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How innovation, evolution and the new customer are re-shaping retail

You only have to walk into a supermarket to see how innovation is shaping our world at a relentless pace. Where we once had to queue for even the smallest purchase, we can now use self-serve checkouts – a technology that gives customers quicker transactions and increases the efficiency of supermarkets. This change doesn’t work in the favour of all brands though, so here’s a look at how how a few are using customer engagement to beat the challenges thrown up by new technology.

This new technology has created challenges for brands such as Chupa Chups, which traditionally relied on checkout displays for impulse purchases.

In response, we’ve collaborated with supermarkets to create exciting point of sale promotions to engage consumers. It’s this interplay of change, innovation and evolution that is crucial in today’s business environment, where many operators are doing it tough.

We recently hosted a forum for senior business leaders with Bernie Brookes, CEO of Myer, as guest speaker, to discuss some of the issues we are seeing and how best to respond to them. Mr Brookes shared his view on the changing retail environment some factors impacting consumer sentiment: the rise of online shopping (particularly from international retailers); global economic uncertainty; the carbon tax; relatively high interest rates in comparison to the rest of the world; and high household savings rates.

Recent data from the OECD’s Economic Outlook (May 2012) shows Australia has one of the highest household saving rates in the world, at 9.6 percent of disposable household incomes. This reluctance to spend, particularly on discretionary items, means that retailers are facing a real challenge. As Mr Brookes stated during his presentation, the GFC rocked consumer confidence and the balance of power won’t swing back to retailers any time soon.

My business, Stuart Alexander, is responding by investing in the design, marketing and delivery of its brands, as we’ve found that consumers still respond positively to product innovation and clever marketing strategies. While risk management is at the forefront of every business owner’s mind, now isn’t the time for brands to be afraid of trying new things. With the right strategy, the rewards can outweigh the perceived risks.

Last year, Stuart Alexander put this theory to the test by taking on market leader Wrigley’s through the launch of Mentos 3D Gum. By launching under the familiar Mentos brand, we were able to reassure stockists that the product would have an established brand behind it. Our strategy encompassed several elements: releasing the product to market first; strong advertising spend; highly visible in-store product placement; and running a consumer promotion during the launch phase.

The results speak for themselves: three months after launch, the brand achieved a national share of the gum market in petrol and convenience stores of 10 percent and a 15.8 percent share in Coles Express stores – the highest ever share for Mentos Gum in either of these markets.

Creating new opportunities for consumer engagement will also help your brand thrive. We recently created increased engagement with Fisherman’s Friend, by agreeing to sponsor the Cronulla Sharks for the 2012 NRL season. This sponsorship allowed us to connect with the brand’s target consumers – blue collar workers aged 30 and above – many of whom enjoy watching the footy. We also had the opportunity to undertake sampling activities in stadium during home games, which allowed new consumers to try the product for the first time.

While these strategies may not necessarily work for your business, the important thing is to make sure your strategies are still effective in the new consumer environment. If not, then review what you can do to reconnect with your customers – the worst response is to do nothing. There’s no doubt that the needs and responses of consumers are changing, and we need to change with them.

Garry Browne

Garry Browne

Garry Browne is CEO/Managing Director of Stuart Alexander, which markets and distributes household brand names. Garry is former President of the Food and Beverage Importers Association President. He also created and serves as a Director of The S’Team Foundation. Garry has a Bachelor of Business from UTS and is a former student of Harvard Business School.

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