It’s never been a more exciting time to be involved in retail or shopper marketing. It’s also never been more dangerous or risky to be marketing a consumer goods brand. The industry is about as dynamic and unpredictable as it has ever been. Discounters are going from strength to strength. E-commerce is booming. Convenience stores seem to be growing faster than any other channel. Many major retailers, with their historic dependence on large stores in supposedly great locations, are struggling. And in all of this, shopper buying behavior is changing significantly, and fast.
All of this spells danger for brands and manufacturers. All of this rapid change means it’s easy to be investing in the wrong channels and retailers. As shopper buying behavior seemingly shifts continuously, there is a need to continuously shift our perspective and our investment. So what should brands do to ensure that they are on top of the challenges that shifts in shopper buying behavior bring?
See through the myths about shopper buying behavior
If we are to believe everything we read, shoppers are obsessed with price, and everyone and everything is being bought online. Neither of these is true. If shopping was all about price, why would convenience stores be booming? They are rarely the cheapest place to buy anything. Why is it that specialists are growing too? Why are craft beer and organic foods booming? While price is important, and the endless discounting by major retailers and brands isn’t helping, shopper buying behavior and decisions are clearly making decisions based on more than price. And yes, there is a lot of online action, and e-commerce is growing fast. But globally the share of total grocery is still tiny. While in many markets the majority of shoppers do now shop on line, few are doing the majority of their shopping online. Buying behavior is changing, but most shopping still takes place in-store, and that will be the case for some time to come.
Start understanding shoppers – your shoppers
Shopper buying behavior is changing in fundamental ways. Shoppers are finding that they are more choices about where to shop than ever before. These new channels often also create new options of what to buy. Different shoppers are shopping in different ways. It is no longer sufficient to understand consumers and consumption. There might have been a time that shopper understanding was optional. These changes in retail dynamics mean that today, shopper understanding is mandatory for brands.
Change your approach to developing an understanding of buyer behavior
That’s all very well, but understanding shoppers is often a painful, expensive process. Shopper research projects often take months and months – not least because of the challenge of convincing retailers to allow fieldwork in their stores. Projects which can take up to six months, and often cost a small fortune are prohibitive to some manufacturers, and are increasingly inappropriate in a rapid changing environment. What is required are fast, simple, and cost effective approaches to understand shopping behavior.
Integrate shopper fully into the marketing planning process
While shopper marketing has now entered the lexicon of many organizations, the planning process seems too often to leap from consumer brand plans to customer plans. Shopper understanding is dripped into the process at best. At worst an understanding of shoppers and buying behavior sits outside the ongoing operation and planning processes, somehow residing within separate projects or forgotten soon after the research project is completed. To be effective, planning processes need to be revised to become faster and more flexible, and shopper-oriented.
Start zero-based budgeting
Even assuming that the current way of spending marketing funds is optimized (which, if we are honest, is unlikely!) it will be optimized for yesterday’s shopper, not the shopper of tomorrow. The best way to respond to this challenge is to follow the example of Unilever, who recently announced that they would instigate a zero-based marketing budgeting process. This, in theory, should force the organization to re-evaluate all of its spend based on an up to date view of the market conditions and dynamics.
Review retail trade investment urgently
Customers are in flux. Changes in the competitive environment and shopper behavior are leading to convulsions across retail. Some will win, some will lose. Many will become increasingly demanding as they struggle. Retail trade investment must be reviewed frequently, (I’d recommend a zero-based approach to this as well!) and spend should be made in ways which are flexible and avoid longer term commitments unless absolutely necessary. There was a time when big retailers would always continue to grow. Continuous, long term investment commitments under those circumstances was less risky. That is far from a certainty today.
The future is difficult to read, but it appears clear that the trend towards a fragmented shop will continue for some time. Shopping behavior will continue to change. More technology will come along to influence and disrupt and while much of it may fail, some will work. Critically, some will work for some shoppers. Shopper behavior will become more heterogeneous. Understanding this will be, arguably, the key to brand success. For more, please download our free e-book “Managing Channels in the Age of the Digital Shopper”.
Image: Flickr
