In February, the NZ Herald quoted associate professor Jonathan Elms, lead researcher of a survey into the issues facing retail in Australasia, as saying: “Despite all the rhetoric around internet and multichannel retailers, most [retailers]are very firm about the importance of having a significant physical presence.”
This came off the back of the latest retail sales data from Statistics New Zealand, which showed total retail sales for 2015 were up $921 million or 4.4 percent from the previous year to $21.8 billion.
New Zealand has undergone a gradual, yet drastic change in the way it approaches communicating with shoppers. Not so long ago it was the role of an activation, below-the-line or a promotional agency to either execute a creative idea in-store or deliver a simple sales driving promotion. But over the last four to five years there has been a shift toward an approach that rewards working collaboratively with all stakeholders, including clients, retailers and other agencies to deliver an integrated solution that changes both shopper and consumer behaviour.
Troy Fuller, managing director of the specialist shopper and retail communications agency Raydar, maintains shopper agencies now need to bring to the table an understanding of the shopper as well as a clear strategy in how to influence them.
“The shift in New Zealand to more shopper-centric thinking is driven out of necessity,” he says. “Shoppers are more empowered than ever before due in no small part to the exponential rise in online shopping and mobile technology. No longer do shoppers need to settle for what traditional bricks and mortar stores are selling. Shoppers can now buy whatever they want, from wherever they want at whatever time of day they want. Not only is deep discounting not enough to keep shoppers coming back, it also fails to serve all stakeholders equally. You need to partner good value with a positive shopping experience.”
Trend watch
On a recent visit to the States to attend the Path to Purchase Institute Shopper Marketing Conference, the team at Raydar saw a whole new side of retail. Here’s some of the interesting tech trends happening internationally.
Musical tables
KFC South Africa has created an immersive sound experience with its tables by using bone conduction to transmit sound from the table through the body to the ears. To hear tunes from unknown local artists, KFC patrons simply had to put their elbows on the table and cup their hands over their ears.
Sales updates on the fly
Offermoments delivers personalised ads to shoppers while they are walking along the street. After downloading the app, shoppers are informed about exclusive offers at stores they are physically walking by.
Pizza and movies
Pizza Hutt Hong Kong developed a pizza box that came with a movie projector lens that allowed for short films accessed on a mobile to be projected onto a wall.
Touch it, feel it
It’s no secret that Kiwis are becoming more comfortable clicking their way to purchase, with data from BNZ showing that online retail purchases accounted for $3 billion in sales in 2015. However, no matter how many digital screens we slap across the world or how immersive we make our apps, a digital shopping experience can still not deliver something as tangible as walking into a shop. And Anne Hirst, director of promotions agency Phenomenon, sees this as a major advantage for shopper marketers.
“When people reach the store they may have an understanding of what they want to try or buy (they may have researched the options online, looked at peer reviews on social media, and scoped out pricing) but a significant part of the purchase decision is made in-store, when the consumer can actually interact with the physical product and ask the advice of a trained expert,” she says.
“The face-to-face, tactile experience of being in store can’t be underestimated. Tasting, touching, smelling and holding the product cannot be replicated by any other channels.”
As a whole, shopper marketing draws together the existing disciplines of what used to be called promotions, experiential and digital, and seeks to have them working in a holistic manner, to communicate with the target market. And like their counterparts in other disciplines, shopper marketers are becoming better at using research and data to refine their strategies and deliver more effective solutions for clients.
BTL director Christine Abbott believes a successful marketing plan needs to integrate shopper marketing early in the brand-planning process with shopper research needing to sit alongside consumer research.
The reason for this is that consumers don’t engage with disparate channels in a vacuum. In fact, Reachmedia general manager of sales Christopher Gin observes, “buyer behaviour continues to evolve, with shopping research and conversion either occurring at a store or online”.
This is not indicative of a battle between the two channels, but rather illustrative of the need to ensure a seamless brand experience that does not leave the shopper disappointed whether they’re perusing in-store or hitting the purchase button online.
Viva la revolución?
