Design Trends . POPAI. 2010
Global Trends in Marketing at-Retail
Presented by
Robert Liljenwall
The Liljenwall Group
Global Trends in Marketing at-Retail
“If you’re not in chaos, you’re dead”
Tom Peters
Avoiding Chaos….
An African proverb translated into Mandarin and posted on
a bulletin board in China….
• Every morning in Africa, a gazelle wakes up.
• It knows it must run faster than the fastest lion or it will
be killed.
• Every morning a lion wakes up.
• It knows it must outrun the slowest gazelle or it will
starve to death.
• It doesn’t matter whether you are a lion or a gazelle.
• When the sun comes up, you better start running.
Source: Thomas J. Friedman, The World is Flat
The World is Flat,….And Smaller, and a Lot Faster
By Thomas Freidman..
10 Flatteners that have made our world smaller
#1 Berlin Wall, Windows
Wall down, Windows up
#2 Netscape goes public
WWW launched
#3 Workflow software
We’re all connected
#4 Open sourcing
Source codes open
#5 Outsourcing
Overseas is “in”
#6 Offshoring
Let’s move to China
#7 Supply chaining
W-M factor
#8 Insourcing
Vertical integration
#9 In-forming
Data mining, etc.
#10 The steroids
High tech explosion
Is it all about the 35 hour work week?
Beyond the World is Flat
• Global recession
• Nation failure (The PIGS) – Portugal, Italy, Greece,
Spain
• Financial meltdown
• Web 2.0 changes the playing field
• Social Networking -- like it or not
• Global resource management
• Going green
• Customer-driven design
10 Retail Innovations….key to 2010
• Catch a wave
• Retailers must apply creativity
• Solve my problem
• Consumer-centric approach…add services
• Do it for me
• Conversion from DIY to DIFM
• Help Me Choose
• Choice/info overload…opportunities to sample;
online integration
• Come to Me
• Mobile retailing…go to customer
Study: Retail Forward, 2009
Consumer-Driven Opportunities…
• Enhance My Experience
• Bringing brands to life
• Make it Easy
• Innovative process, service, design (USCAN)
• Do It My Way
• Getting customer involved -- deeper, design
• Help Me Connect
• Relationship building -- customers, retailer
• Speed it Up
• Immediate gratification…”now” is better
Study: Retail Forward, 2009
Greatest Invention since printing press: The ‘Net
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Brazil -- 344 of 1000
China -- 224 of 1000
Syria -- 176 of 1000
Greece -- 460 of 1000
Germany -- 670 of 1000
Netherlands -- 829 of 1000
United States -- 732 of 1000
Sweden -- 820 of 1000
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E-information; e-Education; e-commerce, e-connectivity….passionate
believers…”can’t live without!”
Source: Internet World Statistics, 2009
The Net Grows
• 1.6 billion online; 658 million in Asia; 251 million in NA
• $1 trillion spend online by 2012
• m-commerce will reach 10%
• Broadband – highway to retail success?
• US – 98% with broadband; buy online
• Japan – 96%; UK – 95%
• Top 500 largest web retailers grew 8x faster than
overall retailing market; up 11.7% over 2007
• Top 500 Web-only merchants grew 20.7% in 2008
• Consumer brand mfgs. grew 15.3%
• Retail chains online biz grew 12%
• Amazon grew 5x faster than rest of B2C, +30%; $20B
Source: Internet Retailer Study, 2009
Digital, Digital, Digital
Social Media….getting personal in a big way
You may not like it, but it’s not your choice anymore.
Remember the 7-second Rule
Marketing at-Retail Decision Making
Shopper Unplanned Decision -- Updated
Metro Group – 2009 consumer study
Italy – 42%
France – 76%
Germany – 50%
Denmark – 77%
Belgium – 70%
Holland – 80%
UK – 75%
Netherlands – 2007-09 POPAI Benelux study revealed:
• 50% in food retail vs. 70% previous finding
• Survey revealed wide variance with respondents
entering the store vs. after shopping experience
• Drug store respondents measured 69% ISDR
• Consumer electronics – 69% ISDR
UK Shopper Explained Ltd. – 70% ISDR, 2008 study
Shopper lists…who makes them?
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Spain – 34%
UK – 33%
Portugal – 37%
Netherlands 43%
France -- 45%
Italy – 51%
Germany – 57%
US – 60%
Greece – 70%
Source: Metro Group 2009
Bottom line: POPAI’s original research valid
Shopper behavioral studies confirm POPAI’s original
research in 1995-96. Studies performed during the past
two years (2007-2009) by POPAI Benelux, Shopper
Explained Ltd., a UK consumer research firm, and by
Metro Group demonstrate that the “in-store decision”
remains in the range of 60-70%, depending on the
venue, retail category, and country/culture patterns.
