Changing retail fortunes

 

toothpaste-ISOIt’s a quarter of the way through 2014 and the retail landscape is as turbulent as ever.

Price discounting continues across grocery, petrol and convenience, and challenges for traditional Australian retailers have caused a seismic change in department store ownership.

Distracted by this turbulence, retailers and their suppliers risk losing sight of their common goal of category growth.

To maximise growth opportunities, they must maintain focus on generating value while delivering on inevitable price demands.

This should be supported by smart and engaging instore shopper experiences.

1. Listen to shoppers

Samsung’s research revealed shoppers find buying washing machines often confusing and unsatisfying.

The retail environment did not deliver what they wanted and available sources of information were not useful.

As a result, the category often defaulted to running price promotions and selling machines for less than shoppers were willing to pay.

Samsung used these insights to build value back into the category by working with retailers to create a more engaging and informative experience.

It increased the type and availability of information from “silent salesmen” (interactive tablets) and ensured a less cluttered floor environment, as seen in these images at Bing Lee.

Samsung2

Smart brands not only talk to their shoppers, they listen.

Insights gleaned from shopper behaviours can form strategies that are easily executed in the retail environment.

2. Create additional category value

Like many FMCG categories, oral care is driven by price and promotion.

This consumer staple with historically limited differentiation between brands and products first saw category value built through manufacturer diversification.

This was seen in special care toothpastes (i.e. sensitive teeth), accessories (i.e. floss and portable toothbrushes) and incremental devices (i.e. electric toothbrushes).

Colgate recently identified that a significant proportion of consumers view oral care as part of their health and beauty routine rather than personal care.

This created an opportunity to introduce premium products proven to improve physical appearance as well as oral health.

Their Optic White range was launched with above the line investment and instore merchandising, as well as limited price driven activity.

Standout instore presence was achieved through impactful packaging, clear brand blocking and powerful off location displays featuring solutions to encourage trade up.

The insight is to start with a consumer insight that is consistently reflected at every consumer and shopper touchpoint.

3. Create an engaging shopper experience

Even in price competitive environments, shoppers will pay a premium to customise.

This is a trend long followed by the auto industry, but it presented challenges at the point of decision.

Car shoppers have infinite possible variations in new cars, from engine specifications and wheel options to paint colour and internal inclusions.

A showroom can only carry a fraction of the full product range.

This means that shoppers must ‘imagine’ their final purchase while being expected to part with thousands of dollars.

Audi UK responded to this consumer concern with their next generation, Audi Experience Centres.

Using cutting edge interactive technology, they created a platform for shoppers to design their own “package” on a giant screen.

Those unwilling or unable to purchase on the day can download their finished design on their computer or mobile device.

For Audi, this solution addressed two challenges: space to carry multiple SKUs and the consumer desire to personalise.

Smart use of technology shifted the focus from price towards satisfying consumer and shopper needs.

Engaging shoppers while remaining price competitive is achievable, if you listen to your shoppers to understand and overcome their purchase barriers and deliver on their needs.

Neil Johnson is a director at Kantar Retail, a global management consultancy that helps retailers and brands turn insight in to strategy and activation. You can email him on neil.johnson@kantarretail.com.

Comments

1 comment

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    Kristian Mahony posted on April 22, 2014

    Great article - got a mention in my blog post > http://www.theretailguy.com.au/retailers-new-way-forward/ reply

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