With the cost-of-living crisis continuing to impact retailers, competition for consumers’ wallets will be fierce, and the battle to win over the younger generation will be especially hard-fought.
Recent Forter research found that more than 73% of the 1,000 UK consumers surveyed for its Consumer Trust Premium Report suffered a negative online shopping experience in the preceding three months, but among Gen Z respondents, the figure is even higher – a whopping 93%. When asked what constituted their negative online shopping experience, Gen Z consumers were four times more likely to have had their personal information stolen in a data breach than older generations.
These negative experiences threaten one of the most important features of the retailer-consumer relationship: trust. In a retail environment where customers are thinking harder about every pound they spend, trust is a key element of brand loyalty, and Forter’s research has revealed that it has a significant impact on sales revenues.
UK consumers reported that they are willing to spend 44% more, on average, with retailers they trust. Retailers must, therefore, do all they can to ensure that their customers have an end-to-end shopping experience that builds long-term trust.
But where should they start? We’ve identified two key areas for action:
Stop turning away genuine shoppers
Gen Z customers represent the core of future business for retailers, and their income is set to outpace that of the millennial generation by 2031. Despite their growing purchasing power, millennial shoppers are twice as likely than Gen X to be falsely declined at checkout, while Gen Z buyers are an incredible six times more likely to be declined than those born in the baby boom.
These declines are frequently the result of retailers over-rotating on fraud prevention in the hopes of blocking bad actors, often at the expense of customer experience. Many Gen Z shoppers are finding that when they first venture into e-commerce, retailers are incorrectly identifying them as untrustworthy and turning them away simply because they’ve never encountered them before. A lack of historical shopping data ultimately leads to false declines instead of an opportunity to secure the consumer’s lifetime value.
The irony is that this has a far greater negative impact on the business than actual rates of fraud. Forter estimates that for every dollar retailers lose to fraud, they lose thirty dollars by turning away legitimate customers.