While 50 high street outlets were closing in the UK every day, Amazon was gaining 400 million visits every month. The combined impacts of the COVID-19 pandemic, changing consumer habits and a shift towards online-only retail has led to a downturn in profits for consumer goods brands.
However, despite these changes, it’s not all doom and gloom for CPG businesses. This new world holds plenty of potential (and profit) for brands that decide to adapt and thrive, rather than letting these changes consume them. So, what does this new evolution look like and how will the fittest survive?
What does the new world look like?
Shifting consumer habits and the convenience of online retail has led to a long-term downturn in high street sales, with the COVID-19 pandemic only accelerating these changes over the last two years.
Although the specifics of how the high street will look in thirty years are difficult to predict, the blueprint for this new world is already starting to become clear.
Changing consumer habits:
Monthly high street footfall has long been on the slide. Except in March and the Christmas season, 2019 saw a drop in monthly footfall compared to the year prior. In a trend that’s been consistent since 2012, 2019 was the first year that saw more store closings than openings in the UK.
Convenience is now the first priority for consumers of all demographics. With even leisure stores like bookmakers and estate agents seeing the impacts of a lack of consumer love for the high street, empty store spaces and shopping centres are increasingly becoming the norm.
Growth in online-first approach:
Consumer demand, clever marketing tactics and flexibility are all factors that have contributed to a growth in online-only retail business models. An online presence is a must for any brand, but the emergence of digital-first marketing has also meant businesses can reach more consumers, more effectively, than ever before.
With tools like social media retargeting, Google ads and localised search, marketing departments are able to pre-empt customer needs and target specific demographics easily. Plus, eCommerce portals and apps have made the online shopping experience more immersive and enjoyable, with the added convenience of quick delivery.
Impacts of COVID-19:
Although the move away from the high street towards online retail has long been on the cards, the COVID-19 pandemic accelerated this change. As well as placing restrictions on people’s movement, the pandemic disrupted consumer confidence and led to a shift in their priorities – changes that look to be long-lasting.
Before the pandemic, simply having physical products in a store was enough to encourage consumers to buy. However, with fewer people returning to city-centre offices, shopping centres and high streets, casual browsing and impulse purchases have significantly reduced.
A greater focus on health and wellness has also impacted what consumers are buying as well as how they buy them. For example, self-care and plant-based products are increasingly growing in popularity. Plus, reductions in household income as a result of the pandemic has led to a lack of confidence and overall drops in spending.
How have CPGs responded?
Some CPGs have sought out opportunities in the changing retail world, including increased digitisation, alternative multichannel experiences and personalised marketing.
After trials in Spain, Zara has used their customer app to link their online and offline store experiences more effectively. As well as providing a 30-minute click and collect service, the app also lets customers view products online and reserve fitting rooms to try them on in-store. Customers can also checkout online while in the store, meaning that all purchases are tracked as part of a seamless shopping experience.
Similarly, moving online has benefited coffee shop brand Grind. Originally a London-based chain of stores, Grind’s online shop helped the brand to connect with customers at home, showcase their super-cool pink, compostable pod products and shift towards a subscription-based model. Giving customers a more convenient offering and attracting new markets with one-off or time-limited offers has proved hugely successful for this brand.
Wellness, health and fitness have become a higher priority for many consumers, and quality fitness clothing brand Sweaty Betty has used its marketing to tap into this trend.
Instead of focusing on the benefits of their products, the brand has built a community and united them behind their mission to ‘empower all women through fitness and beyond’. Showcasing real-life models and creating a range of fitness and wellness content has added extra value to consumers’ lives far beyond what Sweaty Betty’s products offer.
In contrast to these success stories, many department stores have failed to adapt, with the UK losing 83% of these businesses in the last five years. Today, 79 department stores are now open compared to 467 in 2016, with the high overheads of store-based retail and the failure to create an effective online experience being major factors in their collapse.
Debenhams own failure to move with the eCommerce trend and their takeover by online-only retailer Boohoo is just one example of this shift. With empty retail units being transformed into leisure or entertainment venues as consumers seek out a high street experience rather than casual retail browsing.
Turn change into opportunity.
If you’re a CPG looking to grow in the changing retail world, then increasing digitisation, focusing on your values and developing multichannel experiences should be a priority.
Build a digital transformation strategy:
Having a website is no longer enough. To take full advantage of the growth in internet retail, you need to take a digital-first approach and develop a digital transformation strategy. Rather than investing in random digital tools, creating a transformation strategy means you start with the values and aims of your business and set out a plan to position it in the digital economy more effectively.
Digitisation can be the answer to a range of business challenges, whether it’s customer communication, stock management or consumer insights. An effective digital transformation strategy can help you to solve them and is the best way to future-proof your business in the changing retail world.
Stay true to your values:
Today, more consumers than ever are aligning themselves to brands that share their core social, political and moral values. Therefore, to be most effective, brands need to be authentic and have strong-held values. Whether you believe in sustainability, equality or community, getting back to your businesses’ core values and showcasing them to the world will help you connect to your target market more effectively.
Focusing on a personalised approach is also key. Whether you are approaching customers directly or creating a new consumer experience, having true intentions and being personal with a purpose will ensure your success.
Create a multichannel marketing plan:
There are now a multitude of online marketing activities that brands can use to reach new customers. Digital banner ads, paid social media, sponsored content and paid search are just a few of the tactics that can support traditional offline marketing activity.
Again, to take advantage of these tools most effectively, every activity should be intentional and driven by data insights or brand purpose. If you’re a clothing brand that’s trying to reach a younger demographic, then influencer marketing and TikTok ads are two activities to consider. For older age groups, Facebook ads and sponsored content might prove more effective.
Linking your online and offline activity is also key to success. If you fail to provide a consistent experience (with consistent messaging) across all your platforms, then your marketing won’t produce the growth you’re looking for. Regularly analysing your performance data will enable you to make continuous improvements and ensure your marketing campaigns are as effective as possible.
To navigate the online and offline marketing space most effectively, it’s worth getting some expert advice. Whether you want to communicate your brand’s values or get the best return on your digital marketing budget, get in touch with us to see how we could support the growth of your CPG in the changing retail world.