There will always be studies that reflect variances with
other research because of venue, time, methodology,
country and culture.
Global Trends in Marketing at-Retail
10 Global Trends in Marketing at-Retail
1. Survival and re-invention
2. Consumers’ increased power of choice
3. Retailers win the battle
4. Brand marketers become retailers
5. Technology explodes at all levels
6. Measuring marketing -- not optional
7. Right sourcing
8. Building brand equity
9. Global expansion
10. Partnering -- sucking up the food chain
#1 -- Survival and Re-Invention
Economic chaos reigns across all borders
• Recession, global financial melt down
• Changing point of sale – social media is the Elephant in the room
• Loyal customers switching brands,
• Lost customers – via consolidation, shrinking base
• Diminished cash flows, reduced work force, downsizing is “in”
• Increased costs – production, distribution, operations, taxes
• Downward pressure on pricing, “How low can you go?”
• Dramatic shift in customer purchasing habits – hmmmm?
What to do?
• Re-invent yourself & your company
• Think outside the box
• Innovate and re-think ‘business model’
• Don’t give up -- stay positive
• Turn-around -- late 2009 or 2010 maybe?
Challenging times or just plain chaos?
• 50% shoppers spending less in all categories; 62%
spending same or more in grocery
• Consumers spending less across all demographics
• 87% are switching to brands or going to private label
• 68% of shoppers staying home vs. going out
• 50% brought special occasions or nights back home
• 100K + wage earners more negative about economy
than all other wage earnings
• Retailers/manufacturers have to monitor the economy –
as it relates to their brands/category; overall impact
Miller Zell 2009 Shopper Behavior Study
Store closings…retail shrinks
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General Motors -- 2,639
Chrysler – 789
Circuit City 567
KB Toys – 461
Ritz Cameras – 400
Starbucks – 300
Waldenbooks – 240
Jones Apparel – 225
Van Heusen – 175
Ann Taylor 163
Source: About.com. B. Farfan
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Popeye’s – 150
S&K Famous – 135
Advance America – 130
Boater’s World – 129
Pier One – 125
Eddie Bauer – 121
Office Depot – 118
Rite Aid – 117
Zale – 115
Gap -- 100
Who is next?
• Blockbuster in facing Chapter 11
• Barnes & Noble closes stores, replaces
CEO with tech-savvy head of their
interactive
• Brick/motor stores are facing same fate as
newspapers….real estate is getting too
expensive.
#2 Consumers exert the ‘power of choice’
• Consumers have many choices
• Point of sale shifts to wherever ‘they are’
• Products, styles, prices
• Brands -- national or private
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Remember: Customer controls revenue stream
Technologies create new distribution channels
More discriminating, sophisticated
Exercise power at Point of Sale
Demand service, quality, price
Matching price/value
Immediacy and relevancy
Entertain me….experiential
Switch for a good reason -- like price;
loyalty diminishes
Apple and Build-a-Bear….shopper engagement
The Shopper is Not Just a Consumer
Your New Partner…..
Customer Inc. is a Banker
Makes judgments about price and value
Customer Inc. is a Merchant
Responds to goods and contemplates “home store”
Is susceptible to sensory & rational persuasions
Customer Inc. is Operations Management
Convenience and efficiency highly important
Customer Inc. is, still and also, a Consumer
Assesses products based on familiarity
Pantry purchases replenish planned/past
consumption
Curiosity evokes hunting behaviors
Demand Generation -- focused marketing
New generation….Demand Generation
#3 Retailers winning battle
• Retailers push ahead of brand marketers
• 61% surveyed feel they hold the ‘upper hand’
• Walmart is still the elephant in the room
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Drives vendor behavior -- everywhere
Reduces POP from 700 to 300 displays
Sales $409 billion; profits up to $99 billion
Ending “Clean Aisle?”
• Retailers take control of their space
• Control the shopper’s market
• Seizing control of customer data
• Replacing traditional data mining vendors
• Brand marketers at increased disadvantage
• Pushing private label
• Control space; lower overhead, Increased profit margins
Retailers expand private label power
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Explosion of choice...trends changing fast
Consumers “trust” major retail brands…
Private labels profits lure retailers
Under trained, under utilized, under motivated retail
sales force…dumbing down retail
Pressure between brand marketers, private labels
Top brands will not suffer…consumers will demand top
two or three…below that, gone
Tesco, Wal-Mart, Loblaw, Sainsbury
Trader Joe’s -- America’s favorite
Private Label Market Share
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UK – 42%
Belgium – 41%
Germany – 38%
US…
• 20.8% Supermarkets
• 13% Mass
merchandisers
• 12.6% Drug
• Total volume: $51 billion
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France – 31%
Netherlands – 25%
Canada – 22%
Spain – 32%
Poland -- 8%
Denmark -- 25%
More than $55 billion in sales is up for grabs by 2010
for private label growth according to PLMA.
