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Complementary to Trend Horizons.
Consumers and Retail
“We want to be for sale where consumers want to buy us,” Ed Shirley, the vice chair of global beauty and grooming at Procter & Gamble, told the CEW Newsmaker Forum audience on Sept. 15, 2010.
And where consumers want to buy their products has become ever more complicated—with new economic sensibilities to access, emerging markets to test, giants ruling the landscape and virtual shopping experiences available at any time the consumer feels the mood to spend. In her “What Now? What Next? What’s Worth It? — How to Get Shoppers Back into Stores Right Now” presentation at Shopper Marketing Expo in October 2010, Wendy Liebmann, CEO and chief shopper for WSL Strategic Retail, said that: “As the economy ekes its way to recovery, shoppers no longer live to shop—they shop to live. They have a new set of entrenched values and a new list of stores on their radar. That means companies need to reconsider everything they do in order to succeed over the next two to three years.”
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So the basic question seems to be: today, how do we engage consumers during their shopping experience?
“There’s a new definition of retail,” said Marc Rosen at his “Looking Back to See the Future” panel during Luxe Pack Monaco. “It’s about rebuilding excitement. Consumers are not enticed to buy solely on what’s new. It’s an experience ripe for new invention. [It] is not about copying [what’s been done], but taking a lesson and timely, sensitive insight into consumers’ lives.”
Maura Cannon, Jennifer Marino, Yumiko Nishikawa and Denee Pearson began their Fashion Institute of Technology The Future Of Beauty: The Future of Retail presentation (as part of their Master of Professional Studies degree in Cosmetics and Fragrance Marketing and Management graduation program) with a critical quote from Marshall Cohen of NPD: “Retail as we know it has failed.”
The team described it as a wake-up call, and they used it as the jumping off point to assess what it means to be part of consumers’ lives moving forward.
Retailers, they said, should leverage honesty and transparency to communicate authenticity while embracing consumer input and using that to drive strategies. “Consumers want to sit in the driver’s seat. It is imperative to trust your customers, and embrace and incorporate their input.” At the same time, they noted, that retailers must also validate consumers’ virtual communities: “It is all about community. Retailers need to help the consumers connect and validate their choices through their network. It is critically important to be a part of their community.”
And though much emphasis has been placed on the online communities, we seem to have reached some equilibrium between online retail and brick and mortars—having gotten past the notion that online retail would be the demise of brick and mortars. In fact, the digital realm has become a very important driver for physical locations. In its August 30 issue, Bloomberg Businessweek noted that virtual and physical retail had been a lopsided battle in virtual’s favor, but pointed out the huge advantage that brick and mortar’s maintain.
“Internet stores enjoy the paradigm-busting advantages of the web, like the ability to personalize deals to shoppers and offer on-the-spot price comparisons,” noted Brad Stone and Barrett Sheridan in The Retailer’s Clever Little Helper. “Offline retailers, by contrast, may never know anything about a shopper who walks in, pays for a single item, and walks out the door.
The authors maintain that “the ratio of people who visit a store and actually buy something is much higher in the real world than online.”
“The bulk of CPG sales still go through brick-and-mortar doors,” said Kevin Kells, national director, Consumer Packaged Goods Industry Team, Google, in a 2009 GCI interview.
And there’s good reason why. In its October 22, 201, Let Your Fingers Do the Shopping feature, the Chicago Tribune cites a California Institute of Technology study suggesting that online retail is not the most rewarding experience for consumers and merchants. The study showed that consumers found more value in—and would pay, on average, 50% more for—goods they could touch. The feature notes that associate professor Andrea Morales of Arizona State University, who researches consumer behavior and social psychology, believes that shoppers do feel more connected with products after touching them.
And that’s before even taking into account the impact of well-trained, engaged retail staff.
“The role counter staff can play in educating consumers cannot be underestimated,” Jean-Jacques Etienne—a consultant, ATN Conseil, who has worked with a number of top global beauty brands—told GCI at LVMH’s October 2010 Scientific Symposium in Paris.
And the digital realm is now being leveraged for the benefit of brick and mortar sales.
“Over the past year tech entrepreneurs have raced to correct this imbalance and extend digital efficiencies to the physical world,” wrote Stone and Sheridan. “Internet services such as Foursquare, Gowalla, Booyah, and—as of Aug. 18 —Facebook have enticed millions to digitally ‘check in’ to real-world locations.”
