How to make your brand matter in the new retail paradigm
OgilvyDO Adminon 19 March, 2019
There is a new generation of consumers: by 2020, millennials’ spending power will overtake that of Gen X, and Gen Z is not far behind. The way these consumers behave and engage with brands is transforming business models, and the marketing required to convert them to loyal customers.
Traditional Retail, including the local Mom&Pop stores that make up the majority of retail sales in Southeast Asia, is being reinvented through New Retail. Suddenly Modern Retailers, our malls and brand stores, have thousands of new competitors. The “everything store” is now accessible offline at every corner.
Through this shift, shoppers’ standards and expectations are continually shifting; in a world of 30-minute delivery and supply chain disruption, how can retailers compete? In his keynote at eTail Asia 2019, Ogilvy senior partner Rune Sølvsteen outlines how brands can adapt to millennial shopping trends today, to secure engagement and loyalty tomorrow.
According to Sølvsteen, a common misconception is that millennials prefer to shop exclusively online. In reality, millennials prefer brick and mortar stores — but only when those locations are delivering the right kind of integrated shopping experience.
In this new environment physical stores have to deliver in one of two categories: Experiential, like a makeup store where customers can enjoy a makeover; or Functional, such as a store with more technical product that is best bought online, but where the customer is seeking expert product advice and guidance. Certain store categories, like Alibaba’s Hema, are offering a mix of both Experiential and Functional.
But the major challenge that retail brands must reckon with is not physical vs. digital; it’s cultural. The entire retail model is built around delivering products; often products that consumers desire, but don’t really need. And perception around this is shifting. It’s a matter of striking the “delicate balance” between scarcity and choice, Sølvsteen says. Consumers have a scarcity of attention in their busy lives, but also, as a world, we have a scarcity of resources. The new millennial shopper is more and more aware of the world’s limited resources, and willing to change their shopping behaviours accordingly.
“The aspirational mind-set of consumers has changed,” he says. “We want to experience more, but we want to own less. 90 per cent of consumers prefer an experience over buying and owning something.” He outlines three key criteria which retailers must deliver to the consumer in this new paradigm: simplicity, authenticity, and intimacy.
Simplicity: The modern consumer doesn’t need much, says Sølvsteen; they want their shopping experience to be curated, pre-selected, and relevant. Algorithms are helping to shape this behaviour and expectation, and brands are falling by the wayside when they’re not seen as strong or relevant enough.
Authenticity: “Brands aren’t built by authority any more, they are built by trust and trust now mainly comes from other consumers. The consumer is the authority on your brand,” says Sølvsteen. “Can consumers trust you, and the provenance of what they’re buying from you?”
Intimacy: Millennials are looking for social interactions; real offline connections with their friends, but also personal interactions with others when shopping. “What do we have as a key asset in retail?” Sølvsteen asks. The answer: “People!” Ensuring more personal interactions along the shopping experience drive customer engagement.
The key to achieving all three of these is understanding customer context – what are the moments that matter? What is on their mind at a specific time? Relevant, personalised engagement is important: delivering the right message at the right moment gets your brand message across.
“Get creative, think differently,” says Sølvsteen. “That’s how you make your brand matter.”