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Zero Consumers: Understanding who they are and what they want

As consumer behaviour shifts, new shoppers emerge, challenging businesses to update their strategies to stay competitive. Dubbed “zero consumers” by McKinsey, a global management consulting firm, this group defies traditional shopping patterns with its distinct characteristics. Their emergence is not confined to Asia. It’s a global phenomenon that challenges businesses to rethink their approach.

The impact of zero consumers on the business environment is profound. Their unpredictable shopping behaviours and demand for a seamless blend of online and offline experiences pose significant challenges to companies. These consumers are reshaping the competitive landscape, pushing businesses to innovate in offering value, engaging, and building loyalty. The rise of zero consumers underscores a broader shift in consumer expectations, where the lines between digital and physical, value and values, become increasingly blurred.

This scenario raises an urgent question for businesses worldwide. How can companies adapt and thrive by aligning their offerings and strategies with the needs and preferences of this new kind of customer?

Who are “zero consumers”?

In a report by McKinsey, a new category of shoppers has been brought into the spotlight: the “zero consumers.” Zero consumers are adept at navigating digital and physical retail spaces, displaying a mix of frugality and willingness to spend on quality or experiences, showing a scant sense of brand loyalty, and prioritising health and sustainability without a uniform readiness to pay a premium for these values. This group stands out for their unique shopping habits and values, a phenomenon that extends far beyond geographical boundaries. 

The demographic heart of the zero consumer group pulses strongest among Millennials and Gen Zs, generations already recognised for their impact on societal norms and economic trends. These younger consumers are digital natives, comfortable blending online and offline worlds in a way that previous generations have not. 

According to a report by HubSpot, they show a significant inclination towards supporting small businesses and brands that emphasise diversity, inclusion, and environmental impact. For instance, a notable percentage of Millennials prefer products from small businesses and woman-owned brands. They highly value corporate trust, especially companies that treat their employees well and can be trusted with personal data. Most Millennials still prefer in-store shopping, but many shop through online retailers like Amazon. Payment preferences include a mix of full-price purchases, instalment payments, and subscriptions. These shoppers are less brand-loyal, more price-sensitive, and more likely to seek brands that align with their values.

So, who exactly are these zero consumers? Let’s look at the defining characteristics that set them apart and explore how they’re reshaping the landscape of consumer engagement.

1. Zero consumers demand a seamless physical and digital experience.

Zero consumers increasingly seek a shopping experience that blurs the lines between the physical and digital realms, emphasising the need for a seamless “phygital” interaction. McKinsey’s insights underscore this demand for omnichannel shopping experiences, where consumers expect the convenience of online shopping to complement the tactile engagement of in-store visits. This fusion of online and physical shopping channels ensures that consumers can enjoy a continuous and unified experience, whether browsing on a smartphone or walking through physical store aisles.

In Malaysia, a significant portion of retail spending revolves around omnichannel interactions. Recent reports reveal that over half of the country’s retail expenditure is attributed to omnichannel shopping, with projections suggesting an increase in the coming years. This shift is primarily driven by consumers using online platforms for product research, price comparisons, and user reviews before making in-store purchases.

Similarly, an equal proportion find inspiration in physical stores but ultimately make a purchase online, indicating a circular pattern that fuels omnichannel spending. This dual-direction shopping behaviour emphasises the need for businesses to provide consistent experiences across all platforms to meet the sophisticated demands of today’s shoppers.

Malaysia’s adoption of omnichannel shopping mirrors a broader global trend amongst zero consumers, where the ease of online shopping converges with the immediate gratification and sensory experiences offered by physical stores. For businesses, the imperative is clear: to appeal to the zero consumer, seamlessly integrating digital and physical shopping channels into a unified consumer journey is not just beneficial—it’s essential.

2. Zero consumers’ spending habits are more challenging to define.

Zero consumers present a new challenge in defining spending habits due to their nuanced approach to purchases, termed by McKinsey as the “Zero midrange.” This concept reflects a unique consumer behaviour where spending is not easily categorised into traditional high or low ends. Instead, zero consumers are known for their scrimp-and-splurge pattern, where they might save money on specific categories only to spend liberally on others they perceive as valuable or enhancing their life experiences. 

Additionally, Zero consumers emphasise experiences over products. They prioritise purchases that offer meaningful experiences or meet their values, such as sustainability, wellness, or unique personal enjoyment. This shift towards experiential spending underscores the need for brands to connect with consumers on a deeper level beyond mere transactions.

In addressing zero consumers’ diverse and complex spending habits, offering flexible payment terms like Buy Now, Pay Later (BNPL) schemes can be particularly effective. BNPL options cater to the zero consumer’s desire for flexibility and value, allowing them to manage their finances on their terms while still indulging in the experiences and products they find worthwhile. By enabling consumers to spread the purchase cost over time without incurring interest (if payments are made as agreed), businesses can appeal to zero consumers’ pragmatic yet experience-seeking nature, encouraging purchases that might otherwise be deferred or abandoned.

3. Zero consumers redefine customer loyalty.

Zero consumers are reshaping the concept of customer loyalty, moving away from traditional loyalty to brands based on repeat purchases or longstanding preferences. Instead, their loyalty is fluid. McKinsey refers to this phenomenon as “Zero loyalty,” highlighting the readiness of these consumers to explore new brands and products that meet their criteria for value, quality, and ethical considerations.

In Singapore, this shift is evident in consumer behaviour, with a blend of digital and physical shopping preferences and an increased emphasis on brand experiences and values. For instance, amidst rising inflation and cost of living, Malaysian consumers have become more cautious in their spending yet open to new experiences and brands that offer them. Brands that prioritise enriching customer experiences and delivering value beyond mere transactions will likely capture their interest and loyalty​.

Loyalty programs can significantly retain these zero consumers by offering more than just transactional benefits. Personalised programs, curated experiences, and brand values like sustainability, wellness, and community involvement can help foster deeper connections.

4. Zero consumers care about values.

Zero consumers prioritise health, sustainability, and transparency in their purchasing decisions. McKinsey’s “Net Zero” concept highlights this demographic’s focus on environmental and social governance (ESG) principles. These consumers actively seek brands and products aligning with their values, emphasising sustainability, ethical production, and transparent brand practices.

Health is a significant concern for zero consumers, who gravitate towards products and services promoting physical and mental well-being. This interest extends beyond traditional health products, including food, apparel, and technology supporting a healthy lifestyle. Sustainability is equally vital, driving demand for products made from sustainable materials and ethical supply chains with minimal environmental impact.

Transparency in production processes, ingredient sourcing, and social operations is crucial. Zero consumers prefer brands to communicate their practices openly, demonstrating a tangible commitment to their stated values. By integrating these values into their operations, companies can resonate with zero consumers, cultivating loyalty within this influential demographic.

Coming up next…

We’ve talked about who zero consumers are and their preferences. In the next blog, let’s look at what SMEs can do to meet the demands of zero consumers.

More about Qashier

Qashier offers multiple digital solutions, including QR code table ordering, table management (F&B), employee management, customer relationship management (loyalty programs), inventory management, data analytics, and cashless payments, in an all-in-one device.

Qashier promises a seamless setup within 10 minutes, without the need for technical expertise. It boasts a user-friendly interface that is simple for anyone to learn and use. If you require assistance, you’ll find 7 days-a-week responsive technical support from your local team.

Try the Qashier app for free on your own Android device! Alternatively, you can speak to us to see how Qashier can meet your business needs. Schedule a meeting with us here, WhatsApp (+60) 12 660 2741, or email [email protected].

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