Buying decisions are increasingly made at point of purchase, with the process behind a consumer purchase light years ahead of what it was a decade ago – driven by fragmented media, innovative marketing techniques and cutting edge technologies.
Understanding and managing the impact of the retail environment on brand equity is more important than ever.
At TNS, we are consistently asked by clients to reveal the secret of keeping ahead of the cluttered marketplace and striking a chord with a consumer.
By predicting how today’s consumer will evolve, we can try to understand how brands and retail environments will need to change in response.
Using this insight, all those involved in the purchase decision process can stay ahead of the game.
Future challenges
If we are to look ahead just seven years, to 2015, we can see several key new market forces which will change the retail business environment forever.
Examining just a couple of these helps us to understand the true extent of change between 2008′s and 2015′s shopper environments – and so helps retailers to plan ahead for these fundamental evolutions:
For example, interconnectivity will be a way of life. It will impact the way people get and share information, communicate, do business and even the way they socialise.
We predict that spending on services will grow at the expense of spending on goods, whilst the prevailing belief that bigger is better will break down – meaning that global organisations need to hone in on local understanding and communication.
Obviously, technology will be pervasive, driven by falling costs, widespread access and adoption, increased standardisation.
But the digital retail environment will also see shoppers have increasing input into product creation, blurring the boundaries between manufacturer and consumer.
Consumer power
And another key prediction – the value chain will become more intimate.
Consumers will share more information with retailers and suppliers but will expect to get more in return. And the power of social media will mean that suppliers have to listen to consumers or risk negative critique which can quickly span the globe.
It is not hard to forecast the influence of corporate responsibility and product sustainability. Already, retailers are being pressured to improve their ethical activities, review packaging, source local produce. This demand for responsible retailing is only going to increase.
But what does this mean for brands and suppliers in 2008? The challenge for retailing in 2015 will be to manage complexity and diversity, through businesses that span the globe while reaching out to the individual. This will require focus on a new set of solutions.
Given the anticipated growth of niche retailing, the diffusion of media and markets and the increasing reliance on point of sale as point of communication, shopper insights captured in the retail environment will be key to driving sales.
Retailers will need to understand what motivates the shopper at the point of sale while suppliers must work with retailers to determine exactly where a product fits within the retail mix.
Innovation will be key
Innovation is the one true sustainable driver of growth, and as product lifecycles grow shorter, the need to innovate will intensify.
New combinations of products, experiences and services will let shoppers express themselves, and innovation will increasingly take place at the point of purchase.
At the same time, shopper experience will prove critical – and companies will need to focus on how customers feel about themselves in their interaction with the shopping environment, product, service and brand as part of the total brand experience.
Speed to market will also become a critical success factor. Retailers and suppliers must use predictive tools to identify and act on trends early, and get out of trends more quickly.
And when things go wrong, our networked world will spread bad news quickly – so retail organisations will need to actively manage all aspects of their portfolio to maximise return and minimise risk.
Understanding consumers is not the same as understanding shoppers.
Retailers must start to swap conventional consumer research about who is shopping for which products for research geared more towards shopper insights.
Understanding the needs, attitudes and behaviours of customers in shopping and buying mode; why the shopper buys (or does not), why certain items are purchased and how the shopping experience affects the buying decision will all prove crucial to keeping ahead of the game and ensuring the retail offer of the future keeps pace with what shoppers want.
herb.sorensen@tns-global.com
