From Shopper to marketer… Transaction to lifestyle… Pharmacy to grocery Rx… Convenient to on-demand…. The change of pace in retail today is unprecedented. The past is no longer a predictor of the future. Demography is dead. Traditional categories are becoming obsolete. Digital is in the driver’s seat. In essence, the fundamentals of retail are being redefined and the playbook rewritten—in real time.
These are daunting prospects for retailers and manufacturers, with tremendous internal and external implications. Where can they realistically begin? How can they balance out-of-the-box thinking with the practical need to manage risks?
Backed by insights from its proprietary research, global consumer retail leader and private brand pioneer Daymon has identified four key forces that retailers and manufacturers should focus on in 2017 as they shape a new way of retailing and bring shoppers and internal stakeholders along a new path to purchase.
1. Foster Shopper Collaboration and Participation
Shoppers have been liberated from the confines of conventional retailing and are now taking matters into their own hands. Thanks to the digital revolution, settling is no longer necessary, and shoppers feel empowered to translate their frustrations into solutions.
Retail has begun to respond, by offering personalized goods and services, supply chain transparency, seamless shopping, flexible payments, luxury at a value, healthy foods that are crave-worthy and other goods and services. Expectations are at an all-time high. But shoppers continue to raise the bar, particularly when it comes to the demand for creativity and self-expression. Increasingly, they also desire to influence not only their own choices, but also broader positive change.
To address this shift in the coming year, retailers and manufacturers must move beyond traditional shopper segmentation and work to identify and address commonalities in consumer needs that transcend demographics. They should also work to tap into the new “participatory shopper” by providing opportunities for consumers to co-create and act as brand marketers, as Lay’s did successfully in their global “Do Us a Flavor” campaign and German retailer Lidl is doing with its “social price drop” campaign this holiday season in the U.K.—allowing customers to crowdsource the prices of select Christmas products through Twitter.
Pro Tip: “Pop-up retail is another way retailers are testing and getting consumer feedback on products in real time,” says Nicole Peranick, Director of Culinary Thought Leadership for Daymon. “For example, earlier this year, U.K. retailer Tesco launched a wine bar pop-up in the heart of London’s entertainment district to showcase its premium wine ranges under the Tesco Finest* label. International discount chain Aldi also launched a similar concept in May 2016 to time with London Wine Week.”
2. Create a Destination
In the landscape of ever-evolving physical and digital store formats, retailers must create attractive destinations to drive traffic. Traditional definitions of categories can no longer dictate the journey through the store. Shoppers want solutions that are tailored to their lifestyles and needs, and that lead to experiences—not just transactions.
Innovative retailers, such as Whole Foods and Loblaws, are creating destinations by developing culinary innovation centers and bringing restaurant-quality food service to the store. Other retailers are seeking out personal bonds with shoppers by providing communal spaces in-store for education, product trial and socializing, much like Apple has done in the electronics arena. Looking across categories, creating exclusive lines of Private Brand products dedicated to a specific season or flavor, like Trader Joe’s and its pumpkin-spice everything, is another effective way to provide a unique and playful element of surprise.
In 2017, retailers should continue to focus on creating branded destinations with products and services that establish authority in high-volume areas of the store. Finding fresh ways to deliver differentiated solutions and providing shareable experiences should also be top of mind.
Pro Tip: Consumer marketing events—from cooking demonstrations to wine tastings to pet events—can be fun and exciting ways to engage shoppers with your brand and keep them coming back for more!
3. Target Precision Wellness with Grocery
Consumer self-knowledge is expanding dramatically. Sophisticated data-tracking tools, including smartphone apps and wearables, are becoming mainstream, enabling users to monitor their daily fitness, dietary and other lifestyle habits. Personalized DNA profiling is also becoming more affordable and more accessible, allowing consumers to scan their DNA for genetic markers of disease, dietary intolerance and more. Next-generation devices and services can now even suggest changes to optimize personal performance and manage health conditions. As a result, optimized diets, exercise programs and even more targeted prescription drugs are becoming the new reality.
Precision wellness is only set to grow in the coming years, providing new opportunities for retailers to create more personalized offerings for the self-aware shopper and to position themselves as partners in their customer’s wellness journey. One example already in the works is a partnership between leading CPG company Campbell Soup and wellness startup Habit, who are set to launch a personalized nutrition and meal service delivery program based on personalized DNA results in early 2017.
Other brands and retailers could also consider teaming with a wellness service provider like this to provide shoppers with optimized dietary recommendations, menu plans, shopping lists or even meal solutions, based on the personalized data generated from wellness tracking tools and/or personalized DNA profiling. Targeted exercise tips and even optimized medication recommendations are also avenues to explore.
Private Brand Spotlight:
“There are clear opportunities for Private Brands to make ground in the precision wellness space,” says Carl Jorgensen, Director of Wellness Thought Leadership for Daymon. “One example we’ve already seen come to market is Walgreens’ ‘Well at Walgreens’ activity tracker, a wearable fitness monitor that directly competes with the likes of Fitbit, Garmin and Jawbone. The tracker syncs with the Walgreens Balance Rewards app, and awards participants points redeemable for in-store savings when they complete certain activities, such as logging weight, tracking blood pressure and glucose levels, and reaching fitness goals.”
4. Redefine Convenience
Thanks to our increasingly digitized world, the definition of convenience is rapidly changing. Items once found at stores within walking or driving distance are now available for pre-order and pick up at lockers or vending machines, as is currently being trialed by Walmart. The answer to “what’s for dinner” is increasingly becoming subscription-based, with services like Blue Apron and HelloFresh proliferating. Drone delivery is set to revolutionize on-demand at Amazon, and the list goes on.
Much of this reinvention is and will continue to be driven by technology—from real-time data and robotics, to 3D printing and blockchain (the technology behind the digital currency and payment system Bitcoin). To stay relevant, retailers and manufacturers must work to identify and begin investing in innovations that will help them commercialize the store of the future, giving customers what they want, when they want it—without fuss or frustration.
Retailer Spotlight:
European grocery retailer Carrefour has created a new store in Turin, Italy, that showcases how next generation urban formats can solve for the needs of today’s on-demand shopper. The store is open 24 hours a day, and offers a curated assortment of relevant products, as well as targeted services to support the urban shopper. For example, it features a “Blue Box” section, where a team of professionals (such as an electrician, a locksmith, a tailor, etc.) are on hand to offer assistance. There’s also a photo printing service, a pick-up point for online orders and even laundry facilities. Next to the Blue Box space is Market Café, a self-service dining area where visitors can purchase ready-to-eat items and charge their mobile phones.
Creating a Path Forward
Without a doubt, these forces are having an enormous impact on what it will take to succeed in retail in the coming months and years. Throughout 2017, Daymon will continue to examine these four shifts and provide even more detailed insights for retailers and brands. This will include defining common shopper needs and the solutions to best satisfy them, generating new strategies to nurture consumer engagement and drive convenience, and identifying Private Brand opportunities in the wellness space and beyond.
“We know it’s a challenge for retailers and brands to keep up with and make sense of the many changes affecting our industry today,” says Dave Harvey, Vice President of Thought Leadership for Daymon. “Our plan for 2017 is to focus our research on these four areas in order to generate disruptive ideas and implementation plans that will help our retailer and brand partners continue to evolve and succeed.”