As this past holiday shopping season revealed, painfully, consumer behavior is shifting. Customers are more frugal, and have higher expectations when it comes to their shopping experience.
Recent studies from researchers have shown a disconnect between what consumers want while shopping — such as consistent pricing and better service — and what retailers are offering. Moreover, consumers are rejecting goods and services that are not authentic, and more so, goods that are mass-produced. Storytelling and product narratives have also taken on more meaning for consumers — especially Millennials who are not only value driven, but values driven as well.
Here, WWD talks with Shilpa Rosenberry, senior director of global consumer strategy at Daymon Worldwide, a retail strategy and services firm, about these changes in the market and what it means for retailers.
WWD: What does “authenticity” and having a “narrative” really mean for a brand or retailer? Why is it important?
Shilpa Rosenberry: Consumers’ values have changed. It’s no longer about keeping up with the Joneses and accumulating more stuff. Consumers are seeking transparency and authenticity from the companies they do business with, from a better understanding of where and how they source products, to how they treat their employees and if they stand for the same values. In large part due to technology and social networks, they’ve become more knowledgeable about nuances in production and sourcing in everything from food to fashion. They’re rejecting anything that appears mass-produced. It’s no surprise that well-known brands’ sales are struggling as consumers embrace smaller or local brands that more closely align with their new badge values. Big brands have figured this out, and as we’ve seen in the last year, many are feverishly snatching up smaller companies with unique propositions.
With authenticity being so critical, having a compelling brand story or narrative is more important than ever before. The more you can connect with consumers with real, genuine stories, the better.
Even the largest brands must work hard to tell “small” stories that resonate with consumers. People want to support real people. One way to do this is through storytelling — connecting consumers with the real people who work for you and their stories.
Another way for a big brand to get small is to partner with local businesses. Starbucks, for example, has partnered with smaller local businesses in its trading areas, such as Bantam Bagel in New York City. This win-win solution allows them to get the halo effect of the small brand while the smaller brand gets incredible distribution and brand awareness.
WWD: You once described the shift from consumption to experiences as a challenge and an opportunity for brands and retailers. How can companies leverage this shift to increase sales, profits and customer loyalty?
S.R.: Experiences are powerful. An obvious way to offer a more compelling experience is through services, such as when Walgreens identified a gap in the market and started offering immunizations in their retail space, which opened up a new revenue stream and has since created many more opportunities for health services at retail. This is also clear in the number of retailers venturing into beauty services and food service. These types of in-store services drive trips, encourage community, allow retailers to gain cultural capital and build loyalty.
Another way experience can build loyalty is through the rise of “beta retailing” — these are store experiences that are fluid, flexible and encourage participation. Products, assortments, services can actually revolve or be switched out according to shoppers’ preferences.
Most recently, we’re seeing sensorial experiences become more important than ever before. The move to shopping online has a lot of benefits but it simply cannot compete in sensorial experience, or in-store concepts, platforms and products that appeal to the five senses: sight, sound, smell, taste and touch.
This is even playing out in food retail. For example, we’re seeing food retailers bring sensory attributes into product, from the rise of fragrance and aromatics being infused into product flavors like lavender cheese, saffron rose popcorn and tea infused ice cream. Retailers are also using color as a signal for health, from rainbow salads to multicolored carrots.
WWD: In previous discussions you mentioned that food and fashion are related. How?
S.R.: Our culture has changed and food is playing a different role today. Food is fashionable today. Like fashion, it’s emotional, not transactional. Consumers are increasingly aspiring to higher-quality food experiences. Like we saw in fashion, consumer foodways have gotten more sophisticated. They’re sharing their food stories and pictures of their meals at restaurants. Higher-end department stores figured it out long ago — food and fashion work together. Now everyday mainstream retail has figured it out, too.
I think this is why we’re seeing more fashion retailers open up food-service options and restaurants in their stores, including Urban Outfitters and Macy’s. It drives trips and makes shopping a more enjoyable experience.
Also, shopping together generally makes consumers spend more. Put all of this together and it’s no surprise fashion retailers are increasingly seeing the value of food service.
WWD: How has social media contributed to changes in consumer behavior?
S.R.: Consumers today have amazing access to information, especially from their own social networks, making them less reliant on brand-driven assertions and more empowered to seek feedback and share with their peers — local and global — to reach their own conclusions. With the rise of social media, retailers and brands are under the microscope, and can easily be made, or broken, in just one day.