As e-commerce continues to drive the consumer experience amid an ongoing pandemic, retailers have needed to adjust not only how they reach loyal shoppers, but how they engage new ones. In light of the changing customer journey, Klarna, the leading global payments and shopping provider with more than 200,000 global retailers, examines what its own proprietary data reveals about how today’s digital-first shoppers are adopting new behaviors and discovering new brands.
The customer journey now begins online and, more specifically, on social media – which is good news for direct-to-consumer (DTC) digital brands. But success is not immediate nor guaranteed, and industry experts say brands need to naturally and organically intercept shoppers at various digital points of discovery.
And while retail’s digitalization has been accelerated by the pandemic, how, when and where technology is used has been largely driven by consumer behavior. If one thing is certain, it’s that shoppers want seamless, tailored experiences no matter where they shop. In fact, Klarna’s data reveals that six out of 10 U.S. shoppers say a seamless shopping experience is a top driver for consumer loyalty.
The pandemic has also paved the way for new consumer behaviors to emerge. Consumers are comfortable purchasing from platforms that maintain the social element of the shopping experience and have also shown an openness to buy from brands they’ve never tried before. At the same time, flexible payment options that allow consumers to buy now and pay later have become a must.
Put simply, consumer expectations have been raised again, while today’s shoppers are looking for a one-stop-shop — a place where they can shop, pay, manage finances and discover new brands.
“For retailers, this means putting the customer at the center of the shopping journey by offering a more personalized experience end-to-end, and that includes providing better, more flexible ways to pay,” said David Sykes, head of U.S. at Klarna. “Our recent holiday report found that 59 percent of consumers expect a seamless shopping experience online and in-store. And app shopping is now hotter than ever, with consumers demanding a tailored experience and access to everything in one place.”
Notably, the Klarna app is downloaded, on average, 20,000 times per day, which resulted in one million new U.S. shoppers joining Klarna over the summer. In the first week of October, the Klarna app took the number one spot as the most downloaded shopping app in the U.S. app store, outpacing Amazon Inc., Target Corp. and Walmart Inc.
Under the Influence
Part of what makes the Klarna app so popular, Sykes said, is the consumer’s ability to access curated content and recommendations based on your personal preferences and style, as well as browse and find inspiration through brand discovery.
New research suggests it is this digital, experiential structure that young consumers are flocking to today as they look to expand their knowledge of brands while maintaining fiscal responsibility.
A recent study, conducted by Boston Consulting Group in partnership with Highsnobiety, that explored how young luxury consumers shop, found that consumers today look for brands that are “both aspirational and accessible” while looking to cultural pioneers as a point of discovery. While cultural pioneers, or put simply, the influencer’s influencer, prefer to shop with multibrand retailers and are consistently looking for new brands to shop. Notably, there has been a shift away from traditional department stores and 50 percent are more likely to shop on mobile.
Lauren Riihimaki, social media influencer with more than 4.7 million Instagram followers and host of Craftopia on HBO Max, told WWD she prioritizes finding new brands when she shops, embracing an ever-evolving style that she shares with her followers.
“I love browsing the stores and [coming across] brand names I’ve never heard of before,” said Riihimaki. “As my style evolves, I think a lot of retailers stay within a general aesthetic or style to their pieces, so getting outside of that is important for me so I don’t get stuck in one style. I have my go-to brands for staple pieces that I’ll always shop at, but I really love discovering what else the world has to offer.”
Though, with so many new brands entering the market, the process of finding new ones can be daunting even to experienced, digitally savvy consumers.
“I have a terrible, tedious habit of having 10 tabs open with 10 separate shopping carts and having to sort through the items you actually want to purchase can be time-consuming and overwhelming,” said Riihimaki. “A great feature that elevates the shopping experience on Klarna’s app is being able to create Wish Lists across multiple stores.”
Klarna’s recently launched shoppable Wish List feature allows users to create, share and follow among friends, family, brands and influencers. So far this year, more than 3.4 million products have been added to Klarna Wish Lists since the feature launched in 2019.
Concurrently, Sykes said, Klarna has seen a continued shift toward social shopping, which in many ways encourages users to share new brands with one another. As consumer behavior continues to trend toward recommendations, it becomes even more important for brands to exist where the consumers and their friends are.
