Shopper Marketing - May 2018 - 19

SPECIAL REPORT

MAY 2018 SHOPPER MARKETING

ment. Much of the current buzz is around adding
store features that provide some new convenience or strike the shopper's fancy - things like
using artificial intelligence tools including chatbots to improve communication between employees and customers, or virtual-reality enabled
devices to create a more interactive and threedimensional experience between customers and
products. "These elements on their own do not
make a store," cautions Munk.
Instead, the agency advocates using technology to learn more about consumers and to build
a platform from which to launch more meaningful and personalized "data-enhanced" experiences. "Technology will exist to enhance the
shopper experience, but the best use of tech is
about increased ease, inspiration and personalization," says Munk. "It isn't really about the tech,
but about the results of tech." He argues that all
operators can borrow cues from fashion retailers like Montreal-based menswear brand Frank &
Oak and women's fashion brand Revolve, both of
which are combining high-tech features with data
analytics to engage with customers in potentially
transformative ways.
Amazon too, of course, is now bringing its powerhouse data machine and vast analytics expertise
into the brick-and-mortar space. At an Amazonowned bookstore in the Wrigleyville neighborhood of Chicago, books are set on shelves with
covers facing outward, not only for easier viewing
but also so that customers can easily scan a bar
code that delivers reviews and other information
to their smartphones. Dedicated areas are given
to books on displays arranged by star ratings,
while the overall layout features generous open
space, modern finishes and an Echo Dot station.
Going forward, Amazon may well bring a similar
kind of data-driven merchandising approach to
its Whole Foods stores, where the activation to
this point has concentrated mainly on promoting
lower prices.
Marketers can also look to alternative channels for inspiration. At the new Delta terminal at
New York's LaGuardia airport, large sections are
devoted to high-quality QSR-style commissaries
with self-checkout kiosks for faster service, while
chic restaurants feature high-tech conveniences
like individual iPad stations for general browsing,
menu selection and ordering. "These kinds of innovations not only raise the bar of what consumers expect when they travel, but it bleeds over
into their broader set of standards and expectations for all retail-related experiences," observes
Highland.

Getting Smaller, Going Local

From big-box retailers to supermarket chains, retailers are accelerating the trend of branching out
into new store formats. Kroger's Fresh Eats MKT in
Ohio and H-E-B's Central Markets in Texas are two
noteworthy examples of the shift toward smaller,
localized and/or specialty formats with personalized assortments and services built around individual community preferences. Many of these bodega-inspired stores are located in urban or exurban
areas and offer a level of convenience and flexibility that cookie-cutter superstores cannot match.
"The days of dropping a 150,000-square-foot box
into a suburb are waning," says Highland. "Retailers are reimagining their assortments based on
smaller footprints and are asking themselves: How

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do we show up where our shoppers are? They've
begun to accept the idea that it is not necessary to
make every item available under one roof."
By no means are these simple solutions, however. Retailers face a variety of challenges in taking
on new store formats. These include:
n Assortment. Generally speaking, less is more.
Shoppers do better with fewer choices that are
curated for them. They tend to buy more and are
happier overall with the shopping experience.
n Diversification. In addition to determining
the ideal size and format for a given location,
a retailer must decide whether to offer some
sort of a service, educational component or
entertainment feature that helps drive traffic.
Walgreens, for example, is piloting a new optical products and services section in its Chicago area stores in an attempt to expand the
retailer's role in shoppers' lives.
n Merchandising. Creating a curated assortment in the context of a truly local experience
requires an agile approach to merchandising
- one that is informed by data and insights
into customer preferences - to keep shelves
properly stocked. Smaller and more curated
stores have to be managed better because a
single out-of-stock is a higher percentage of
the total SKU assortment in smaller stores.
Within existing formats, retailers are competing
harder for younger customers by prioritizing different parts of the store. For example, recognizing that Millennials tend to shop the perimeter of
grocery stores, many retailers are placing greater
emphasis on sections like fresh foods, seasonal
products and beer and wine. "This creates a vacuum in the center-store and an opportunity to call
out key CPG categories like beauty, baby and pet
food in which to create more impactful branded experiences," notes Trank. For instance, it is
common now for large chain retailers to feature
enhanced beauty/personal care sections with
dedicated customer service personnel and more
prominent marketing and promotional campaigns
by individual brands.
These kinds of advancements are table stakes
in an industry where unprecedented levels of
competition and channel blurring are allowing
only the strongest retailers to survive. With now
even 7-Eleven offering "restaurant quality" meals,
there's no limit to how far any given retailer can
encroach into another's territory. "What we're
seeing now all over the retail sphere is the blurring
of lines between selling and experiencing," says
Munk. "The old brands don't have a lock on consumers, and the new brands are fighting for both
perceptual and habitual space wherever they can
get it. It is going to continue to be terrifying for
the brands and retailers that resist change, and
very exciting to be a consumer and shopper, in
the years to come."
Against the drumbeat of negative news coverage, Munk and his colleagues remain optimistic about the future of brick-and-mortar retail.
"Physical retailers are still very important to
completing the customer experience," says Manikas. "Stores provide a level of service and offer
a sense of community, exploration and discovery
that - at least to this point - cannot be replicated
online."
Editor's note: Part two of this series will discuss
the resurgence of brands at retail. It will be published in the July issue of Shopper Marketing. SM

