Tag: retail

retail environment

Retail trends… and fads

How to identify and respond to the true macro forces that really matter for a business.

The 2017-18 retail trend season is ending. Unless you were retired from the world on a deserted island over the last few months, you have been hearing and reading about the trends that are disrupting the retail world. There has been no shortage of articles, reports and even books predicting the adoption of e-commerce, the emergence of voice, the revolution of AI or even the death of stores. Every day, we were bombarded from countless sources with ‘trends’, often coined with fancy names, but not always backed by a deep understanding of people’s behaviors. Those that incorporated behaviors often talked out of both sides of their mouths – with trends diametrically opposing one another without giving a clue on how to deliver against them simultaneously.

In fact, when you review those ‘trends’, you quickly realize that most of them have their opposite, grounded in existing or emerging shopper behaviors. People are adopting e-commerce: true. Voice search is going to grow big: true. Artificial intelligence will revolutionize the retail business: true. But it’s also true that people still visit stores, type search terms on keyboards, or talk to customer service agents or sales assistants – and they will continue to do so for quite some time.

4 tensions facing marketers:

  • Digital vs Physical
  • Convenience vs Exploration
  • Budget vs Premium
  • Curation vs Control

Brand owners and retailers are under extreme tension to fulfill those expanding – and often opposing – expectations. My view is that they can only resolve the tension if they understand precisely what people really want and need in the context of their categories, their channels, and their journeys. By identifying what’s driving people to behave the way they behave at the moment, brand owners and retailers can precisely balance opposing trends – or macro-forces – to ensure they design and deliver the right proposition, with the right value, at the right moment of the journey and in the right way. Yes, the 4 Ps of marketing, but made contemporary.

Digital vs physical

Let’s start with the place – I’d rather say Moment of the journey as indicated in a previous post. Everyone agrees that the rapid adoption of new digital technologies has transformed the relationships people have with brands and the way they shop for them. They research information about products, review the opinions of peers and experts, get usage ideas and purchase online – not only big-ticket items like electronics or travel but also everyday products. Shoppers are also getting more familiar and confident with e-commerce and they shop more often online across a larger variety of categories. True. But at the same time, shoppers keep on visiting stores. And they will continue to do so. Only in stores, people can learn, test, try on products and benefit from personal help and advice from caring associates. Shoppers are also creatures of habit and, despite the success of the digital channels, they keep on entering their usual stores for top-ups or weekly fill-ups. The bottom line is that, for shoppers, there is no such divide as digital vs physical: they blend the two along the path to purchase. They research online, purchase offline; they buy online return in-store; or they browse in-store on mobile, buy online. Shoppers visit stores and sites depending on their wants and needs or the spur of the moment. Retailers need to sense and respond to those wants, needs, occasions, and motivations at every step of the journey to capture a bigger share of shopper wallets.

Convenience vs exploration

The right way – to replace the old P for promotion – is a question that has been stirring up some debate lately: what matters most for shoppers between ‘convenience’ and ‘exploration’? Those who say ‘convenience’ look at voice search as the next big thing in shopping. In a not so distant future, shoppers will be able to fulfill their needs without shopping in a store or an e-store. AI will automatically connect products to needs and self-driving cars will deliver those products directly to shoppers. Those who say ‘exploration’ talk about ‘explorium retail’ to describe the enjoyable experiences that retailers like Selfridges are looking to provide to their shoppers – the term is from Trevor Hardy from the Future Laboratory. Convenience vs exploration: interesting debate for which the true answer is ‘it depends’, mostly on the shoppers’ level of involvement in the purchase. In low involvement categories, shoppers will be happy to delegate the chore of shopping to a machine such as Alexa, Google Home, and their clones. If you are selling one of those categories, be ready to learn how to make it to the shopping list of an algorithm! On the opposite side of the spectrum where involvement is high – so does the price to pay – retailers will have to work hard to delight demanding shoppers with well-crafted experiences that go well beyond the transaction. If you are operating in such markets, make sure some of your executives come from the entertainment industry. Having said that, when the sales season starts, it’s neither convenience nor experience, it’s just bargain and price.

