Retail Branding In The New Digital AgePosted : 11 October 20174
The traditional retail industry and associated business models have gone through a significant phase of disruption. The rapid emergence of e-commerce and the evolution of social media platforms as digital shop fronts continue to shake up the industry. Amidst all this change, retail branding has also acquired a new meaning. Three broad factors have redefined the concept and principles of retail branding – emergence of online as a significantly influential channel (both in terms of generating awareness and revenue earning capabilities), branded experiences acquiring more importance than brands and the blurring of the physical and digital world in the brand funnel journey.
Even five years back, retail branding followed the traditional principles of creating and establishing a differentiated brand positioning, bringing this positioning alive across all physical stores and ensuring that the branding is able to positively influence brand equity. These principles have not really changed; instead, it has become more challenging and complex today to achieve the desired results.
Retail branding as a discipline borrows heavily from branding as an overarching domain, but there are some fundamental differences. The aim of any ambitious retailer is to establish its brand as a preferred destination for shopping amidst all the competition. Positioning is strongly influenced by a proposition. This proposition can be defined at different levels, which may include one or more of the following examples:
The new complexity in retail branding
Retail branding is complex due to the presence of dual layered objectives – establishing a differentiated positioning of the retailer and its own line of goods, and secondly, making the positioning attractive enough for successful off take of other manufacturer brands. In the case of luxury retail, the challenge is more onerous as the physical stores continue to be the primary consumer touch point with the luxury brand.
The emergence of e-commerce as an industry has shifted the focus of retail branding from physical stores to that of cross-channel consistency around visual identity, generating perceptions, communication of positioning, and enhancing the customer experience. Retail branding has come a long way from the time when having similar colour palettes on the primary name board and internal branded materials was considered good enough. With the consumer decision journey now criss-crossing online and physical worlds, retailers have to ensure consistent and high quality brand experiences across channels and points of engagement. For example, bad customer experience on the online channel of a retailer may impact sales at physical sites, or in many instances, negatively impact the equity of the whole brand.
Key challenges in retail branding
In today’s world, retail branding implies addressing the following two key challenges:
Online vs. offline brand expectations: Consumers have altogether different expectations when they engage with brands online and offline. This is equally true for retailers. When a consumer is researching or buying a product from an online channel, his or her primary needs are convenience, ease of research (compare, contrast, read feedback & reviews), and the ability to easily access a wide range of products to take a value-driven decision. In an offline channel (physical store), the primary consumer needs are to physically touch and feel the product, to satisfy a specific shopping occasion and to get a more in-depth evaluation of the product. In order to satisfy these different consumer needs, it becomes imperative that branding needs to be consistent across these wide variety of needs and channels.
Technology and sensory driven expectations: When engaging with brands in online channels, consumers are looking for brand experiences that seamlessly transition between platforms and technologies (desktops, laptops, tablets, smartphones, etc.). Superior functionality and ease of use of online channels is a key expectation of consumers, which leads to the need for impressive visual features. In the physical world, consumers are expecting to be impressed by holistic brand experiences. This has been the trigger behind retail stores morphing into experience centers – think Samsung Experience Stores – or even places where you only experience brands (and not having the need to buy them).
These diverse, and sometimes contrasting, needs have defined the evolution of retail branding as a discipline. The successes of brands like Apple, Starbucks, Hermes, Samsung and Disney are largely driven by the superior retail experience they provide. Premium and luxury brands design physical retail touchpoints that have the ability to propagate the same exclusivity perception that the brands stand for. This is not only true for single-brand retailers (like the examples above) but also for multi-brand retailers.
Multi-brand retail is a massive segment, which includes all supermarket and grocery chains. Branding in this segment has also evolved beyond the mundane, but there is still a significant scope for improvement. Multi-brand retail is predominantly a ‘price-tier’ driven segment, but those who have been successful have evolved their branding beyond price-based positioning. Opening more stores as a strategy for growth is increasingly becoming a thing of the past, with pressure from e-commerce and the rising costs of maintaining an expansive physical presence. The focus has now moved to aspects of trust, community, sustainable sourcing, honesty, choice and value for money.
Best practices for successful retail branding
Regardless of whether it is single-brand or multi-brand retail, strong branding in the retail industry requires a comprehensive understanding and appreciation of the following key aspects:
Understanding the evolution of consumer decision journeys: The fundamental premise of branding is to put forward a differentiated positioning at key stages of the consumer decision journey. The way consumers engage with retailers has seen a fundamental shift in the last few years. The decision journey is highly unstructured and non-linear, there are multiple points of infraction and brands can enter and exit the consideration set at any stage of the journey. For effective retail branding, an in-depth understanding of these decision journeys is critical. Branding needs to be strong and consistent across all touch points, convey a differentiated positioning and hold the consumer within its universe (i.e. within online and offline channels).
Keeping on top of global trends: We live in a world where our lives are influenced more by events and people living thousands of miles away from us, rather than our next-door neighbours. The emergence of social media platforms has magnified the pace at which remarks become opinions, opinions become thought-pieces, thought-pieces become voices and voices become trends. Retailers need to stay on top of these trends to be relevant shopping destinations for consumers. The age old positioning of Zara as the doyen of fast fashion is increasingly under threat from startups that have disrupted traditional fashion retail business models. Trends will impact the lines that a retailer should carry. Branding needs to be strong enough to encompass these changes and keep a retailer relevant as its product lines evolve.
