With the traditional plethora of Christmas retailer TV adverts hitting our screens in the lead up to the festive season, there’s a sense of nervousness behind all the jollity.

Over 30 high street retailers have gone into administration since 2008 with Debenhams, Select, Toys R Us and Poundworld the more recent examples.

We can expect the usual fight amongst the large retailers for our seasonal attention, especially with huge budgets allocated to Christmas TV advertising. Yet, this repetitive end-of-year strategy seems to be wearing thin. Our recent research at Lida reveals that 74% of adults believe that retailer Christmas TV adverts do not influence their purchasing all year round. As people can shop around, 24/7, using their laptop or smartphone, is this short-term investment worthwhile?

Now is the time for retailers to think about their brand health long-term. While it’s true that ecommerce has dealt massive blows to the high street, we should also remember the overall share of sales via online retail is yet to hit 20% in the UK.

Online sales as a proportion of all retailing, seasonally adjusted

Retail is in a completely different place to a decade ago, yet many have bucked the trend and understood the multiple foundations of shopping and brand loyalty.

Additionally, whilst technology gives online retailers an edge in terms of precise targeting, it is by no means the only tool behind personalised connections. Going forward, here are five increasingly important drivers of retail success. 

1. Define a cultural context

Those that connect with present-day culture stand to win. Brands must avoid the risk in trying to play in areas where they do not have permission but can stand for much more.

Lush overstepped the mark in 2018, forced to drop its ‘Spycops’ campaign criticising undercover police. After years of decline, their competitor Body Shop has started to recover, posting 2.3% increase in UK like-for-like sales in 2018. It has built upon its heritage of ethical trading and opposing animal testing, both powerful forces that appeal to its target audience.

Our research at Lida also shows that 77% of adults agree that “It’s becoming more important for retailers to stay up-to-date with modern day attitudes and ethics.” Therefore, retailers need to adjust to these new expectations.

2. Seek a new emotion to engage consumers

It’s long been recognised that buying decisions are driven by feelings and emotion.

A framework of emotional motivators defines feelings that significantly impact customer value.

These are by no means exhaustive but include: stand out from the crowd, enjoy a sense of well-being, feel secure, feel a sense of thrill, have confidence in the future, feel a sense of freedom, feel a sense of belonging, succeed in life, be the person I want to be and protect the environment.

In the USA, IKEA is the most emotionally connected home goods brand (according to Motista). It successfully delivers on emotional motivators such as belonging, well-being and success through its ‘wonderful everyday’ platform.

Retail brands can define which motivators they and their competition currently address, then which ones their brand could unlock to differentiate. 

3. Expand the value universe

With so much consumer choice and shopping possible 24/7/365, so the loyalty market has re-shaped. Providing monetary rewards and discounts is no longer enough to drive loyalty profitably.

Retail brands need to think how they create value. ‘The Value Universe’ framework proposes that brands have the potential to migrate from being product-based to experience-based.

At Lida we are using this with the likes of Costa Coffee to evolve their club. The key is understanding how value is created in each sector. A hypothetical example might be for a car manufacturer brand, with four stages of progress. It is important to tailor the steps along this journey for each sector or brand.

car manufacturer value universe

4. Create brand inclusivity

The loyalty market was founded upon exclusive member rewards. However, monetary benefits are straightforward to copy, and consumers find it easier to find lower prices.

It will become necessary for brands to involve customers more to create enduring loyalty. There is the opportunity to lead an agenda, using data-competence to move beyond the rational.

Gucci’s meteoric reinvention under Alessandro Michele is a shining example of this. Gucci plugged itself into social media conversation and made that part of its own development. The result was that the business more than doubled its revenue from €3.9m in 2014 to €8.3m in 2018.

5. Treat digital and offline as one 

The fastest growing retail brands are turning their attention to creating experiences across both offline channels. Retail Week Connect’s report on the Top 30 fastest growing retailers reveals a number of emerging themes:

  • Stores are used more as marketing tools by online retailers. Well-known names such as Ebay and Amazon have had stores for a while, yet it’s companies such as Joules which are using physical space to showcase and order products.
  • Stores are increasingly an extension of online delivery. Click-and-collect may have been established by large retailers such as Argos, but online retailers such as The Works are branching out, and it is now the fastest growing sales channel.
  • Stores are being used as experience galvanisers by ecommerce operations. The Hut Group showroom opening in central Manchester places it at the centre of the community.
  • Digital is now seen as critical to driving store traffic. The likes of Tiger and Primark may have no ecommerce platforms, but they invest heavily in social to drive customers to their shops.
  • Social media is becoming a key selling channel. Instagram’s Checkout channel is being trialled by both H&M and Zara, whilst Green Man Gaming has developed its own social media functionality.
  • Digital is being trialled as a live extension of stores not just vice versa. JD Sports has developed live chat to connect its online shoppers directly with store staff. 

Whilst Christmas advertising might seem an unavoidable tactic for retailer brands, those who have successfully survived have done so through looking after their longer-term health.

Digital will continue its relentless expansion as online becomes a natural part of our lives. Yet the benefit and appreciation of human involvement and experiences will be critical to business success. Those brands that look outside of automation and mechanically delivered messages stand to gain.

Going beyond short-term seasonal marketing, connecting on a cultural level and being an intrinsic part of consumers’ lives will be increasingly important differentiators in the future.

How machine learning is transforming retail both online and offline