Shops are Showrooms: A Brave New World of Retail
As shops turn into showrooms, retailers must adapt to a radically changing retail landscape in order to compete.
As shops turn into showrooms, retailers must change with a radically shifting landscape in order to compete. There’s one upside to economic crisis: it can be the mother of great invention. The Wall Street crash of 1929 gave birth to Mickey Mouse and sliced bread, among other things. Who would ever argue that Mickey Mouse hasn’t lit up our lives? Or that sliced bread hasn’t helped us get more from our daily loaf?
If we take the attitude that hard times can produce great things, we give ourselves a better chance of overcoming challenges-and maybe even enjoying the ride.
Shops are now showrooms
For retailers, the challenges are coming thick and fast. Consumers are treating shops as mere showrooms, trying out products before going home to order it online for the best price. Price transparency may be great for consumers but it can devastate a bricks and mortar retailer who showcases wares only to line the pockets of others. The fall of Borders coinciding with the rise of the Kindle is a poignant example.
The ad from Dixons, an electrical retailer in the UK
Equally, where retailers were once the middlemen bringing brands and consumers together, new technology enables brands to cut retailers out of the loop altogether. Nespresso stores are a good example of this shift.
And so the pillars of traditional retail are being challenged, one by one. Technology is making price comparisons easier than ever before. There’s more choice online and fast home delivery is more convenient than any retailer location. These days, quality of service is mainly judged on speed.
So what are retailers to do?
The answer, of course, isn’t straightforward - retailing is hugely complex and becoming more so every day. However, retail brands could be the catalyst for change and survival. Retailers need to truly understand their brand and what it means to their customers’ lives. Once the brand is understood, every activity - from marketing and distribution to product launches and innovation - flows from that core philosophy, strengthening the retailer’s proposition.
For many, this represents a major shift in mindset and culture, particularly for those entrenched in the rational science of retailing led by merchants, accountants and operations people rather than marketers, insights experts and brand managers.
Yet retailers with a differentiated and relevant brand story and point of view are best placed to weather the storm. Customers are loyal to Trader Joe’s because they connect with what the retailer stands for - not just because of the price. Trader Joe’s also has a robust private label program that gives them a unique point of difference.
Private label can be a hugely valuable business brand tool, but only if you get it right.
R.I.P. 'good, better, best'
Customer attitudes are rapidly changing too. People spend more time considering each purchase, shopping with their hearts as much as their wallets. This makes the old ‘good, better, best’ (‘good’ being the opening price point, ‘better’ mimicking the national brand equivalent and ‘best’ being the more premium range) retail concept irrelevant. This model suited rational buying, where people picked private-label because it did the job at a lower price. Nowadays, shoppers want emotion and experience as much as functionality. In the changing world, private label needs to offer something more.
Back in 2004, the Australian supermarket, Coles, worked with Elmwood brand consultancy to create ‘You’ll Love Coles’. Their previous private label was very ‘me too’ and rationally price-focused whereas ‘You’ll Love Coles’ used real people as advocates on pack to say why they liked the product. This idea engaged with consumers beyond the functional on an emotional level. In a few years, sales doubled.
Elmwood’s revamp of Walmart’s Great Value private label was a similar success story. A new design made it easier for customers to find the range on shelf. Great Value became an important ally in helping customers meet their tight weekly shopping budget.
From private label to private brand
The CPG brands a retailer stocks are no longer a key differentiator. If retailers want to get more people in-store, they need to be the only ones who do what they do. Private label is the perfect vehicle to drive that difference. By operating on a more emotional level, private label can inspire and excite shoppers with products that have a point of view they can relate to.
Private label could soon become private brand - going way beyond a simple packaging solution and making compelling stories with a unique point of view the mainstream strategy. This is one way to drive more footfall, boost margin and differentiation, and compete with online products.
Asda, the UK grocery chain, is a retailer that sensed the changing winds and got on-board early with private brand. They worked with Elmwood brand consultancy to create the strategy behind Chosen By You, the UK’s first “branded” private label range. More than just pretty packaging, Chosen By You is a big, brave idea. It has a point of view (real customers test and approve every item) and a distinct personality, as well as terrific shelf standout. Asda treats Chosen By You like a true brand and it’s bumped up sales by a significant amount.
As brand-power gathers steam, private label has a golden opportunity to come of age. Retailers simply need to recognise the potential and make it reality. However, they should move at pace. As fast as we think the world is changing now, it’s worth pausing to realize that we’re only standing on the edge of unprecedented change to come.
Looking East
The pace of change is being set by those hungrier for it - namely, India and China. Able to meet high demand with ultra competitive pricing, their economies are expanding at a phenomenal rate. Three-quarters of India’s billion plus population - that’s 750 million people (three times the population of the US) - earn a dollar a day, which breeds aggressive price competition. India’s transport systems reflect this pace of change, as highspeed train networks spring up over roads frequented by ox and cart and new affordable cars like the Tata Nano, retailing at around $2000.
China and India’s own retail environments are ahead of everyone else when it comes to innovation and meeting consumer needs. Consider a perfume counter that dispenses perfume using spirits optics. Customers keep their original, beautiful bottle and simply go back to the store for a refill. Blending premium with value, this counter is a simple, handy and quirky idea - more importantly, it’s an experience you wouldn’t be able to get online.
As far as change goes, it’s fair to say we ain’t see nothin’ yet. But to end on a positive note, retailers that embrace the changing world could be the famed successes of the future.
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