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Brands must meet the retail challenge

Around the table: Sarah Dear, Jon White, Rachel Barnes, Rob Moss, Jonathan Sands, Sushma Sagar, Simon Hall, Philip Smith, Rebecca Peel, Lynsey Barber.
Around the table: Sarah Dear, Jon White, Rachel Barnes, Rob Moss, Jonathan Sands, Sushma Sagar, Simon Hall, Philip Smith, Rebecca Peel, Lynsey Barber.

Mobile commerce, supermarket power, empty high streets ... what does the changing retail environment mean for brands? Our experts examine the implications.

Successful brands are an 'antidote to anxiety', according to Jonathan Sands, chairman of Elmwood. 'Brands that make us smile, brands that remind us of a simpler and safer time ... the key is to understanding what's going on in people's heads and whether we can help them feel easier living in these times.'

It's a time of anxiety for consumers and in turn, for retailers and brands. As Sushma Sagar, senior brand manager for Banana Republic, points out, consumers have less disposable income and are less inclined to spend than they were a few years ago. As a result, she says: 'We need to deliver something engaging and compelling to get them through the door.'

When Marketing, in association with Elmwood, brought together key players to discuss brands and the changing face of retail, several challenges became clear. Brands and retailers are negotiating competitive pricing strategies to reach those looking for discounts, along with an improved experience for consumers willing to invest in purchases; a distinct consumer divide. Negotiating online and offline platforms also presents increasing challenges of course, but is providing all important data.

MyWardrobe marketing director Rob Moss says his challenge is giving customers this emotional, tactile experience in an online environment. 'A pure pricing strategy is an aggressive area,' he adds. 'The added value customers receive, what gets them looking and keeps them loyal, is the priority.'

For Jon White, marketing director at Kimberly Clark, the challenge with the Andrex toilet tissue brand is working with retail partners to engage consumers with the brand in store. 'In a crowded environment there is a lot of pressure on both of us. We want quality engagement with our brand without simply giving it away,' he says. While it can be tempting in this climate, he questions whether price-cutting is a sustainable long-term model.

'Stores are no longer shops, they are showrooms. People look around, then look on their iPhone to see where (a product) is cheapest.

As a retailer, you have two choices: either win the race to the bottom as the cheapest, or do something different,' says Sands.

Sarah Dear, head of retail and managing partner at Elmwood, says that adding this emotional dimension, which builds a relationship between the consumer and brand, rather than product, requires a big cultural shift for some traditional retailers.

The consumer divide

White sees signs of hope, however. 'Despite all the doom and gloom, we see a real top and tail in shopper behaviour,' he says. 'Consumers look for discounts to save a few pennies, or are willing to spend extra on day-to-day luxuries rather than big-ticket items. It's a good sign.'

This polarity is also evident to Simon Hall, industry manager, retail, at Google. 'You can see this in last year's sales figures,' he says. 'Discounters did incredibly well and Waitrose, for example, really articulated its proposition and emotional connection.'

Simon Hall, Jon White and Jonathan Sands

For White, the proliferation of choice available to consumers and their ability to be individuals has made it more difficult to talk to the majority. 'There are still plenty of brands spreading themselves too thin in too many ways, losing that point of difference,' he says. 'People will choose to go to the brand that has that point of difference rather than one that's supposed to stand for everybody. The lesson is, be crystal clear who you really want to build that connection with.'

Sands identifies three consumer trends: a desire to buy high-quality products; a belief in the individual; and togetherness, driven by social media. 'Brands that help bring people together, those supported by individual advocacy and by quality, are all in a good position,' he says, as these are the attributes in which consumers are willing to invest.

For Sagar, quality is central. In fashion, this translates into a 'cost per wear' mindset. 'It's balancing quality with cost in the consumer's mind,' she says. Last year Banana Republic opted against a change in price structure, but renewed its focus on value for money.

For Moss and MyWardrobe, m-commerce is the next step. 'It's not a "eureka moment", finding a whole channel full of people we've never seen,' he says. 'Consumer behaviour has changed. Transactions through tablets have risen 400% year on year. It's a rich environment in which shoppers immerse themselves.'

Similarly, Hall notes recent Android activation figures for mobile devices. 'Mobile is always on throughout the day and peaks at weekends: 20% of all searches have local intent. On mobile that goes up to 40%,' he says.

Simon HallJon WhiteSarah Dear

Data versus intuition

Analytics also show consumers are researching offline for online purchases when grocery shopping, in the same way as clothing. 'From our analysis, 36% of grocery transactions are researched online beforehand. It's higher than expected,' says Hall. 'Fashion is 64%.'

Online data has become a central tool for brands to discover trends. The plethora of data available, from positive mentions in social media and funnel analysis of arrival to post-purchase analysis, is invaluable. 'It's never just one thing,' explains Moss. 'It's about zeroing in on key data points to see what's going on.'

Hall also warns against focusing on a single metric. 'Online conversion rates have dropped 55% over five years. Focusing on them as the be-all and end-all would look like you are performing badly. Actually, shoppers want to look around, consume editorial or video on-site. Maybe they are researching offline shopping. All the data is there, but you have to decide. Who is your customer? What's important to them? Why are they leaving and not buying?'

From an agency perspective, data is important, but should not eclipse other elements.

The data Elmwood uses often comes from clients, but also from customer insights gained from its international network of offices and clients. Trends happening elsewhere in the world inform innovation. 'The challenge with any brief is that a client wants to grow, but the data we get is historic. We all guess the future to an extent,' says Sands. 'Part of the creative-thinking process is making intuitive decisions.'

So what do the next 12 months hold that will help brands connect with consumers?

For Sagar it's all about online enhancing the in-store shopping experience. 'Some stores have been (offering) iPads for customers to browse more information. With wi-fi now common, why not try on clothes, have a coffee and have the clothes delivered to the door.'

For others, long-term thinking rather than short-term reaction is essential. 'Those that truly innovate and challenge current behaviour will win,' says White. 'Those that just ride the wave of current behaviour, in the long run, will lose. Collectively, that's our role as a retailer or brand: to drive new behaviours and trends.'

Rob Moss, Jonathan Sands and Sushma Sagar

For Hall, brands must 'be fast to react' to how the customer is changing. He foresees smaller store formats that work differently and, echoing Sagar, bring more of the web in-store. 'Multichannel retailers offering same-day delivery will be in the US by the end of the year,' he says.

Mobile is the future for Moss, however. 'I've been discussing ideas with 02 on Priority Moments, which is driven by geo-based offers. A mobile company has a lot of customer information; surely there's a way to monetise that? Only in the past two years have we really started to see mobile commerce, but we are heading for a truly mobile retail experience.' Phone networks will, clearly, have a central role to play.

There can be only one winner with the lowest price, says Sands; 'The key, whether brand or retailer, is emotional engagement.' Without that, brands will be in a race to the bottom.


Sarah Dear - head of retail and managing partner, Elmwood

Jon White - marketing director, Kimberly-Clark

Rachel Barnes - deputy editor, Marketing

Rob Moss - marketing director, MyWardrobe

Jonathan Sands - chairman, Elmwood

Sushma Sagar - senior brand manager, Banana Republic, The Gap

Simon Hall - industry manager, retail, Google

Philip Smith - head of content solutions, Marketing (chair)

Rebecca Peel - marketing manager, Elmwood

Lynsey Barber - reporter, Marketing


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