A Blog series on Shopper Marketing
By Cyndi Pyburn
No retailer would disagree with the statement that the North American retail landscape has changed very dramatically in the past decade. Consumers today evaluate shopping decisions utilizing a plethora of social media tools and apps. Once the buying decision is made, there is an ever-growing list of online retailers to fulfill their needs. As such, there has been much written about ‘retail going the way of the dinosaur’. Some predict that retail will change more in the next five years than it has ever in the past century. These predictions are not without concern when the world’s largest stores are a simple ‘tap’ away.
According to McKinsey, US e-commerce has grown at an impressive pace of almost 18% per year and accounts for about 8% of retail sales. In Canada, it’s about half. However, regardless of geography, e-commerce is rapidly on the rise. Not only are retailers being bombarded with competition everywhere – think changing retail formats – warehouse clubs, convenience stores, pharmacies and Dollar stores and then layer on EBay, Craig’s List, Amazon, Google Shopping and the millions of other web-based retailers – it’s a war out there!
Retailers do have options. A couple of thoughts:
- Private label ‘design to value’ – identify the features consumers value most and redesign products accordingly, with goal of eliminating anything that increases costs but not value, to consumers. Communicate in customer-friendly language.
- Addressing the ‘real estate portfolio’ – by ‘right-sizing’ their store networks and store layouts to embrace greater customer learning (product demonstrations) and ease of buying and returning (including online purchases).
- Blurring the lines between physical and digital — mobile technologies will continue to influence every stage of the customer’s shopping journey – from personalized promotions prompted by geo-targeting to in-store research and price checks.
- Using data and analytics for decision-making – leveraging vast amounts of data to facilitate targeted marketing (think product recommendations aka iTunes or Netflix), tailored assortments, effective pricing and promotions.
- Ensuring that the store is ‘experiential’ and delivers a ‘wow’.
Retailers can no longer afford to be the middle man sellers of national brands. They have to give consumers a reason to choose their store over competitors. Some retailers could position themselves as leaders in category style or innovation, by developing products that appeal to their high spending target segments. Our customer decision journey work tells us that retailers will need to offer deep product and service expertise – not just in the moment they buy product, but to use and enjoy the product long term – in essence building brand advocates. The in-store experience must be informative and enjoyable, hence the ‘experiential’ element. The experience must also be personal with customized promotions and tailored assortments that appeal to them. Lastly, the forward thinking retailer will use research to engage customers in the development and communications of product.
How ready is your organization to keep up with consumers? How willing is your organization to adapt to the changing retail scene? Better yet, do you feel your organization will be a thought leader and forward thinker in the sweeping era of retail change?