Barbara Bentley, director of brand strategy and client partnerships at Revolution Shopper Marketing, suggests a revolution has begun as retailers and brands move away from the path to purchase and focus on the path to loyalty. There has been a realisation that value is not created through a single transaction but a lifetime of loyalty.
“Technology is allowing us to create strategies that transcend traditional through-the-line mentality,” she says. “We can connect brand and retail through real time promotional offers linked to shopper profiles instantly creating value.”
Retailers are fully aware of the value of in-store marketing and activation, and demand that their suppliers support their brands in in-store. Brand ambassadors, such as those provided by Phenomenon, have to be authentic representatives for the product. Consumers need to feel that they are speaking to someone from the client company, and so the briefing and training process is crucial. The brand ambassadors directly influence the consumer’s purchase choice at the coalface, by persuading them to buy a product or up-selling them to purchase more on the day.
The combination of visual identity, great briefing and training processes, and particular offers that can be made on the day, will regularly result in selling more in four hours than a store would commonly sell in a week.
“We have really seen the shopper marketing revolution build momentum post-GFC,” reports Sonia McConnachie, director at Commando. “The industry has grown out of a need to make marketing dollars work harder to drive sales, with point of purchase being the more direct and easier way to deliver results.”
The shifting mindset hasn’t necessarily always been led by agencies, rather the need of retailers and manufacturers to support each other to keep consumers purchasing during difficult times. There is a desire for a more integrated, in-store approach with a clear return on investment for short-term gains.
Commando sees its role as that of building a relationship with shoppers through engagement campaigns, driving them in-store to purchase, ensuring there are reminders at point of purchase that resonate with what they have seen out-of-store.
“The ideal would be the opportunity to continue that relationship so that they repeat purchase, turning them into loyalists and opinion leaders, advocates of our product brands to encourage word-of-mouth and counter the negative market forces of competitor activity or bad PR,” says McConnachie.
“We know shoppers don’t just make impulse buys at point of purchase. Of course, yes, some products respond well to impulse buy strategies but some products require a longer and better decision-making process, combined with consumers wanting to know more about what’s behind their products. Some of this decision-making is being made well before they enter the store, be that consciously or sub-consciously. It’s our job to give shoppers our product brand’s message as early as possible in that decision making journey through awareness and engagement campaigns.”
You’ve got mail
In the cluttered retail environment, where brands are literally stacked on top of each other, it can be difficult to get cut-through. So what does it take to deliver a standout shopper campaign?
According to McConnachie, strong awareness and engagement campaigns begin out of store with a hook or opportunity that drives the consumer in-store to purchase. The trick is then to leverage retailer channels to remind shoppers to purchase once they are there (or capture impulse buy shoppers), ensuring the campaigns are unique to the retailer.
The shopper marketing process begins long before the consumer sets foot in the store. As Gin says: “Evolving media fragmentation and consumer media consumption habits have seen retailers stick to tried and tested media platforms that deliver sales results. Catalogues continue to be viewed as an integral part of a retailer’s media mix.”
Distributed into letterboxes, catalogues are viewed at the consumer’s discretion, can be highly targeted and are not viewed as being intrusive—which certainly contributed to Countdown continuing to invest in mailers despite reducing its print advertising investment last year.
Engagement with catalogues continues to be high and is a strong contributor to moving consumers in-store with the influence on buyer behaviour commencing from the home environment right through to the point of purchase.
Real world virtual experiments
A photograph of a grinning Mark Zuckerberg walking past a crowd wearing Oculus Rift headsets went viral earlier this year, and confirmed to some that 2016 might well be the year of virtual reality. But Zuckerberg and his crew aren’t the only ones dabbling in this technology.
Revolution’s Barbara Bentley says her organisation is already using the technology for a very practical reason.
“We are working with a major FMCG retailer to utilise virtual reality for visualisation of store layouts, bring alive shopper journeys and in-store campaigns,” she says. “In consumer electronics we are working with a retailer on utilising virtual reality for training retail staff on the ultimate shopper experience. We are building loyalty platforms that have real time promotional offers linking the brand, retailer and shopper.”
