Brands need to consider better
store layout and packaging design
Group Transformation Director
Ogilvy & Mather
Despite the many changes happening in retail, you could ask: Have the fundamentals of shopping really changed? People still buy most of the things they did five years ago, they still go shopping frequently— averaging over 250 visits to supermarkets each year in the UK, for example—and the average FMCG basket size is much as it was five years ago. So why are brands not feeling comfortable? There are several changes in retail that are impacting the way brands reach consumers and engage them. I’d summarize them in three “C’s”: context, convenience, and calm.
Setting the context
The first thing to note is that the context of retail impacts the choices consumers make, and when the context changes, people’s choices change. What may seem great value in a sale at an upscale department store might be seen as wildly expensive at a discount store.
As discounters have taken hold in the UK over the last four years, they have focused on consumer perceptions of pricing and what constitutes value. The significant advertising budgets of Aldi and Lidl have focused on price messaging; Lidl has run an advertising campaign in Ireland stating “full shop, half price” with a slogan “beat the brands with Lidl prices,” in which it promotes its own-label version. This puts significant pressure on CPG brands to consider how they project value to consumers who are shopping in a very “savvy shop” context. Brands need to create the bragging rights of a smart buy for their consumers.
Ikea has leveraged contextual pricing in a different way to highlight its affordability in Saudi Arabia. They ran a campaign called “It’s that Affordable,” which compared the cost of the furniture to everyday items such as pizzas or coffee. Ikea used framing, with contextual pricing, to help consumers see how affordable their items are.
Other behavioral heuristics can also help brands to stand out in the value equation. The Journal of Consumer Research highlights how important it is for brands to create the “endowment effect,” which causes you to place more value on things you own.
In the context of a physical shop, people expect to be able to touch and discover the products. Brands that enable this can smartly create the feeling of “ownership” pre-purchase. Just watch the excitement of consumers in Apple’s Genius Bars to see this engagement in action.
This trend is now moving offline too with the growth of virtual sampling. This allows you to virtually “try on” products before you buy, and Toni and Guy, the beauty salon brand, is using it to allow people to test colors before they buy their nail varnish or hair dye. This “virtual trying on” removes one of the big concerns about buying online, as consumers can check that it suits them before they buy.
Online drives convenience
The growth of online is of course in part driven by convenience, as you can increasingly browse for anything from your sofa. Amazon has created a new type of shopping that has no checkout line, and where the power of the review review—purchaser or independent—is king. This is driving brands to focus on increasing their specialist category reviews. In the smartphone world, the tech reviewer is a now critical part of the communications mix, and brands invite all of the reviewers and bloggers to major preview events.
In physical retail there is also an increasing focus on convenience, with self-checkout growing. As there is less human interaction at the checkout, and so less chance to offer last-minute promotions, brands have to reach people in other ways as they move through the store. This could be through using technology, with mobile couponing, active brand placement on the retailer app, and brand rewards programs for loyalty all coming more to the fore.
While Amazon has changed the way we shop, and when we shop, we see that most people still go for a frequent “quick shop” to physical stores, and often then the nearest shop is what constitutes convenience.
With growing urbanization, the number of “mini” supermarkets has increased, and with more single-person households, the ranges these stores stock is also changing. Brands are having to adjust, as they need to reach the urban single-dweller, who may range in age from 18 to 80. These shoppers often pop in most days, and so the need for brands to have a more varied range to stay relevant, while maintaining constant availability and the right portable pack size, all becomes part of the brands “convenience” offer.
Retailers are also innovating their convenience offer with the growth of “order and collect” at their stores. This service allows the consumer to shop the whole range of the online store, but have it delivered to their local store at a time that suits them to collect. Again, this forces brands to have to be front-of-mind for the consumer as they go online. The brand must be really smart in their use of programmatic buying, and must know their consumers’ previous shopping habits to predict their next purchases. Increasingly, brands are spending more of their marketing budgets on programmatic advertising to reach their customer base.
Keep calm and carry on
The final “C” could of course be curation, and it is true that personal curation enabled by brands and retailers is now becoming a consumer expectation. But instead, I have chosen a different “C.” With the hectic environment people live in, and the sometimes overwhelming amount of choice on display, one gift a brand can offer a consumer is a moment of calm.
Kantar Retail ShopperScape in 2015 noted that 43 percent of US consumers describe a stress-free shop as one in which they are “easily able to locate the items I need”. While much of this ease can be enabled by retail design, brands can also help by having packaging that is easy to identify and navigate. To an aging population, constant packaging changes can be disorienting.
My elderly father was a prime example of this, as he recently arrived home with loose tea instead of his favorite tea bags, and it was like a “spot the difference” competition to work out which pack was which. A small gesture by a brand—having clear packaging and coding—can make all the difference to a harried shopper, and give that brand a little more emotional credit in the bank.
Ultimately consumers’ shopping habits are going to continue to evolve. The brands that best understand the context of where their consumers are as they shop, what convenience means to them in that moment, and uses that understanding to reward shoppers with a stress-free experience may continue to thrive.