and multichannel customers are now much more mainstream than perhaps retailers have given them credit for, and the early promise of ecommerce, that shopping using the internet would be something everyone did, is belatedly coming true. “10 years ago everyone thought that the world would change overnight, and then it didn’t and they forgot about it,” he says.

The figures show it is wrong to make assumptions about how different groups will be willing to shop, but it is right to try to keep abreast of what they are doing.