It’s never been easier to connect with the end consumer. The advent of the internet and social media means that brands and retailers can get closer to their customers like never before.
Multiple touch points allow them to connect on a number of levels, at different times, and at different places and enhance the ability for customers to connect with their preferred supplier.
Historically, the connection points were quite simple; at brand level the marketing effort was focussed on driving end consumers into a retail partner environment where the retailer could maximise the sales created by the brand push.
The brand benefited by increased wholesale business through the retailer and the retailer benefited by the brand doing their marketing job for them.
Times are changing
But over time things have changed.
Retailers began to realise that, thanks to the effort of the brands pushing consumers into store, they did not necessarily have to maximise conversion rates specifically on that branded product. Why not push the consumers to similar products where they could enjoy increased margin.
Sports retailers began to develop own brand strategies to fill these gaps thus using the “mega brands” as the marketing push to get consumers into store and then using their own brand propositions to entice the consumer.
Of course, in many other industries, this sort of activity has been happening for some time.
Supermarkets now offer their own gourmet food ranges as good as restaurants, or even better when you can assemble them at home. They can bring together “solutions” from multiple categories under the same brand. They can offer services, such as purchase advice or after-sales support, complimentary services and more. And just like Netflix is able to use its deep knowledge of people and their behaviours to personalise its movies and suggestions, so retailers can leverage loyalty card data and instore tracking to offer more relevant and personal solutions.
“Private labels” have become more effective than classic brands – and with a little nurturing have the opportunity to innovate and grow in ways that their previously esteemed rivals cannot. They can also be much more profitable, flexible and value-creating for their owners, the retailers.
As this retail strategy has evolved brands have begun to respond and, coupled with the ability to interact directly with the end consumer rather than through the retailer, have begun to push direct to market strategies.
Marketers across a wide range of industries are actively working to develop Direct-to-Customer (DTC) models that directly engage customers using social, mobile, and digital channels and devices. “The number of manufacturers selling directly to consumers is expected to grow 71 per cent this year to more than 40 per cent of all manufacturers. And over a third of consumers report they bought directly from a brand manufacturer’s web site last year,” according to Forbes.
This shift is also being reflected in our own sporting goods industry and is having a profound effect on retailer patterns.
Nike are using “portable” ecommerce experiences, mobile apps with in-store beacons, and out-of-home digital media networks to continue the conversation started on e-commerce web sites into their own stores and deliver an expanded choice of personalized offerings at the point of sale.
The goal of all this effort is to more directly support, enhance or accelerate the customer journey by adapting to changes in customer behaviour and differentiating the brand experience.
Some brands seek to supplement the retail, partner and promotional channels they rely upon with education, personalised experiences and decision support but more and more are trying to displace traditional retail channels that keep them from learning more about their customers. In either case, the results of a well-executed Direct-to-Customer strategy can be measurable and disruptive.
So where does this, for example, leave a small independent sports shop? They don’t have the footfall or customer base to justify a private label range and they cannot carry a wide enough product range to either offer the consumer a credible choice or compete with the brands DTC strategy.
We are seeing it time and time again within our own customer base as retailers across the sector struggle to come to terms with these seismic shifts.
Of course, this changing landscape also creates additional pressure on the traditional retailer as, due to the ease with which one can connect with the end consumer, niche homespun brands are entering the fray causing more disruption.
If I look just at the goalkeeper glove market place, something with which I am very familiar, then the latest estimate suggests that there are over 200 “brands” just in the UK alone. While it is true that with the majority of these business there is very little innovation and core product development, nevertheless with such a large number of brands and products out there there is, inevitably, market disruption.
We are in a time where business models are evolving so rapidly that it is vital for both retailers and brands to look ahead.
Consumers have choice like never before. Brands are becoming retailers and retailers becoming brands, and traditional routes to market are being challenged. Whichever side of the retail fence you are on it is clear that you must adapt to survive.