Moment of Discovery
According to Klarna, digitally native brands, or DTC brands, which have notably changed retail themselves over the past several years, have unsurprisingly thrived in the social shopping arena — proving again they know how to speak to today’s consumer who is looking for authentic interactions.
“DTC brands are leading the charge with social shopping given their digitally native status,” said Sykes. “Consumers no longer look to catalogues and runways to understand the latest trends. They’re spending time on social media and with friends, and trends are driven by those around them in everyday life. Brands need to be on those platforms in organic ways.”
In a comprehensive consumer trend report earlier this year from Scalefast, analysts found almost 15 percent of consumers believe they have a better user experience and receive higher-quality products from DTC brands. The report further revealed that 19 percent of consumers believe DTC brands are “more likely to be ahead-of or on-trend,” with 14 percent believing that they’re tech-forward.
For DTC brand Lunya, recommendations have become key in engaging new customers for its luxury sleepwear. “The recommendation could come via word-of-mouth, a referral, an article or a social media influencer,” said Liz Dolinski, chief growth officer at Lunya. “Contrary to traditional thinking, word of mouth is not ‘free’ but requires a lot of enabling marketing support.”
“The biggest difference is the instant feedback loop that exists for DTC brands. Our business is built out of two-way conversations instead of relying on one-way pushes,” said Dolinski. “We know immediately if something is resonating with our customer because we’re constantly listening.”
Italian luxury footwear brand M. Gemi has similarly found success in its relationship with the consumer. “We believe the direct relationship with customers and access to a quality product is key,” said Cheryl Kaplan, president of M. Gemi. “DTC brands have the ability to storytell so effectively and deliver what customers are asking for quickly. The feedback we receive from our customers help us make critical decisions on products we create and marketing channels we leverage to tell our story.”
“The [consumer] journey has changed greatly since the pandemic,” said Kaplan. “With less retail traffic, customers are trusting DTC brands and e-commerce now more so than ever. The comfort level has increased and because of this, we are seeing a newfound openness for both discovery and purchase.”
Providing an Introduction
While many brands that consumers discover on Klarna’s platform are DTC brands, a category that has been coming out on top as consumers continue to voice a preference for online shopping, the buy now, pay later solution is also found at Macy’s. Consumers shopping at the world-renowned department store retailer can make four interest-free payments using the app.
Klarna’s shoppers are introduced to brands through multiple channels and mediums including targeted e-mails for brand launches, relevant seasonal or themed roundups, and special shoppable moments and experiences. One recent example is “Hauliday,” the first virtual shopping event specifically created for Gen Z and Millennials featuring exclusive deals across emerging and specialty niche brands such as M.Gemi as well as top brands like Adidas, Sephora and H&M.
In addition, Klarna’s social media posts frequently feature new retail partners and in-app curated content that lets shoppers discover new brands, recommended by a brand they love.
Moreover, Klarna’s Discover feature highlights styling tips, fashion trends, competitions and giveaways. Some features include ways to celebrate Hispanic Heritage Month, getting ready with Haus Laboratories, and a how-to guide for styling bodysuits. At the same time, more personalized shopping sections are created for the user within the Created for You and Trending sections of the platform that encourage brand introduction.
Delivering to the Consumer
As COVID-19 continues to draw more customer segments to online shopping, Sykes says it will be increasingly important for even established and luxury brands to engage consumers online. “Having an authentic and accessible voice,” he said, “will also be key in winning new audiences and maintaining brand loyalty.”
“Now more than ever, people are turning to digital and e-commerce channels that provide them the speed, flexibility, and convenience in buying the things they want and need,” said Sykes. “It’s important for retailers to understand their customers and how they want to engage with a brand regardless of whether they’re new or repeat customers.”
Klarna’s dedicated co-marketing team also works closely with its retail partners to understand a brands’ existing consumer profile and what drives them. The team then collaborates with each brand on customized growth strategies.
“It’s not only what consumers are buying that has changed — it’s the way they shop,” said Sykes. “One of the most important things to consider when engaging consumers is customer loyalty through a seamless end-to-end experience. Putting customers at the center of the shopping journey is key in a now-extremely competitive online market.”