Online retail—still a viable, healthy outlet in its own right—may be brick and mortar’s staunch ally. And digital mediums and outlet is certainly a huge boon for brand owners.
In “A New Path to Purchase: Influencing the Digitally Enabled Shopper, Before the Store” presented at October 2010’s Shopper Marketing Expo, Tom Conti, president of G2 Interactive, and John Paulson, CEO of G2 US, noted that 76% of purchase decisions are made by shoppers before they even leave home. There are new drivers to retail purchases, notably social media—back to “The Future of Retail” team’s community.
“With social media, we launch products months before they actually hit the shelves,” said P&G’s Shirley.
“Brand marketers are still keenly aware that their online campaigns need to, for the most part, drive off-line actions,” said Kell.
And the branding opportunities certainly grow exponentially. “The Internet makes geographic location irrelevant,” said Lawrence Mortenson, president of LM Consulting, in GCI’s Making the Brand/Consumer Connection (and Sale) Online. “Brands that invest in establishing themselves online have the opportunity to build exposure worldwide.”
Laura Kenney—beauty editor, Fashion and Beauty Channel, StyleList.com, AOL—agreed: “The Internet has the ability to exponentially increase brand awareness.”
The Big Guy
A survey conducted in late 2009 by GfK for Private Label Manufacturers Association (PLMA) demonstrated that consumers have more than the economy on their minds, though they are continuing their search for value and savings.
And Walmart has become synonymous with both in consumers’ minds, and this has swayed some long-standing beauty buying tendencies—or at least what the industry assumed those tendencies were.
“Whether your brand is at Walmart or not, what is happening there and how consumers are spending their time and dollars inside the store is vital to the entire beauty and personal care industry,” Alisa Marie Beyer, founder and creative director of The Benchmarking Company, had said upon the release of her firm’s Pink Report “Women & Walmart: Seeing Through the Eyes of the Beauty and Personal Care Consumer.” “It’s easy to become out of touch with the real beauty consumer. It’s important that we get back to her.”
An astonishing “71% of women shop for beauty and personal care items at Walmart every week,” according to Beyer. And according to the research, women’s opinions on Walmart have changed and old truths no longer apply. Where once she may have been embarrassed to shop for her beauty or personal care items at Walmart, or wouldn’t admit that she was a Walmart shopper, women consumers, today, love Walmart, and are not afraid to admit it. Walmart is an important part of her shopping behavior, and with 18 new beauty truths, the 2010 Pink Report unveils her true thoughts on shopping for her favorite beauty and personal care items there. Today’s beauty consumer has come undone, and she’s operating under a whole new set of truths where convenience, price, value and most importantly (authenticity) are the keys to her wallet.
“Women & Walmart was so important to us because when 200 million people do something each week, it’s critical that we understand what and why,” said Beyer, . “Whether your brand is at Walmart or not, what is happening there and how consumers are spending their time and dollars inside the store is vital to the entire beauty and personal care industry. My goal with this report was to give the folks on Madison Avenue an intimate look at Main Street USA to see what’s really going on. It’s easy to become out of touch with the real beauty consumer. It’s important that we get back to her.”
The Pink Report findings highlight that both Walmart and beauty brands can benefit from understanding several key themes that are impacting women’s lives today as they make purchasing decisions about beauty brands. For example, women view Walmart as their top destination for beauty and personal care purchases—71% of women shop there for beauty and personal care products. And today, Walmart means more to women than just bargains or low prices: 67% of women strongly agree that Walmart offers premium brands for less.
And Walmart is looking to extend its global reach into emerging markets—with The Wall Street Journal, in October 2010, highlighting two such efforts. The retailer currently operates in India through a joint venture (Bharti Wal-Mart Pvt. Ltd., which started operations in May 2009) with Bharti Enterprises Ltd., and looks to grow from its current four India stores to 15 cash-and-carry stores by the end of 2011—with India’s retail regulations (which allow multi-brand retailers like Walmart to only operate wholesale outlets and to provide back-end support to local operators) hindering further efforts. All in an effort to capture a slice of a retail market that has annual sales of more than $350 billion.
In South Africa, Walmart is considering making a $4.63 billion bid for Massmart, which operates warehouse-sized stores. The move, according to the Journal, would give Walmart a head start in sub-Saharan Africa over European rivals Carrefour SA and Tesco PLCs.
