Retail’s next big plays: rethinking innovation in Australia
By Jarrod Payne, a quantitative market research & insight specialist at Kantar Millward Brown.
Retailers are beset by change on all fronts.
From the continued rise of online shopping, the growing integration of the internet of things, artificial intelligence in homes and cars, driverless cars, social shopping and players like Amazon attempting to reduce friction in the shopping process.
These challenges require innovative and forward looking solutions. While Australian retailers do some things incredibly well, in some critical areas they still seem to lag behind global counterparts.
Every year we look back at 50 years of data and use big data techniques to understand the difference between companies that simply set a trend and those that fundamentally move a category forward, which gives us a view into what will shape the marketing decisions of the future.
Such knowledge is important in all categories, but the rapidly changing nature of the retail environment provides particular challenges.
For a brand to be consistently successful over time, it must have a meaningful relationship with its consumer that extends beyond simply meeting needs. This becomes crystal clear when we look at both brand equity performance and financials for the world’s biggest brands.
Based on our data and reflecting on emerging global retail trends, here are some suggestions.
Get the instore experience right…I mean flawless!
E-commerce is still gaining significant momentum and continues to threaten brick and mortar businesses. The good news is that people still really like going in to stores. The challenge is to keep them coming back.
To level the playing field with e-commerce, retailers must perfect the experience. The customer experience must be paramount and consistent across every touch point, for every customer, every time.
This involves fundamental changes to the nature of stores themselves. Imagine a store that has their best 20 per cent of inventory on display for customers to touch and feel and discuss with real humans and the other 80 per cent of inventory available online. People like space; they like comfort and they appreciate well-presented environments.
Develop a robust “share of experiences”
The focus of course cannot be limited just to stores. Brand must play a role from the very physical experience to the more intangible ones.
Beautiful brand experiences can take shape seamlessly when they are a natural part of the consumers’ daily habits.
Retailers need to look for ways to grow the share of experiences both instore and online. For example, Amazon Echo is a personal assistant that brings shopping and other functions seamlessly into the household. Similarly, Tesla is now bringing the “test drive” experience directly to a person’s home.
Or consider what it would it look like for Woolies or Coles to have smart shelves — as a shopper peruses the baking goods, the screen overhead kicks off a cooking segment using those exact ingredients the shopper viewed.
Nail the art and science of distribution
As with any category, being available and convenient enough for consumers to choose your brand is key in the retail space.
While some retailers such as Alibaba have tackled these concerns with 24 hour anywhere delivery, new approaches such as distributed business modelling are becoming common, with technology facilitating an easier implementation.
Take UberEats for example, a service that allows for consumers to order food anywhere in their city from almost any store, all controlled by an app that connects you to a distributed network of independent drivers. What’s to stop Uber from having retail partners?
It is clear that changes such as these won’t happen overnight. Equally it is important that the industry begins to make changes to traditional business models now, if they are to weather the storm of rapid innovation within the category.
Failure to do so will just open the door even wider for new, innovative global players to enter the market and disrupt the category completely.
This would have been unthinkable in years gone by, but companies like Uber and Airbnb have shown us the awesome power of innovative solutions that completely understand and address consumer pain points.
Jarrod Payne specialises in quantitative market research & insight and helps drive the Brandz research each year at multinational market research firm, Kantar Millward Brown.