These types of experiments are breaking down the lines between the online and physical worlds. And this is being accelerated by the proliferation of smartphone technology, which means almost every person entering a store is connected to the internet every step of the way.
And although it will still be a while before we see truly immersive shopper marketing experiences in stores, this type of tinkering holds the promise of interesting times to come.
Proof’s in the numbers
As in every channel, clients expect metrics to show how their marketing is performing. They want to know whom their marketing is reaching and how effective it is at converting perusal into purchases.
“The ratios of above-the-line and below-the-line have changed significantly as retailers and brands seek a high return on investment rather than just creating awareness and foot traffic – they want to drive consideration to conversion,” Bentley says.
And for this reason, shopper marketers are increasing their investment in data.
“Demands have placed a higher importance on data for marketers to tailor messages that are relevant to the consumer,” says Gin. “Reachmedia actively partners with a range of data providers to ensure that the letterbox is being utilised in the most effective manner and currently work with a number of large retail clients to target households based on a variety of objectives.”
And this isn’t limited to paper-based shopper marketing, with Gin saying Reachmedia also invests in tracking the performance of in-store executions to determine which population segments are contributing to sales made.
“The ranking of targeted household against customer loyalty data conveys the sales contribution and return of each household decile and where diminishing returns kick in,” Gin says.
Reachmedia isn’t alone in tracking Kiwi shoppers. In pursuance of better data, BTL has developed a proprietary tool called ShopperTrack, which is specifically designed to track how New Zealanders shop.
In 2015, Raydar developed and launched Shop Window, an ongoing syndicated study—based on information gathered from Frucor Beverages, Sanitarium and George Weston Foods —into the attitudes and behaviours of the New Zealand shopper. There are two components to the research: a standardised study providing context on the New Zealand shopper, who and where they shop and what matters to them; and a focused deep dive into each category of interest and shopper, their purchase triggers and decision making, identifying opportunities to deliver better to the shopper needs.
Revolution Shopper Marketing analyses category design and flow, utilising neuroscience to understand how shoppers interact with environments, asking a series of core questions: Is it natural and easy? Is the product available? Do they have choice? And what value does it create in their world?
Others like Phenomenon use years of influence in the field to provide information, which is shared with clients when assisting with the planning of their activations. In-store sampling, for example, will involve regularly interfacing with tens of thousands of consumers. Opinions are collected and fed back to the client. “A new variant or new packaging innovation, or even product reformulations can arise from consumer comments,” says Hirst.
Size matters
In recent years, marketers are spending their shopper budgets on fewer, but bigger campaigns. As Fuller reports, in previous years Raydar saw a range of smaller, more tactical work. Now the agency is developing campaigns like the Anchor black milk bottle, Weet-Bix All Blacks, V Chat, and Tip Top Better Burger. They’re designed to be substantial enough to cut through and deliver a larger and more lasting return on investment.
However, these larger campaigns do bring the need for greater through-the-line integration. Agencies need to come together to develop work that is disruptive and cohesive and that will achieve a range of different objectives. The Path to Purchase Institute Shopper Marketing Conference in the US last October demonstrated the inspirational work being done globally, providing a rich insight into the future of shopper marketing. It reinforced that agencies and marketers in this space need to keep up with global best practice if they are to continue to succeed.
Fuller believes that there are two important advancements shaping to step-change shopper marketing in New Zealand. The first is the digitisation of the shopper. The exponential rise of mobile partnered with emerging in-store technology will provide marketers with more sophisticated tools for tracking shopper behaviour and delivering more targeted communication. This is a relatively scary prospect for a lot of people, but if done well, and more importantly ethically, it will be incredibly powerful.
The second is data. The data that will emerge from the technological advancements will give marketers an even deeper understanding of their shoppers. It will allow marketers a greater ability to measure what works and what doesn’t and be far more effective as a discipline.
“We already exist in a marketing environment that is especially fiscally cautious,” says Fuller.
As one can see from Unilever globally adopting a zero-based budgeting approach (in which all expenses must be justified), it is looking likely that this will go even further. It will mean a far greater focus on proving effectiveness of work. No longer will ‘hit and hope’ be good enough.
