Changed shopping and cultural habits are disrupting retailers’ established methods of building and retaining shopper loyalty.
In the age of social media, life lived on smartphones and transformed expectations about the relationship between brands and consumers, retailers are finding new ways to connect with and sell to shoppers.
At the heart of the new relationship model is the need for ‘authenticity’, argues TCC’s global insights director Bryan Roberts.
Applying insights from InterContinental Hotels’ 2017 Trends report to retail, he believes that to create loyalty today, retailers should build on four foundations, and has identified examples from the UK and internationally of businesses doing that well.
Interconnected shopper relationships
The rise of social networks and smartphone use is mirrored by a desire for protection of privacy and dislike of generic message “bombardment” by brands.
Consumers’ own interests often conflict as they seek to be ‘always on’ as part of a social media crowd but also want to be treated as individuals.
Kantar Futures executive chairman J Walker Smith has summed up the fragile balance this way: “The future is an economy of social relationships, not brand relationships – it means facilitating personal engagement, not managing brand interactions.”
Roberts highlights how Intersport in the Czech Republic cleverly keyed into customers’ interests by creating a promotion which provided a discount related to distance run.
The percentage off was the same as the number of kilometres covered. The initiative became a social media sensation as runners shared their routes and distances – and sales climbed 16% as a result.
Retailers have successfully democratised once-exclusive products such as Champagne and smoked salmon.
Today there remains shopper thirst for new and ‘rare’ products, frequently those tagged with labels that create a sense of authenticity, such as ‘artisan’.
“Seats, along with toilets, are the two most common demands among older shoppers. Why aren’t more retailers doing that? It’s easy, and it’s a small moment of ‘thank you’ and authenticity”
TCC’s global insights director Bryan Roberts
The growth of craft beers is a good example – up 87% in the 12 months to April 2017, compared with a 0.4% fall in mainstream beer, according to Nielsen data.
Roberts points out, however, that there is an opportunity for retailers to foster greater loyalty through experiences, whether in-store sushi bars or free fruit for children.
TCC focus groups revealed that loyalty rewards such as money-off restaurant deals and theme park visits were highly valued.
There are also simple changes that retailers could make to stores which would be highly valued by shoppers.
“Seats, along with toilets, are the two most common demands among older shoppers,” observes Roberts. “Why aren’t more retailers doing that? It’s easy, and it’s a small moment of ‘thank you’ and authenticity.”
Value and values
Efficient business practice and corporate social responsibility need not be contradictory imperatives, maintains Roberts.
Retailers such as the Co-op, he points out, have made their commitment to Fairtrade central to their appeal.
“Retailers are very, very bad at telling me why Fairtrade is good. When retailers do a good thing, they need to explain why it’s a good thing and how it’s helping shoppers create a better world for all”
TCC’s global insights director Bryan Roberts
He says: “They can achieve a point of difference in a competitive market, which makes obvious commercial sense, while at the same time embodying their brand values and burnishing their brand experience.”
But that is not always achieved, and retailers need to become better storytellers to fully realise the opportunity on offer.
“Retailers are very, very bad at telling me why Fairtrade is good. When retailers do a good thing, they need to explain why it’s a good thing and how it’s helping shoppers create a better world for all.”
Contextualise, then personalise
Personalisation is a big retail priority at present, reflective of how consumers want to be sold products and services “their way”, rather than generically.
However, Roberts notes: “This endeavour starts off with contextualisation – offering products and services in the right way based on country, region, city, store or even time of year.
“Only when retailers have adequately managed the art of contextualisation can they then progress to personalisation.”
He highlights the Tesco Metro branch in the multicultural area of Newham, east London, as an example of good contextualisation. It is the only Metro store with a halal meat counter and a fish counter. Spirits occupy only one gondola end.
Context addressed, the opportunity is there for retailers to personalise – as Waitrose has done with its Pick Your Own Offers scheme, allowing customers to choose 10 deals based on their own shopping habits.