Study: 8 New Rules for Profitable Retail
The combination of the changing social attitudes, digital technologies and socio-economic change has created new rules for retailers.
“It is a world in which the needs of shoppers remain, in many ways, largely unchanged—but their expectations of how businesses will fulfill those needs are being transformed. It is an old challenge in a new world” – The Future Shopper
This is one conclusion of a report from The Future’s Company in collaboration with Kantar Retail. Rapid changes in technology have altered the meaning of ecommerce, which has moved from meaning ‘electronic commerce’ to ‘everywhere commerce.’ The economic turmoil of 2008-2009 has altered the economic landscape, as incomes have been squeezed and net wealth has deteriorated. In the process, shopper’s perceptions of price and value as well as overall consumption has been inexorably changed. Trust of institutions is another change, particularly in more developing countries.
The Old Challenge
Shopper’s basic needs have largely remained unchanged over time. Retailers and brands still need to meet or exceed one of four shopper needs – convenience, loyalty, experience, and value. But how these intangibles are viewed has shifted, as well as how these needs are met.
This sets up Kantar’s 8 New Rules for retailers:
1. The shopper context has changed. Technology and attitudes have been major factors in this shift. Trust and transparency are demanded by shoppers more than ever.
2. The shopping process has disaggregated – and this will continue. The shopping process is complex and multi-faceted. Shoppers use many channels and devices to shop – and the retailer does not control all of them.
3. The store needs to be extended in time and space. Stores must exist beyond the physical location to include digital. The strategic question is how best to extend the store’s extended presence that fits its best positioning and competitive advantage. Plus, the store must learn to maintain the relationship with the shopper no matter where the shopper buys.
4. If you are brick ‘n mortar, you are also digital. This involves rethinking your digital presence not just beyond your walls, but also within them. Digital can greatly change the nature of brick ‘ mortar. Expect digital to overlap merchandising among other things.
5. Brick ‘n mortar must make the most of physical contact. Brick ‘n mortar retail can offer experiences that purely digital retailers cannot. Maximize the ‘touch’ experiences in-store.
6. Pricing is becoming more personal. Personalized pricing and product/service offers will become more widespread. But the offers must have rationale reasons and cannot be arbitrary.
7. If your shopper marketing is being done in-store, it is being done too late. Shopper planning is started long before the shopper gets to the store. Many “moments of truth” occur outside your four walls. Organize your shopper marketing programs accordingly.
8. Manage your intermediaries. Dues to disaggregation and digital, opportunities open up for new entities to place themselves between the shopper and the retailers. Work to keep them on your side.
This Kantar Retail video explores how changing shopper attitudes and technology are re-shaping retail.