#4 Brand marketers fight for control
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Brands fight defection:
• 33% of brand loyal customers
depart; major concern
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Leveraging their own brand equity
by going retail
Still own the customer -- forces
stores to carry brands
Proctor & Gamble #1 or #2 in 28 of
36 categories
• “#3-5 brands in a category will lose
out to private labels…”
Bill Smith, Proctor & Gamble
Former Chairman, POPAI
P&G’s powerhouse brands
Apple personifies brand marketers’ response
• Apple is world’s highest
grossing retail store at
$4,000 sf.
Apple sales up 8%; profit
up 15% for 2008-09
• Clean design, innovative
products, experiential -every product
#5 Technology -- the Digital Revolution
• Occurring in all market segments
• Brand marketers, retailers, vendors
• Technology heavily impacts consumer shopping
patterns and packaging
• Faster, more robust computing technology
• Imaging technology (flat screen…obscenely so!)
• Display and presentation technology
• Data mining and better, focused research
• Staying competitive – lowering costs
What’s the goal here? Meet customer needs/wants
and extract more $$ from their wallets
Retail Darwinism
• Web-based collaboration
• Know the customer -- demos are not enough
• Build data infrastructure to collect/analyze data
• Global language XML – “lingua franca”
• Using the Internet as the data conduit – to/from
• Learn how to use the data -- Biggest Challenge
• Cycle compression (new product development)
• Product-life cycle shortens
• Value expectations force quicker development
• Shareholder demands vs. consumer demands
Presentation Technology
• “Clienteling”, experiential retailing
• Interactive consumer experience
(Apple)
• “Grandualizing down” to the
individual customer
• Loyalty program expansion,
intensive marketing
• POP/POS blurring
• Self-check out up 47% (USCAN)
• Cash Wrap and security advances
• Getting humans less
involved…self-serve
• Customer “adopting” new
technology(ATM effect)
Presentation Technology
• Personal device integration
• iPad and Kindle -- POP/POS/POC
• Mobile Commerce
• Symbol – hand-held scanning devices
• Tells shopper where
the discounts are
• Magellan – smart card displays
• V-POP -- “drive by” loyalty displays
• Target consumer buying habits by
product
• Cross merchandising, cross promotions
• Social Networked Retailing -- viral
marketing
• Staying connected: Facebook, My
Space, Linkedin, XING, Twitter
Presentation Technology
• Digital printing
• Increased, faster use of large-format printers
• Strawberries on sale in Paris
• Pushing store brands – pre-set templates
• Digital signage
• E-ink – instant signage, Mag-Ink, I-Open
• DOW – electronic paper
• Signs
• Issue: Who pays for it?
Vapor-ware
Interactive Digital Signage: control by gesture
GestureTek’s display –
costly replacement for
touch-screens
inside…but interesting
potential for windowbased displays
LightSpace
interactive
flooring …
Moving up the
retail wall?
Distribution/Functionality Technology
• Marketing at-Retail Supply Chain Management
• Wal-Mart RFID program
• All vendors eventually will be required
• Focus shifting to at-Retail
• RFID Monitoring – 40% of Marketing at-Retail never
“up”?
• WWWMD….What Would Wal-Mart Do factor
• Vendor – EID Passport/Pristine
• Marketing at-Retail tracking – Goliath Solutions
• Functionality
• Better technology – longer, stronger, thinner
Other technology trends
• Interactive kiosks
• Retailer and brand marketer sponsored
• Ad revenue and transaction-based kiosks
• Difficult to justify ROI
• In-store television/plasma displays
• Retailers use for environmental
• design…Wal-Mart TV…better
• Even Grand Bazaar has it!
• Booming Internet presence
• Up to 90% market share in major categories;
• Shifting sales from store to PC, PDAs, phones
• The iPhone ‘factor’ -- fad or trend?
