News

Digital Retail: The psychology of the 21st century consumer

08-Oct-2018

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Scott Cairns, Chief Technology Officer & Head of UK Security Practice at T-Systems, looks at the reasons why brick-and-mortar stores are closing more and more and explores the psychology behind the changing behaviours of today’s consumer.
A report by the Independent in May 2018 found that online retail now equates to 17% of total retail sales, growing from zero 15 years ago. The report quoted Richard Hyman (veteran retail advisor) as advising, "Online retail hasn’t made the pie any bigger – it’s just been cannibalising it".
Analysis of the impact the online retail industry is having on the physical retail sector usually focusses on several common causes, including the income squeeze, rapidly changing consumer tastes, rising overhead costs, too many shops, and too much consumer debt. What is rarely factored into this discussion is the psychology of the consumer. To understand the 21st-century customer, we only need to look inward towards our personal behaviours and practices. A digital society powered by the immediate availability of products and services has perpetuated a world of consumerism, built upon impatience and a need for instant gratification. However, this comes with a consequence that is evident across the nation as retailers close doors and depart from once bustling shopping centres. This story is not a new one, but how have we reached this point? 
There seems to be a global perception that as a society we are busier now than at any previous point in history, primarily due to increased workloads. However, this is actually not the case, and several studies and investigations have demonstrated this over recent years.
In 2014, an article in The Economist examined the question of "Why is everyone so busy?", and concluded it had more to do with our digital "time-saving tools" than an actual increase in real workload. They reference a McKinsey study that highlighted a corporate "perennial time-scarcity problem" felt by executives across the globe who rely on technological devices to aid their day to day work. 
In 2016, Science Alert published "Here's Why You Feel Busy All The Time", as an article where they explored the same paradigm and the notion of not having enough hours in the day. Referencing research from James Cook University and CIPD studies, the article hypothesised "it is the change in our lifestyle, rather than extra working hours, that's to blame". Again it was proposed the complicated reliance on technology to augment or facilitate our everyday lives is a dominant contributory factor to this feeling of perpetual busyness.
The common thread here appears to be our steadily evolving technological support tools, and an 'always connected' lifestyle, within which we face a continuous information feed and the predicament of being contactable 24/7. This situation effectively means we never switch off, and we do not take the time to disconnect, as the digital world is always within reach.
For years corporations talked about 'work-life balance', which is a myth in a connected society where we alternate between checking our personal social media accounts while at work, and reading and responding to work emails on the couch at home. Through her studies, psychologist Aoife McLoughlin found that "using modern gadgets like smartphones can actually make time appear to go by faster", further proposing, "It seems like there’s something about the technology itself that primes us to increase that pacemaker inside of us that measures the passing of time."
As a global society, we have become obsessed with checklists and task lists, fueled by a never-ending stream of mobile apps to 'help' us achieve our targets and objectives. Unfortunately, these apps contribute to this feeling of pressure as tasks remain incomplete and roll over to that 'overdue' status that makes us believe we are failing to move forward.
Exploring the 'life' side of the equation, in 2003, the Association for Consumer Research (ACR) studied the impact of an abundance of choice when it comes to leisure activities as a further influential factor on the feeling of time pressure. They suggested the world is more easily accessible both physically and digitally, meaning there is more to see, read, watch, digest, and try, than ever before. This abundance of available choice perpetuates the feeling that we have less leisure time even though the reverse is true, related to what is known as "the paradox of choice" -  Options are great, but having too many can elevate anxiety and reinforce the feeling of not having enough time.
The pressure to get through what we perceive is a never-ending volume of work due to 24/7 availability, and the drive to undertake as much leisure activity as possible creates an unpalatable dichotomy that exerts the pressure we see as being 'busier than ever'.
Returning to our 21st-century consumer, we can now better understand the impatience we all demonstrate and the need for this instant gratification. The online snap purchase is as a way of releasing pressure and obtaining a dopamine hit, based on the knowledge that we have, against all the odds, achieved something.
The psychology of the consumer is, therefore, an important contributory factor to the growth of the online retail sector. The pressure people feel in their daily lives inevitably leads to the need to accomplish one small thing when we have a minute to spare. In a digital society, this one small thing can be that instant online purchase that takes only a minute, can be performed anywhere, but amounts to so much more when it comes to our mental well-being. Checking a task off our list and obtaining that feeling of satisfaction in having accomplished one thing in a pressured world, can mean all the difference to our psyche, and consequently further contribute to the demand for online retail growth to the detriment of physical stores.