Tia Hall-Davis

It is not what we buy, but how we buy that matters - The new meaning of value for bricks and mortar retailers

Tia Hall-Davis
It is not what we buy, but how we buy that matters - The new meaning of value for bricks and mortar retailers

Increasingly we live in a world where the consumer is in control - liberated by the range of products available and a wider choice of where and how to buy.

Almost half of us have shopped online in the last 12 months and this year alone (2016), high street sales are down by as much as 5% in many cities. You just need to look at the number of electronics retailers, wine merchants or bookstores we (we being Babyboomers or even Generation Y) considered household names are gone. In addition the success of discounters such as Aldi and Lidl and fashion chains like Primark, has created a race to the bottom.  Shoppers now see value as synonymous with ‘low cost’.

It’s now strikingly obvious that traditional bricks and mortar retailers need to re-invent their value proposition if they are to survive.

With this in mind we set out to track the change in shopper attitudes to value. We found a marked shift from the cost consciousness of 2012 that was supplanted by the fashion for austerity in 2014. In 2016 we are seeing the emergence of a new consumer – looking to make a confident, liberated choice. 

We identified four trends that retailers need to start placing front of mind if they are going to evolve with the ever more demanding shopper and deliver a value exchange that has a real impact on their business.

1. New convenience is changing everything

Accessibility: Click and Collect in store or at other convenient locations is now the norm. How long before a high street fashion retailer offers a similar service for their range and competitors’ clothing?

Simplification: Retailers are using more automated tools that simplify transactions and provide ongoing updates. To simplify customer service, Japanese Telecom retailer Softbank has introduced Pepper, a robot, so shoppers can receive advice and buy without waiting for a sales person to become free. Technology that scans shoppers has been around for years but will soon be used to identify shoppers for payments. Whilst today, Contactless payment is a new utility, soon we will use biodata. 

These new technologies are making everything easier and more convenient for shoppers, empowering consumers through reduced complexity and simple, approachable sales processes. 

2. Putting control in the hands of the shopper

Savvy retailers that put shoppers in control and create value propositions that let them choose, trial and buy products and services in the way they want are the ones to watch.

Tailor-made: Many retailers are recognising the individual’s requirements and handing control of “everything I want and nothing I don’t” over to the shopper. Waitrose’s hugely successful ‘Pick your own offer’ program is a great example, as is Sportswear manufacturers letting shoppers design and personalize their own trainers. Many others are starting to follow suit.

Flexibility: Some retailers are removing restrictions and accepting shoppers as an equal partner in the brand-consumer relationship. The move to increased flexibility can be seen in the way retailers encourage shoppers to trial products. Amazon Prime, for example, offers a free 30-day trial whilst Tesco lets you return and exchange a product if you don’t use it. 

Freeing-up time: Shoppers can shop and make decisions to match their availability, such as the rise of ‘pay as you go’ gym contracts. 

3. Choice is at the heart of the new value exchange

Recent years have seen the rise of mobile apps and geo-location technologies that enable retailers to understand and respond to shoppers with greater accuracy, and offer choices that are relevant and timely.  Providing choice has become a major source of differentiation in the race for a new value exchange. 

Aiding choice: Enabling discovery of new options through the use of new technology to engage in real time and offer unexpected extras at no extra cost. Macy’s of New York have been using beacons and transactional data to identify what products interest people and what they buy. It can tailor offers, suggest a wide choice of products and supply information about these products as shoppers browse in store.

Information enablement: Opening up the consumer’s ability to make choices through transparency of information about the retailer and its products. Waitrose introduced QR codes on its own brand meat products – revealing the welfare conditions of the animal, its source and recipe ideas.

Increased access: Helping shoppers to navigate and choose the right products for their needs. Apps and in-store technology are increasingly being used to help shoppers navigate store and find what they need. One example is Carrefour, who are trialing the use of LED lights that transmit location to an app. The app helps shoppers navigate the store, find products and sends location-specific offers.  

4. Leveraging the social community

Finally, social media has transformed how we interact and engage with brands. We all know of stories where social influence has either endorsed or damaged a brand. 

Social currency: Brands are now acting as facilitators of experience and therefore social engagement.  Brands such as ASOS have leveraged social media to create excitement around its sales. They offer exclusive previews online, with shoppers queuing for the virtual doors to open. To create added social engagement people can play games while they wait – win the game and you move up the queue.

Community engagement: There are retailers that sharing and engage with communities for mutually beneficial information exchange and increased fun and financial success. C&A in France asks customers to ‘like’ products as they browse. Clothing hangers contain a counter that rises as customers like the outfit on Facebook. This gives shoppers a real time social endorsement of the clothes they are considering buying.

Sustainability: Consumers have an increased sense of social identity and social responsibility and the smart retailers are looking not simply to engage their customers but want to persuade them by demonstrating their environmental and social credentials. Dominos handed out free pizza to people impacted by the storms in 2014/15 and grocers have committed to reduce their packaging on own-brand products – with Tesco aiming for a 25% reduction. 

The value exchange in retail is changing – it’s no longer about what we buy but how we buy it. As consumers regain their confidence, empowered by the new digital world, they expect and demand new things from retailers. You can have the best product in the market but if you don’t facilitate a true exchange with the shopper and exceed their exacting expectations, you will be rejected. In response to this retailers are becoming more adaptable and more responsive. Retail has always been theatre, now it’s time for it to become full-blown, one-to-one entertainment. 

David Reed, Planning Partner

This was featured on The Drum