Budget vs premium

Delivering the right Value – not just price – is deeply rooted in occasions, needs, and motivations. The tension between offering budget or premium products reflects on a behavior that has been observed for quite some time but recently reinforced by the expansion of categories as well as retail formats: smart shopping. On the one hand, people monitor their spend. They are saving on commodity purchases at their habitual supermarket – retailers have established the idea that value does mean cheap with their private label brands. Or they go the extra mile to visit a discounter or a warehouse club. Value retailers such as Lidl and Aldi have dramatically improved the shopping experience and more shoppers come to their stores. Popularity drives normalization, and normalization drives adoption. On the other hand, shoppers indulge themselves with premium offerings. They spend their disposable income – or the savings they make on commodity purchases – to indulge or pamper themselves with luxury food, personal care, clothes, home equipment, and so on. There is no shortage of newcomers – manufacturers or retailers – proposing top quality products or services to cater to demanding shoppers. Smart shoppers spend more and more on the extremes of value and luxury and retailers need to know, category by category, what’s driving their shoppers’ behaviors.

Curation vs control

Finally, the right Proposition – encompassing product but also associated services. As a rule, people expect brands and retailers to provide them with a selection of products and services tailored to their expectations and preferences. Nothing new in that statement, that’s the essence of marketing. But what’s new is that technology is enabling marketers to offer a personalized, individualized proposition. Curation, which was initially a human task, is increasingly supported, when not fully handled, by machines – think Amazon or Netflix algorithms. Powered by supercomputers, brands and retailers gather data about who people are, what they buy, and how they shop. Algorithms relentlessly and tirelessly scan data to help predict what people may want or need. And software programs deliver personalized assortments and recommendations. Brave new world! But what happens when the system derails? When people receive a suggestion to buy something they have just bought for example? Well, they probably wonder whether they should keep on relinquishing personal data to inform such irrelevant propositions. Not to mention the fear of security breaches. The value people place on their personal data is bound to increase, creating an increased desire for privacy and control over personal data. And with initiatives like GDPR coming to fruition, we believe the tension can only exacerbate. [Update: even more so since the Facebook hearings in the US]

To conclude this rather long post, there is no question that dramatic changes are happening in shopping and retailing. Some brands and retailers will die, some will just survive but there will be players, big and small, that will thrive. The winners will not just be in the game, they will resolve the tensions facing them and find their own way to win. Firstly, they will develop a growth strategy articulated around a clear and strong value proposition for their brands or their retail outlets – whatever they might be. They will focus on currencies that really matter to shoppers, not just buzzwords or shiny objects. Secondly, they will associate people and technology to develop targeted, relevant actions that connect with shoppers along their journey. And thirdly, they will relentlessly innovate for their shoppers with the obsession of doing the job better. Putting to market products and services that people not only love but also are willing to purchase and recommend others to buy.

To succeed, thriving brands and retailers will need to turn their data into insights. Lots of insights. About consumers and shoppers, categories and products, channels and formats, from their own data warehouses, or via partners and third parties. Armed with those insights, they will develop a holistic yet granular understanding of people: their profiles of course but also their needs, occasions, missions, beliefs, motivations, behaviors,… They will also uncover opportunities to create new concepts and prototypes they can quickly put in front of shoppers to assess future value. Finally, they will identify, very precisely, how they can influence behaviors along the purchase journey, whether if it is through communications or their associates.

Although speed and agility will be critical, reacting to disruption will not just mean being the quickest but also being the smartest. Playing the marketing game is for the brave, not for the timorous.

[I want to thank my colleague and friend Efrain Rosario for helping me write this article.]

Shopper marketing in the digital age

It’s not just about the store anymore.

Defining modern shopper marketing requires understanding the history of both retailing and shopping. Because the discipline is intimately connected to the two.

Since its inception forty years ago or so, shopper marketing has evolved several times to address the changes in the way shoppers behave and how retailers respond to those changes.

Originally, there was retail marketing. And then, in the late 90s, P&G and Walmart created the idea of shopper marketing. At that time, the so-called modern retail was booming and people were visiting large format stores to fulfill all of their needs. Shopper marketing was about creating a campaign like Shakespeare would write a drama: one place, one time, one action; in plain English, the store, the shopping trip, the promotion. The campaign was essentially an ‘event’ to increase sales in large format stores during the weekly fill-up. As defined by P&G, success would come by stopping, holding and closing at the first moment of truth eg in front of the shelf.

