Disrupting retail
Jenny Taafe, CEO of iZest Marketing outlines the key marketing trends affecting retailers and brands in 2015
Print15 April 2015
The phenomenal growth of the online economy and all of the various digital platforms on which consumers can purchase, has complicated and in some cases lengthened the average customer’s steps to purchase. Trends such as the ‘Sharing Economy’, ‘Showrooming’ and ‘Webrooming’ all put more control back in the hands of the customer, and bring price to the top of the agenda for retailers.
‘Paths to purchase’ is a phrase that is used in the travel industry and is one that should be used more frequently in retail, to analyse what your customer does before and after they purchase a product from you. The car industry is a great example of how the customer’s ‘path to purchase’ has changed in recent years. A McKinsey report in 2014, shows the average buyer now visits just 1.6 car dealerships, down from 10 years ago when buyers visited an average of five. “This is the most dramatic change we’ve seen in the auto industry and how people buy cars in the last 50 years,” said Hans-Werner Kaas, McKinsey’s senior partner.
So what’s happening?
Customers are doing advanced research and price comparison locally, nationally and internationally before stepping into a car showroom or buying directly online.
So what does this mean for your business and how do you turn so-called negative trends like showrooming into a positive for your business? What are going to be the key trends affecting retailers and brands in 2015 and beyond? How can you ensure that your brand is relevant to your key consumers, whether they purchase it online or off-line? It’s important to map out your customer’s path to purchase and if you have a product that can be researched online in advance of coming in-store, consider what marketing activity you need to invest in to influence your customer in this early phase. Once you have done this you can then take the principles of some of these trends and apply them to your business:
- Bridging the gap
Retailers are getting better at bridging the gap between online and offline shopping. Omnichannel retailing has become the buzz term. The big international retail brands are starting to see the benefits on both sides of their business, by allowing online customers to engage with them in store, and offline customers use the online channels to return or make comments on products purchased. Initiatives like ‘click and collect’ are a dream for retailers and customers alike. Brands such as the The Loop at Dublin Airport, Tesco and Macy’s are just a few which are using this to great commercial effect. Macy’s has stated that customers who purchase on ‘click and collect’ often buy something else when they visit the store, increasing their total spend to 125%.
Some major retailers are bringing the online experience in-store, but in a controlled way. Marks & Spencer’s and Oasis are two retailers who have introduced online pods in their stores, where customers can find products that may not be on the shelves, online. Customers see retail brands as becoming more seamless across platforms, and retailers large and small need to respond and give customers the experience they are looking for.
- Mobile wallet
The launch of Google, Apple, Ebay, Stripe and Square’s (to name just a few) mobile payment products is the biggest change to affect online and offline retailing in recent years. However, these technologies are not mainstream yet, and some, such as Apple Pay are dependent on consumers having a compatible device (iPhone 6). When these payment options are mainstream, what will it mean for your business? We’ve already seen how ‘tap and pay’ with cards has speeded up the checkout process, so we are not far away from consumers being able to check out themselves on their phone and get a receipt emailed to them. This is already being launched in the restaurant industry, with apps such as Tabbedout.
- Perk me up!
Thinking in the context of retail in an Omnichannel world, it’s important that retailers don’t try to reinvent loyalty strategies for each channel, “consider loyalty programmes as a ‘central engagement hub’ for consumers” says Matt Wise, CEO of HelloWorld. According to Zach Goldstein of Thanx, “Modern consumers will only respond to retention marketing programmes that invoke the same three tenets of the Apple Pay approach: (1) painless enrollment; (2) frictionless participation; and (3) effortless security”. For me, this throws up an interesting question, of whether future retail loyalty will be with the retailer or the payment provider?
‘Perks’ is a term you’re going to hear more and more, as customers move away from traditional loyalty programmes, which a lot of customers have become disillusioned by, or are becoming less practical to implement. One reason for this is the use of smart phones as the hub of all research and purchasing. The increase of app based schemes is an attempt to counteract the reduced engagement in these programmes internationally. In the US, loyalty programme subscriptions peaked in 2012 (2.65 billion) but that year ‘active’ memberships dropped 44% according to Colloquy research. Research by eMarketer found that “consumers have begun to expect more personalised offers and services – not just blanket discounts – in return for their participation”
Some other retail trends to keep an eye on:
- Make me feel good: Cognitive dissonance is a well-known consumer behaviour term that can have a negative impact on retail brands. Larger retailers understand this and have started to develop Corporate Social Responsibility (CSR) programmes that make customers feel better about shopping. Marks & Spencer ‘Shwopping’ campaign with Oxfam, TKMaxx’s ‘Give up clothes for good’ and Insomnia’s ‘Change the world on your coffee break’.
- Shopping, food & theatre: Traditional retailers need more and more reasons to drive customers in-store. In the US and UK there is a trend of adding food outlets, juice bars, hairdressers, nail bars to retail stores. Topshop has four food outlets in its Oxford Street store, while BT2 here in Dublin has Alchemy Juice as a major draw to the second floor of the store.
- Social click to buy: Shopify is just one brand which has partnered with Facebook to launch brand Facebook stores. These stores are ideal for a select number of higher value goods that you want to sell within the Facebook platform. The user experience is simple and seamless and the payment options are plentiful.
- Beacon: We’ve heard lots about Beacon technology in recent years. The advancement of wearable technology is what is going to bring Beacon technology to life. According to Ben Pivar, “Retailers are increasingly looking to personalise the in-store shopping experience to compete with online retailers”.
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