#6 Marketing = investment; not an expense
• Goal -- to optimize marketing budgets through ROI analysis
• Recognize trend for increased intelligence before you spend
the money (IMC)
• Research platform begins before you spend the money
• Parties get lost in process…focus on wrong outcome
• Avoid price negotiating traps
• Maintains alignment accuracy throughout process
• Methodology from proven ‘Stage Gate Process’
• Collaborative framework
• Create customer value
• Optimize technology
• Improve reliability of cost/benefit forecast
Source: Sandgren Consulting
Do your homework -- through ROI analysis
• Utilize proven ROI formula
• Integrated Marketing Communications points to increased
use of retail promotions
• Measuring Outcomes…not just Outputs
• Marketing at-Retail plays a key role in IMC
• Cross-functional teams work to maximize retail sales, across
all distribution channels
• As Marketing at-Retail becomes stronger, measured
medium, it becomes more important to media planning and
budget allocation
• Gaining customer insight to needs and wants -- that’s the
goal
IMC is a full-fledged business strategy…not just a
marketing function!!!
#7 “Right Sourcing”
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Not “in-”, “out-” or “near-sourcing”…but “right source”!
Pressure on everyone to lower costs
Monitoring is becoming evolutionary process…
Capabilities, quality expanding in Asia
• Data management, design integration, logistics
improve
• Sophisticated vendors-supply chain established
• Challenge – delivering the benefit of reduced cost within
lead time and transportation logistics
• Local production at “offshore price” (It’s possible….)
• Developing strategic alliances in different countries
• Strategic alliances, joint ventures, consolidations
#8 Building Brand Equity
• Everyone has a brand to build and protect
• Getting lost in the clutter –
• Retailers becoming brand marketers
• Brand marketers becoming retailers
• Marketing at-Retail vendors/suppliers struggle to
create unique brand and differentiation
• Pushing retail brand – long-term strategy
• Differentiate or Die! Please!!!!
Remember the 7-second Rule
The Explosion Of Choice (US example)
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Vehicle Styles
Frito-Lay Chips
Breakfast Cereals
Web Sites/Domains
Radio Stations
Amusement Parks
1970
654
10
160
0
7038
362
2001
1,212
123
340
40mm
12,358
1,174
Source: Jack Trout, 2001
The point is……segmentation and differentiation
Top 10 Global Brands
#1 Google
#2 General Electric
#3 Coca Cola
#4 China Mobile
#5 IBM
Source: WPP/Interbrand 2009
#6 Apple
#7 McDonald’s
#8 Nokia
#9 Marlboro
#10 Vodafone
Scramble for brands
• Magnetism of brands…
• Brands build nation/states…3rd world to 1st world
• Abu Dhabi
• $500 million for Louvre…$200 million/year
• $150 million for Guggenheim Museum
• $80 million for San Diego Zoo
• Dubai
• $150 million for Harvard Medical School
• $45 million for ‘Tiger Woods’
• China…relies on outside brands…not building their own
• The best brand-building opportunity in the world
today
#9 Challenges of Global expansion
• Building an Integrated Marketing Communications (IMC)
across borders
• Efficient, effective marcom program
• Brand convergence -- synergistic/fusion
• Securing trademarks in foreign countries
• Assuring global “presence”
• 40% of Marketing at-Retail never arrives on the “floor”
• New technology to overcome this…
• Goliath
Global Retail Development Index -- 2008
Global Expansion -- 2009
Global expansion – some peaking, some not
Global Expansion
• Marketing at-Retail producers, vendors
consolidate…example
• Respond or else
• Beachhead marketing
• Producers create their strategic alliances in many lands
• ‘Whatever’ it takes to win the account
• Closing down, moving on, moving out
• Retailers establishing their “own” network of local
suppliers/vendors to meet their local needs.
• Adapting to local cultures by acquiring local
companies
#10 -- Partnering – getting, keeping customers
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Partnering is ‘not just a nice phrase’
Becoming part of your client’s Business Model
Must be a ‘member of the family’
You must become a valued member of the food chain
• Provide research, know the customer
• Work from inception through post research
• Know the “brand” – and know your brand…
• “What am I getting for my ‘spend’?” ANSWER THAT.
• Impact your client’s business model…create a permanent
bond…they don’t move without you!
• Relationship marketing is about building a relationship!
Remember the 7-second Rule
In conclusion….
• Global financial crisis will not be resolved any time soon
• Pressure on pricing, keeping customers
• Technology will continue to have major impact, but who
pays?
• Wal-Mart factor at all levels
• Super markets will have a tough time surviving
• Private labels will not supplant major brands -- but remain a
serious threat to level 3-5 brands
• Retailers will squeeze POP space, permanent on rise
• “Right” sourcing is the best answer
• ‘Drilling down’ to customer insights; customer wants/needs
• Being a ‘member of the family’ will always have its rewards…
Remember. the important Brand is “YOU”!!!!!!!!!!!!
“If you’re not confused, you haven’t been listening.”
Tom Peters
Thank you!
Robert Liljenwall
The Liljenwall Group
Mobile: 949-422-7213
Email: robertliljenwall@mac.com