Brands and retailers can lose biff for buck

Procter & Gamble’s move last week to increase its presence in the US retail sector via the purchase of the 36-strong retail chain, The Art of Shaving is further evidence that manufacturers and retailers are consciously creating opportunities to learn each other’s competencies, better understand their shoppers and create the best possible shopper experience.

Let’s first consider this important little phrase about “me the shopper”, not “me the marketer or retail professional”: “When I am in a store or dealership, I am not the manufacturer’s consumer, nor am I the retailer’s customer…I am the shopper”.

The reality is that we exist in a shopper-driven retail environment. As shoppers we define what we want in terms of product performance and efficacy from the manufacturer, and how we want it priced and presented by the retailer. But the mix of the two competencies is what creates success.

Some manufacturers develop outstanding products that don’t sell in poor retail environments. Other retailers take very average products from manufacturers and sell them in an outstanding retail environment. Not convinced?

The original iPod was poorly understood by consumer electronics retailers, so it was retailed the wrong way. Not until Apple retailed it themselves, learnt how the shopper viewed the product and passed on those learnings to other retailers did it fly.

The iPod killed the CD. CD manufacturers were left with an old-fashioned and irrelevant product to consumers in the noughties, but JB HiFi has built a hugely successful business on selling old-fashioned plastic via a great shopper experience.

The key is being pure and focussed on understanding the shopper, not the consumer, nor the customer, and creating the best possible experience of any product they purchase and in any store they happen to visit.

Many years ago I was the VP sales and marketing on the board of Royal Doulton Canada, where the company sold its product via its own chain of branded retail stores as well as other retail partner stores.

It was an eye-opening experience. Around one board room table, VP sales and marketing, VP retail, VP finance and the president were able to trial new product displays and merchandising concepts to best capture the shopper’s needs and wants in our own stores. Then, very quickly – in many cases as quickly as next day or only up to a week later – feed back these “best methods” into our retail partner stores, capitalising on this shopper reaction and increasing sales across the market.

Just as valuable was our ability to sell our competitors products in Royal Doulton stores and learn first-hand why shoppers were choosing theirs over ours, then feeding these learnings back into the product development cycle.

While this vertical integration from manufacturers to retailers is not new news, the motivation for the investment has changed. It is now about learning what the shopper wants in order to apply it to the business, not to increase supplier power for the manufacturer or buyer power for the retailer.

The best of the retailer/manufacturer partnerships are now less adversarial, accepting and understanding that the individual profit goals of each party, whether retailer or manufacturer, can only be achieved if one common goal is achieved…a great shopper experience.

Procter & Gamble’s recent buy-out of a number of US retail chains, premium haircare retailer Frederick Fekkai and Co, Carnette car washes and most recently The Art of Shaving is an example of a brand bringing together both sets of expertise to understand the shopper.

So if manufacturers can use the retail space to understand shopper needs from a grassroots perspective, how can retailers capitalise on the depth of knowledge they have about customers the other way around?

In the burgeoning “own label” space globally, we’re seeing a rise in retail brands. Retailers are learning the competencies of manufactures and developing, sourcing and marketing their “own brand” product for sale to shoppers in their own stores. Some retailers, like Tesco across Eastern Europe and parts of Asia, even sell these high quality “own label” brands to other retailers.

Boost Juice bars is a great example in the Australian market, a simple healthy juice bar concept that introduced its own nutritious snacks range in their own stores and then rolled them out to national supermarket chains. Consumers, who have visited Boost Juice bars and loved the product and the experience, can now take it home in their shopping bags.

Similarly in the US, Starbucks coffee beans can be found in supermarket chains throughout the country, capitalising on sales through the association consumers have with what is a great customer experience in a store.

This coming together of expertise from different start points: manufacturer and retailer, but to a common destination: the shopper, is enhancing shopper experience and bringing innovation to bear in the last six feet of the sale. This is occurring at a faster and more targeted rate than ever before.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.

Click here for more Retail Trends blogs.