Tesco’s recent results and confirmation it is exiting the US underscored the degree to which it had underinvested in Britain and in its customers. The retailer is now on a mission to turn its stores into destinations as part of its £1bn investment in shopper experience. But could it have avoided this situation if it had listened more to its brands’ insights? In fact, could all retailers benefit from doing this?
The prevailing belief within fmcg marketing is that retailers hold power over brands. But this outmoded thinking is holding back both parties.
Take data sharing as an example. Brands often believe that retailers - with their wealth of big data - have access to superior shopper data. Retailer data must be macro, driving broad, measurable differences in sales, hence a focus on price promotion. But a retailer’s macro data isn’t necessarily more useful than a brand’s micro data.
Shopper marketing has taught us that brands need to collaborate with retailers. This would create a very different environment led by experience over price. It wouldn’t just be the consumer who wins. The retailer and the brand would reap the rewards, too.
“Shopper marketing has told us brands and retailers must collaborate”
Look at Red Bull, which has shared data with French retailers and collaborated on planograms and creative category solutions. The result? A 30% to 40% increase in sales in test stores and the initiative is now to be rolled out to nearly 200 outlets.
But for every such success story, there are many more failures. Most brands and retailers simply fall short of managing a winning relationship.
Of course, retailers have a right to address their own agendas everything from growing own label to encouraging price promotions. But if these are prioritised at the expense of experience, shoppers will turn away.
A category that particularly frustrates me is aircare. It’s virtually impossible to shop, especially refills. Who has the time to find the right match? Most will walk away. Aircare is further disadvantaged by being inappropriately located in broader cleaning aisles, next to functional kitchen sprays and toilet cleaners. The emotion behind buying aircare - the desire to make your home smell nice - is lost in the functional mode of the category.
In comparison, homecare aisles that sell accessories such as scented candles are almost as impulsively shopped as chocolate. The category is generally well-merchandised and, at Morrisons, for example, is supported with communications showing a warm representation of the home. By partnering retailer goals with brand knowledge, we can build a more effective shopper experience.
There are many unemotional, poorly merchandised categories that could be improved by combining retailer and brand insight to develop a micro and human understanding of shopping habits and motivations. Done correctly, the benefits are felt by retailer, brand and shopper.
If physical retail has a future, experience matters. Shoppers value it more than ever, so it’s time for brands and retailers to level the playing field.
John Viccars is shopper strategist at RPM
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