As the face of global retail grows more homogenous, there is an interesting effort by other large retailers to maintain a local face as they grow—again, back to connecting with consumers and their community. Read about Macy’s efforts as outlined in Bloomberg Businessweek.
As alluded to in the “The Beauty of Health—or Vice Versa” of “Trend Horizons,” it’s increasingly difficult for a one-dimensional product to compete today—regardless of how good of a one-dimensional product it may be. Consumers expect a lot from their products, as part of the efforts to meet those expectations, SPF is becoming a standard addition to all types of products.
UV damage is clearly connected, a leading cause, to signs of aging—so why not protect while enhancing or addressing other needs, such as moisturization?
A survey commissioned by Neutrogena Cosmetics and conducted by Harris Interactive found that women consumers would rather have coverage and sun protection in their color cosmetics than fashion-forward colors. The survey was conducted online within the United States among 1,018 women ages 18 and older.
SPF in color cosmetics is important to women, as 56% of those surveyed rely on cosmetics with SPF to provide protection from harmful UV rays. The survey also found that 72% of older women wear SPF cosmetic products and makeup year round compared to 50% of the younger women surveyed, indicating that SPF is an important part of color cosmetics formulated for older women.
Regulations and Restrictions
What more could be said about growing regulations and restrictions? I’m sure David Steinberg—an industry consultant, ICMAD board member and columnist for GCI’s sister publication Cosmetics & Toiletries—will never be short of words when it comes to topics such as the Safe Cosmetics Act of 2010 or NGOs, and Carl Geffken, vice president of ICMAD and a consultant, travels the world working to understand and disseminate global regulations and the impact on the beauty industry (Carl has plenty to report at every ICMAD annual regulatory update meeting).
“Will innovation suffer [because of regulatory issues]?” asked Eric Perrier, LVMH’s executive vice president R&D, at LVMH’s scientific symposium in October. “Probably not.”
But, will the industry ever to get ahead in the regulatory game? I don’t think so. It’s a moving target, and is under heavy influence from sources that seem agenda driven. And these sources garner much of the media attention and a narrow version of what’s “bad.” And what is “bad” has become entirely too convoluted, with words such as “natural” and “chemical” having somehow become equivalents of good and bad, for example.
And all the focus is not just on ingredients. The U.S. Federal Trade Commission (FTC) is seeking to make revisions for the “Green Guides,” which are designed to “help” marketers avoid making misleading product claims. The agency claims the new revisions will make claims easier to understand and use. Revisions to the guides include guidance for product claims such as “green,” “eco-friendly,” and “free-from;” and seals of approval.
I find this particularly interesting in how it pertains to the natural/chemical divide, how some exploit that divide and to agenda-driven special interests.
On the surface, the proposal is good for consumers and may make it simpler to speak to consumer expectations.
“In recent years, businesses have increasingly used ‘green’ marketing to capture consumers’ attention and move Americans toward a more environmentally friendly future,” said FTC chairman Jon Leibowitz in a commission press release. “But what companies think [these] claims mean and what consumers really understand are sometimes two different things. The proposed updates will help businesses better align their product claims with consumer expectations.”
In addition, the revised guides advise marketers how consumers are likely to understand certain environmental claims, including that a product is degradable, compostable, or “free-from” a particular substance.
However, the proposed guides do not address use of the terms sustainable, natural and organic. So, how far have we come? It seems like plenty of questions and grey areas will remain.
In addition, the revised guides caution marketers not to make blanket, general claims that a product is environmentally friendly or eco-friendly based on findings from the FTC’s consumer perception study confirming that such claims suggest the product has specific and far-reaching environmental benefits. According to the group, very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate.
Thinking about the past couple years and the direction certain realities may take in the coming year, I wondered about a common thread, and "fear" seems to be a nice, one-word way to make all the connections.
The economy scared the hell out of most of us, losing control of brand messaging as social media's power becomes clear has not been the most comfortable proposition and what does the future hold with propositions such as the Safe Cosmetics Act of 2010 on the table?
LVMH’s Perrier also used the word "fear" as a shaper of the industry in his presentation, reinforcing my inklings, and his use reinforced his overall positive message (specifically about innovation), and I think, too, that fear is not necessarily a bad thing—if harnessed and applied in the right way. It cannot lead to panic, but it should lead to a gain in knowledge—in turn leading to better business and stronger brands.