In the current state of retail, demand and conversion rates are steadily dropping among Traditional shoppers.

At the same time, a small group with a New Economic Order (NEO) mindset seem untouchable by the economic state and is driving up to 70 per cent of discretionary spending in Australia. A groundbreaking, soon-to-be-published market insight report by Resonate CX unveils the pain points, drivers and preferences of these two consumer groups in Australia.  

The increased cost of living and soaring interest rates have caused consumers to think twice before opening their wallets. Demand is falling, conversion rates are dropping, and customers are cautious.  The pressure that inflation is currently putting on the retail sector is leaving an increasing number of retailers mercilessly squashed. According to Asic, the number of insolvencies in the retail sector has doubled over the past two years. Retail is no longer for the faint-hearted.

Key to gaining conversions in emerging segments
The key to survival in this retail zero-sum game is to understand and tend to customers’ constantly evolving pain points, drivers and preferences. An example is the rise of the NEO mindset, which has been growing since the early 2000s.

According to social scientist Dr Ross Honeywill, society is split into two groups of consumers with different mindsets: the Traditional and the NEO (New Economic Order). The Traditionals have a conservative attitude, are risk-averse investors and price-sensitive consumers. They are drawn to good prices, features and functions. Their NEO counterparts have a higher disposable income, are more progressive, and value quality, brand authenticity, and exceptional shopping experiences.

A market insight report by Resonate CX called “The State of Brick-and-Mortar retail customers 2024” zooms in on the experience of shopping in physical stores, examining loyalty, brand power and what makes an exceptional in-store experience for consumers with these different mindsets.

Early insights from the article reveal*:

Growing basket size in a shrinking market
Not much has changed in the past few years when it comes to drivers that make consumers choose in-store shopping over online. Instant gratification is the main reason for customers with both Traditional and NEO mindsets to make purchases in-store. They want to get the product in their hands and start using it immediately. Not surprisingly, for price-sensitive Traditionals, avoiding shipping costs and the ability to try out a product are two other important factors that drive in-store purchases. Instead, NEOs are attracted to fun in-store shopping experiences, receiving personalised staff assistance and supporting the local community to a much higher degree than Traditionals. 

“Being sensory pleasant, with great customer service that isn’t pushy but available. And customer service at checkouts,” said one NEO customer.

Apple is an example of a brand that caters to consumers with a NEO mindset. They enjoy the immersive experience of touching, trying and playing around with a wide variety of Apple products in store. The many possibilities to interact with products is a calculated strategy by Apple, as it is proven that the more you touch a product, the more likely you are to buy it.

The NEOs would be drawn to the designed environments and the staff’s way of engaging and servicing customers. The “personalised journey” that the staff take customers on is one of the keys to Apple’s customer experience success. The community aspect of visiting an Apple store would be another highly appealing factor; for example, the spaces for coding classes, boardrooms for entrepreneurs, and events.

The hidden pitfalls that are costing you conversions

In the Resonate CX marketing insight report, we can see that price is the most important reason for Traditionals to leave a store and go to a competitor. They have a more singular focus than NEOs, and in that sense, are also easier to please (with an appealing price tag). 

NEOs are not sensitive to price in the same way. Instead, there are more different factors at play: They want the overall shopping experience to be fun and see their consumption as an extension of their identity. If retailers want NEOs to stay longer in-store, it is essential to bring out all the bells and whistles. For example, additional and personalised service, and integration of immersive experiences. And they are willing to pay for it. 

“Everyone wants the best price,” explains Honeywill. “For Traditionals, everything begins and ends with price. For NEOs it’s just the cost of falling in love.”

Tap into the psychology of impulse buying

More than 75 per cent of all customers make unplanned purchases sometimes. NEOs, however, have a significantly higher frequency of unplanned purchases. Almost seven out of 10 make unplanned in-store purchases most of the time. Retailers who understand what drives spontaneous purchases, especially by the NEOs, will be presented with a tremendous opportunity to increase basket size and boost sales.

“The State of Brick-and-Mortar Retail Customers 2024” report further reveals the reasons behind unplanned purchases, what makes a dream customer experience, and other patterns of in-store behaviour, expectations, and primary drivers influencing the customer experience. These insights are crucial for brands to understand these consumer groups and effectively tailor marketing strategies. 

Gain the competitive edge now and get the insights first 

The insights from the report will be presented by the CEO of Resonate CX, Mita Bedi, to select retail executives in Sydney, Melbourne and Brisbane in August. Thereafter the report will be released in its full form.

• Be one of the first in the industry to get these insights: Register your interest here and the full report will be sent to you when released. 

*Note that the Resonate CX report is inspired by Dr Ross Honeywill’s categorisation and research, but the data and insights appearing in the report are the result of Resonate CXs independent research.

About the authors: Amelia Rickard is marketing manager and Federico Sasse is a market research analyst at Resonate CX.