Why brand managers need to rethink their retail strategies.
The rate of change in Pakistan’s retail landscape has been dramatic and this change is not restricted to a single category or sector. In the last 10 years, the retail environment in most sectors has changed beyond recognition, be it supermarkets, specialty stores, banks, customer service centres or fast food chains. This transformation is indicative of the increasingly important role that retail is playing in the consumer acquisition and retention process and in the marketing mix. Three factors underpin this change.
1) Media fragmentation
The proliferation of TV channels and radio stations has raised awareness and knowledge levels among consumers. It has also led to a high degree of media fragmentation, making it increasingly challenging and expensive to reach target audiences, even for brands disposing of significant marketing budgets.
Competition has been rising across all categories. For example, in the snacks category, even the small corner shop will have four to five display racks with different brands of chips and snacks.
3) The product or the shopping experience
The shopping experience is now as important to consumers as the product itself, making it critical to optimise the shopper experience as part and parcel of the consumer choice process.
These factors are making retailers assert themselves and leverage their power over consumer choice and turn themselves into brands. In this scenario it becomes imperative that brand managers rethink the role of retail in the brand management process as conventionally one of merely supporting communication or other initiatives. Developing a deeper understanding of the retail environment is critical for brand managers.
The two elements critical to drive this renewed focus on retail are:
Understanding shopper behaviour
Brand managers must acquire a clear and independent understanding of consumer shopping habits in particular categories rather than relying on inputs from the sales or retail team. The retail strategy will ultimately be driven by this understanding. If the category buying behaviour is based on impulse, creating disruptive visibility within the outlet is likely to yield very good results, something I have experienced in categories such as shaving, batteries and beverages. For categories that cover consumer durables or mobile phones, recommendations by the store staff can be the single largest influencer, especially among semi-urban and rural consumers. Initiatives need to be put in place to ensure that this factor works to the brand’s advantage.
Amplifying the brand message
The ATL message may induce a consumer to consider a brand, but for that consideration to convert into a purchase, the message needs to be amplified at the point of retail and (this is important) stand out from the competition. At a time when marketing budgets are under pressure, pursuing these approaches may require shifting resources from touch points such as ATL. This decision can be made by comparing the ROI on retail compared to other initiatives.
Beyond the planning, success at the retail level is largely dependent on the synergy between the marketing, sales and distribution efforts. The task is made easier in companies where there is a dedicated trade marketing or retail department. In companies where these departments do not exist, brand managers must take the initiative to drive this. Understanding the on-ground challenges of the retail environment and working around them to achieve the objective is the cornerstone of achieving synergy and ensuring the brand delivers a consistently top class experience at retail. Attention to detail as part of the in-store customer experience, including competent on-ground staff, visual merchandising and planogramming, have a direct impact on customer acquisition and retention metrics. The power of a memorable retail experience to drive brand equity is often underestimated, the focus being on the communication and product initiatives. During my association with brands like Coca-Cola, Gillette and Nokia, I have noticed that consistent efforts at retail make a significant contribution to both short and long term brand health indicators.
The focus on retail also needs to be seen in the context of the social media revolution. An important point (and one that often fails to get the attention it deserves) is the fact that the social media phenomenon is based around people sharing their experiences with friends. Hence, an experience experienced by a few is talked about by many more. As the importance of social media as a marketing tool continues to grow, so will the need to consistently deliver memorable brand experiences that consumers can share. There is a huge opportunity to do just that while they are out there shopping in supermarkets, malls and department stores, having a meal or a coffee or going to the movies.
Afzal Shahabuddin is Managing Director, Resource Edge.