A new era for retail: soul-searching and the cost-of-living crisis

A new era for retail: soul-searching and the cost-of-living crisis
Opinion: Strategy Leaders

Retailers, it’s time to connect with your customers, become more personal, embrace sustainability, and infuse creativity into your brand, writes Havas Media UK’s head of strategy.

The nation is hurting with ‘permacrisis’ (the Collins English Dictionary 2022 ‘word of the year’) becoming the new normal. A third of people report being personally affected by at least one crisis every day, and 50% of those are feeling the effects in a variety of ways.

But it’s the cost-of-living crisis that is hurting the most, tightening people’s pockets unlike anything we’ve seen in generations. Given a third of consumer spending goes through retail, this matters.

Change is a must, but this has been the case for a while as the sector has navigated its own state of ‘permacrisis’ over recent years—the rise (and more recent faltering) of ecommerce, challenger disruption, Covid closures, record volume decline in 2022, and now a cost-of-living crisis.

Chatting to Chris Marshall, JDE’s Head of Media, recently, he put it well: “Clearly what is working today in many cases won’t be the blueprint for future success.”

So, what can retailers do to accelerate change, address big-ticket challenges, and capitalise on the emerging opportunities that do exist? How can brands finally wake up to the future of retail?

At Havas, we believe cultivating meaning creates competitive advantage for brands and is better for business and the world we live in. This is more relevant and important than ever. Drawing on insight from our recent Meaningful Brands study, I propose four strategic areas on which it is imperative for retail brands to focus to improve their fortunes.

More connected: how brands connect with people

A recent survey by Boston Consulting Group found that 83% of companies could not make connections across consumer touchpoints. With the wealth of means by which businesses can connect to potential and current customers today, this is as staggering as it is alarming.

While challenges exist in the sector, there remains a huge amount of energy and dynamism, both ushered in by and shaping new consumer behaviours. Marketplaces are mainstream. Social commerce is now used by the majority of 18-24s. And DTC continues to grow as a distribution channel, with 27% of UK consumers prefer buying direct in 2023 versus 5% in 2022 (Salsify Consumer Research).

Borrowing an articulation from my colleagues in Havas Market, a consumer might spot your brand on TikTok, follow it on Instagram, research it on Amazon and buy it in store – one unified experience for the consumer but disunited for the brand. Understanding how consumers connect with your brand across multiple touchpoints is key.

More personal: how people connect with brands

What if your brand disappeared and no-one cared? Because nearly three-quarters of people feel that way about brands. Retail is the most meaningful sector in our study in terms of its impact and relevance on our everyday lives, but it underperforms on personal relevance.

Nevertheless, opportunities exist, and the retail sector shows relative strengths in some fertile areas of personal relevance. Attributes such as ‘inspires me with new ideas and possibilities’, ‘gives me a sense of happiness, and ‘helps me express myself as an individual’ are abound with room to flex and explore.

The opportunity is for brands to become more personal in their behaviours — not just generically but with a real appreciation of how those brand behaviours align with what matters most to people.

More sustainable: how brands can become platforms for good

The British Retail Consortium estimates that the UK retail industry contributes about 215 metric tonnes of carbon dioxide through the lifecycle of goods sold and a further 50 from fuel. This makes retail 80% higher than all road transport in terms of greenhouse gas emissions in the UK.

Action is critical and organisations are increasingly making commitments in this space, people have become tired of what they feel are often empty commitments and inaction. Instead, 57% of people claim to be taking matters into their own hands, changing their own behaviours in response to environmental pressures. This is sad.

We must change the brief to build better, more balanced systems that allow retailers to alter their own behaviours and in turn facilitate and normalise more sustainable behaviours among the general public—as consumers and citizens. The opportunity for retail brands is to stop pledging and starting platforming.

More creative: how brands can help people feel and do more

The UK is suffering. Research from Bupa found people’s wellbeing to be down 17% in 2022.

Our research shows there is a clear role for brands to contribute positively to people’s quality of life by ‘helping them feel energised and alive’. But this is an attribute on which the retail sector underperforms in our research.

Addressing this is a communications challenge. Communications can reframe the role and experience of retail brands in people’s lives, but only if brands can capture and hold people’s attention, a major challenge in a sector as mature and competitive as retail.

Creativity is a powerful multiplier of effectiveness. Evidence from Lumen shows that media and creative can complement each other to help brands win the battle for attention.

The opportunity for retail brands is to infuse more creativity into media, while adopting a more expansive and progressive view of what media means now and in the future.

The time for change is now. And this is our call to arms.

Tony Mattson is head of strategy at Havas Media UK.

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