It’s no longer all about price – retailers must entice customers through an accessible, engaging brand. Rebecca Thomson finds out why retail is becoming more brand aware.
Retail marketing has evolved from being all about price to encompassing much more than that. At one time, everyone from grocers to furniture retailers were known for price wars and heavy discounting, and advertising reflected that by emphasising the best deals and the biggest Sales.
Now, however, consumers demand that retailers entertain, engage and impress them. Price remains important, of course – shoppers are still mired in recessionary thinking and are on the lookout for deals and value for money. Part of Majestic Wine’s success can be explained by its smart pricing.
But what really makes shoppers spend is something that captures their imagination or attention. Whether it’s a unique Apple product, a friendly John Lewis assistant or, in the case of young fashion brand Hollister, a nightclub-style store experience, retailers need to stand out and stand for something.
“Customers are expecting more of an experience, an emotional connection – they’re not just doing functional shopping,” says Sarah Dear, managing partner at marketing consultancy Elmwood, which works with Asda.
Retailers today must represent something that customers can either aspire or relate to. The importance of the brand seems to apply across the board – the recent fortunes of Asda and Tesco aren’t just down to operational differences. Asda has been performing well lately. Like-for-like sales edged up 0.7% in the second quarter to June, after a 2.2% uplift in the first quarter, and its investment in food quality – which included a tie-up with cookery school Leiths – has helped improve its overall image.
Tesco, meanwhile, took a drubbing in the press in February after its worst sales performance in years, and has since been working hard on increasing staffing levels and making its stores feel more welcoming.
While Asda has spent the past couple of years investing in its brand and the quality of its products, working hard to create an image for itself as mum’s best friend, Tesco’s brand has suffered. The grocery giant is seen by some consumers as corporate and cold, with a penchant for crushing local businesses in its expansion path.
Walmart-owned Asda is no less corporate, but it has managed to avoid the label more effectively than Tesco.
Simon Hathaway, president of shopper marketing and retail operations at consultancy Cheil UK, says Tesco’s UK operation may have become a little complacent off the back of the Clubcard’s success in the 1990s. “It relied on Clubcard to give it lots of data and was phenomenally successful. Asda didn’t have that data – it concentrated on making the store experience local and building a relationship with customers,” he says.
But Tesco is fighting back. The grocer’s numbers have already improved – gross sales increased 3.7% in the four weeks to July 21, and chief executive Philip Clarke is focusing on ‘warming up’ the feel of the stores, among other measures. Tesco is refreshing 430 stores, which is 25% of its estate, in 2012-13. New graphics and lighting are being used to give the stores a different feel and the early signs are encouraging. Clarke said earlier this year: “We’ve been rolling out this new, warmer look and feel to the stores and it goes down very well with customers.”
Hathaway says the grocers have had to step up their branding efforts in an attempt to increase customer loyalty. He says shoppers are more demanding, and happier to shop around for better value, meaning retailers need something to create a sense of customer loyalty.
“Retailers have always worked at being strong brands in their own right, but they’ve dialled it up because people are now happy to switch between stores for better value. Shoppers are being smart about their choices,” says Hathaway.
But shoppers have become smarter out of necessity – they have wider choice than ever – making even basic purchases potentially bewildering. As Allyson Stewart-Allen, managing director of consultancy International Marketing Partners, says this is where a strong brand can prompt a purchase. “Consumers have more choice than they have ever had before, and they need some aids to assist them to make those decisions quickly,” she says.
The online challenge
The growth of online retail has accelerated traditional retailers’ need to boost their brands and communicate a clear idea of what their business stands for. A strong brand and good store experience are obvious ways to differentiate and defend themselves from pure-plays.
But other trends are at play as well. Brands such as Apple and Nespresso are retailers in their own right, cutting out the middle man and going straight to the customer.
Dear says the shift helps brands protect margins, cultivate a stronger relationship with customers and retain more control than if their products were stocked in other retailers’ stores.
And it’s been an important development – the effect Apple’s innovative approach to retail has had on the industry is well documented.
It’s not just the overarching brand that is important either – the growing value of retailers’ own product lines is reflected in the ever-increasing strength of private-label lines such as Tesco Finest and Asda’s Chosen by You.
As Hathaway says: “Some of the private-label lines are sometimes more expensive and have stronger branded value than competitors’ products.” These lines have in many ways led retail’s move into a more branded arena.
Developing customer trust, keeping messages consistent and knowing exactly what a business stands for was in the past less crucial than it has become, but the retail industry is changing – a meaningful brand is now essential.
Who’s getting branding right?
The beauty specialist creates its own products and stands for a clear set of values, says Elmwood managing partner Sarah Dear. She says: “It has done a good job of standing for a set of unique values and bringing their personality alive.” Everything from store staff to the products demonstrates the passion behind the business, she adds.
The specialist wine retailer has defied the recession to produce strong growth over the past couple of years.
It has done so by cultivating a carefully balanced image. Its recent TV ads for instance depict staff who are friendly and knowledgeable but not pushy.
The fashion retailer is clear on what it offers – fun, young fashion with an edge. The store experience may differ across the estate – the three-floor Oxford Street store is upheld as an example of how things should be done – but as Topshop makes headway into international markets its brand shows no sign of weakening.
The department store group provides consistently good customer service, and it’s this that makes it stand out. Its image as the darling of the middle classes has been strengthened by a series of adverts that never fail to tug at the heart strings.