Embracing technology driven capabilities: As retailers look at creating and delivering experiences, embracing technology as an enabler of a strong brand is important. The use of digital signs is now commonplace in retail stores, but there is far greater potential. In special Starbucks Reserve stores, arty images are projected on to walls. Each Starbucks Reserve store in the world is designed differently to provide a “coffee theater” experience. Luxury brand Hermes created a virtual e-store to showcase its silk squares, shawls, twills, scarves and stoles collections. Technology is becoming a core element of branded experiences and retailers need to embrace more of it in their branding strategies.
Political boundaries do not exist: Retail is now a seamless global phenomenon. E-commerce has rapidly dissolved the barriers of purchasing and experiencing global brands. Retailers like Amazon and Alibaba have redefined the way global retail business models need to be developed. Consequently, any retail branding initiative needs to embrace a global mindset right from the very beginning. As traditional retailers develop and implement online channels, it is critical to understand the fact that online does not have the limitations of physical retail. Alibaba, for example, has the potential to enter any global market using the scalability factor of its platform. Amazon is rapidly expanding globally using a consistent strategy comprising of a brand name with strong equity, expertise in mastering local level logistics and operational challenges and investing heavily in emotional and functional brand building. We still have not seen similar success levels for traditional physical retailers, which illustrates the challenges of managing infrastructure at a global level.
Personalisation is the new strategic differentiator: Today’s consumers are spoilt with choices and have more power over where and when they want to exercise these choices. Retail brands that do not invest in creating individual experiences risk being pushed down the consideration set or even out of it. Consumers are now expecting personalised experiences even when they are shopping at value or discount-pricing retailers. Successful branding strategies need to be able to provide such experiences at each and every consumer touch point. The retail industry has embraced big data analytics capabilities to create such experiences, but the link between data analytics and branding continues to be weak. There are significant opportunities to revamp loyalty card programmes also, which have immense potential to strengthen brand equity.
Although digital is a potent and disruptive force, retailers should be able to see beyond the glitz and glitter of digital. It is not necessary for every branding initiative to have a digital element. Branding should bring out the strength of the retailer in a differentiated manner, which should also be hard to copy. If the retailer in question has had a strong physical presence, any branding initiative should look at strengthening these assets first (and not rely too much on online channels). Online retailers are experimenting with high-end technology-enabled delivery and fulfilment mechanisms, which essentially act as differentiating platforms (in the absence of any differences in product line ups). Traditional retailers should be careful not to copy positioning platforms for which their brand is a poor fit. It will do more harm than good to brand equity. But one category dynamic that traditional retailers should be aware of is the venturing of online retailers into mass-market product lines (e.g. groceries, FMCG / CPG etc.).
If personalisation is the new strategic differentiator, then consistency in engagement and servicing levels is the new activation mechanism of that differentiator. For retailers, these two factors have assumed critical importance in branding strategies. One without the other is incomplete and does not allow a retailer to fully realise the opportunities that are available.
The key to a sustainable retail branding strategy
The challenge of modern retail branding strategies is primarily around maintaining consistency of positioning and communication across all possible touch points. Touch points have proliferated from mere physical stores to online buying channels available on multiple platforms and devices (desktops, laptops, tablets and smartphones). In addition to buying channels, retailers also need to maintain a continuous online presence for visibility and reinforcement of key positioning elements. Fragmentation and proliferation of media vehicles and the emergence of social media as e-commerce platforms (Twitter, Instagram, Pinterest, Snapchat, Tumblr etc.) means that retailers have more touch points to manage. This multiplicity of touch points makes it more difficult for retailers to have a consistent brand image and identity.
Retail branding in the digital age needs to be anchored in a deep understanding of consumer behavioural patterns and the ability to identify real disruptive trends over fads and one-night wonders. For example, a higher level of consciousness towards health and wellness is a trend, while the fact that everyone is looking for pink headphones may be a fad. Strong retail brands, which have survived the test of time, have been purposefully built over time guided by a strong set of principles. These principles define the vision of the brand, and are immune to the presence and absence of digital commerce platforms. Retailers need to always stay close to their vision, even when it is only a small-scale positioning refresh (and not a large scale brand transformation).
Conclusion: A step change in branding for retail is essential
There has been a rapid evolution in category dynamics, consumer behaviour and need constructs in the retail industry. Consumer engagement with retail is constantly evolving and is being strongly influenced by technology (retail platforms and how consumers access those platforms). But one thing has still remained constant – strong retail brands have survived disruptive changes in the past and will continue to do so. If we were to compare the brand building strategies that established Walmart with those that have established Amazon, we will find lots of similarities. These similarities in strategy, which indicate patient but continuous investment in building a brand identity and image, staying close to its purpose, moving with times and establishing a core equity of the brand, are some of the key characteristics of a strong retail branding strategy.
Any retailer interested in building or strengthening its brand needs to look beyond the number of stores it has, the number of products it sells, whether it has online capabilities, or the price points it sells at, to the overarching purpose and the reasons behind its existence.
Source: Martin Roll