19

FIVE RETAIL
PREDICTIONS
Brands without experiences will
fade. Research shows that the vast

majority of consumers will pay more
for a better physical retail experience
and that products and services are no
longer enough to create a meaningful
differentiation. Staging experiences that
create sharable moments and spaces is the
only way to establish premium offering.

Stores will find new ways to become
more tangible. The urge to touch and

feel a product before making a purchase
will keep shoppers heading to stores -
even as the online experience gets better.
Whether it's in food, fashion or home repair,
stores that successfully execute tactiledriven strategies through trial, demos,
classes and videos will have the edge.

"Phygital" will dominate. Technology
will grow, but largely invisibly - through
increased use of personal digital
assistants, for example. In two years,
half of all searches will be conducted by
a voice-enabled device, per comScore,
and voice commerce in the U.S. will
explode over 200% in the next five years
to become a $40 billion industry. By
2027, 92% of front-line sales people can
be replaced by a machine, per an Oxford
University study.

Risks will be rewarded. Retailers
have to live up to the "guest" promise:
Make the shopper feel happy to be in the
store. Think less about conversion and
more about creating brand converts.
Use innovative merchandising solutions
to tell a story, create heroes and rethink
category norms. In this way the idea of
physical retail will begin to morph into a
more liberal definition of what a store is,
and what it can do in our lives.
Stores will become media. Call it
Showrooming 2.0. Retail will ultimately
become a marketing function, not a sales
function, predicts author Doug Stephens.
The power of a physical experience to
create a lasting brand impression has
almost no peer in traditional media, and
that experience is valuable to brands.
In addition, Amazon and possibly other
tech giants will continue to expand into
brick-and-mortar retail, creating robust
extensions of their online delivery/
subscription services and forcing
traditional retailers to come up with more
impactful ways of using the physical store
space.

FCB/RED is an award-winning, top-ranked retail agency specializing in shopper marketing, brand engagement,
environmental design and digital to physical commerce. The agency exists to improve the lives of shoppers. From
innovation to implementation, FCB/RED provides strategic perspective and 360° tactical breadth to ignite the
shopper experience. In 2017, FCB/RED acquired top-ranked environmental design firm Chute Gerdeman. Together
they offer world-class, seamless solutions that holistically address the needs and desires of today's in-control,
omnichannel shopper in 80+ markets. Visit them at fcbred.com and chutegerdeman.com.


http://www.fcbred.com http://www.chutegerdeman.com

Table of Contents for the Digital Edition of Shopper Marketing - May 2018

Contents
Shopper Marketing - May 2018 - Intro
Shopper Marketing - May 2018 - 1
Shopper Marketing - May 2018 - 2
Shopper Marketing - May 2018 - Contents
Shopper Marketing - May 2018 - 4
Shopper Marketing - May 2018 - 5
Shopper Marketing - May 2018 - 6
Shopper Marketing - May 2018 - 7
Shopper Marketing - May 2018 - 8
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