Entering the new millennium, retailing was evolving – and shopping too. Shoppers were diversifying their store choices depending on the occasions and the missions. Large-format stores were still dominant for the regular stock-up trip but other – often smaller – formats like supermarkets and c-stores were capturing a significant share of top-up trips and special trips. Unless conveniently located for the shopper, hypermarkets and supercenters were not the first choices to buy a few missing items. And definitely not the place to buy apparel or sports equipment. I should not forget discounters and clubs challenging them all on price and convenience. The competition was fierce. Confronted with an increasingly complex environment, shopper marketers developed increasingly sophisticated programs and campaigns. I remember a manufacturer’s shopper toolkit containing hundreds of pages of guidance and assets across dozens of sections to cover all shopping options you could think about – consumption occasions, shopping missions and retail formats.

People can switch to shopping mode anywhere, at any time

Nowadays, in the omnichannel world we live in, occasions, missions, channels, and formats are still essential but shopping has gone more fluid and ubiquitous. With shoppers getting more familiar and confident with e-commerce, new shopping behaviors are emerging. Breaking the boundaries of physical and digital spaces, shoppers hop from one channel to another to facilitate their purchases or get better deals. Shopping spreads across places, ecosystems and moments. The journey can be long or short, the stakes can be high or low, but covering the entire journey is paramount: what triggers the journey in the first place; what happens – or not – during the planning, buying and consuming stages of the journey; and finally, what influences people’s decisions.

I know that some marketers tend to focus – I could say corner – the journey in the buying phase. Wrong idea. Ignoring the planning phase, when the want and need emerge, is a deadly sin. Across many categories, it is the precise moment when people build the initial consideration set. According to a podcast held recently by McKinsey & Co, the battleground for brands is what they call the ‘active evaluation’ phase when people switch to shopping mode and draw upon past experiences, external influences and biases to list brands that could fulfill their wants and needs. Time is accelerating too. Search, planning, selecting, buying, the upper part of the journey is shrinking. “It used to take time to go from research to discovery to awareness all to purchase,” said Facebook’s Sheryl Sandberg at the last dmexco in Cologne “but now, you have digital and mobile that is happening faster than ever”.

Disregarding the consuming – or using – phase, when the want or the need is satisfied, is a fatal mistake too as it reduces the shoppers’ goal to the act of purchase. People don’t purchase without a reason. They shop to satisfy a want or a need, or according to the ‘Job Theory’, they hire a brand to do a job. Knowing how your brand is doing the job and taking on board comments and suggestions from clients and fans is critical. Together with past experience, social media are more than often the most influential source of information for shoppers. We also have to take into consideration the fact that owning is becoming out of fashion in many categories. Think cars: for the younger generation, what matters is the usage, not the ownership yet the success of alternative transportation options. Overlooking the consuming phase also neglects the fact that the purchase journey is shrinking on that end too. For example, buying and consuming food can be delivered in one act, one place, one time. The industry has already coined this kind of place the ‘grocerant’, the simple contraction of ‘grocery’ and ‘restaurant’. Whole Foods is probably one of the most famous examples of ‘grocerant’ I came across so far.

Shopper marketing is about influencing people when they are in shopping mode

In the digital age, the goal of shopper marketing is to influence the decisions people make, when and where they make them. Using again the analogy with entertainment, modern shopper marketing has more to do with the creation of a TV series than a classical drama: multiple locations, multiple times, multiple actions. The desired output is not a campaign but a holistic experience leveraging the entire marketing ecosystem – brand and retail – along the journey. Creative still needs to attract, connect and close, but at the precise moments when and where brands or retailers have a chance to influence people’s decisions.

Before closing this post, I’d like to propose my personal definition of shopper marketing in the digital age: “shopper marketing leverages insights to influence people’s decisions whenever, wherever and however they are shopping”. If we deconstruct this sentence:

  • shopper marketing starts with insights;
  • it talks to people who are shopping to fulfill a want or a need;
  • the goal is to influence decisions;
  • it takes place along the entire journey – not just at retail.

Quite different from the industry definition but times are changing. What do you think?