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Retail Technology

Why retailers need to fish with dynamite

By Ali Nehme

September 20, 2018 | 4 min read

Over the past couple of years, physical store growth has stagnated. In turn, e-commerce verticals have increased. It is a case of commerce following the customer desire and more and more, that desire is for seamless transactions. Which means that the demand for traditional physical storefronts will continue to diminish while the appetite for warehousing space and experiential storefronts grows. The last retailers to evolve with the consumer have been niche retailers like pharmacies, grocery, food industry and sports goods. These retailers have a lot to lose as major players continue to diversify their verticals. In the case of mega online leaders, they have the appetite and power to build monopolies with rapid force across the world.

Ecommerce image from Pixabay

What do retailers need to do to survive? Diversify their investment approach and growth channels. In short, they need to work closer with those who share their goals; brands and manufacturers. Naturally, brands have common goals: accelerate the growth of their verticals and diversify their retailers’ portfolio. Retailers do not need to single-handedly invest in this transformation; if the formula is right, they have the support of their manufacturers (Brands in this case).

Here’s a glimpse of how retailers can partner to accelerate their commerce transformation:

Reinvent your tech stack:

Retailers cannot build their business on legacy systems, which will hinder their exponential growth. The system of tomorrow will incorporate consumer experience at each phase and open itself up to partnerships. When this happens, retailers can deliver on the consumer desire for frictionless personalized experiences and connect with brands to leverage data and delivery.

The right stack will help standardize, connect and personalize the customer experience and with that allow brands to disproportionally invest back in that retailer business. A key component of this is advertising, allowing brands investing to deliver greater volumes. The $300bn Ad business will continue to grow, and the investment shift from media to eCommerce will inherently go back into the retailer who delivers seamless and personalized experiences with high return-on-investment at significant volume.

Data sharing as a key driver:

Walled-gardens are being built and brands are looking for retailers who give them visibility across category dynamics and sales performance. Brands look at eCommerce as a key driver in addition to being a way to test their go-to-market strategies: launching a new product, new bundles, pricing, etc. As retailers give brands deeper visibility into how their product is performing, it will go a long way into how much they want to invest with them. If you were in a brands’ shoes, you would want that visibility while pushing to have a line of sight of your customer.

Co-investing to drive category growth: You will be amazed how much brands are willing to co-fund campaigns to grow their category with specific retailers if they see the tangible benefits. If the above two areas are met, brands are willing to increase investments with retailers. The relationship between brands and retailers is not new nor is it negligible, and brands are willing to help build and grow categories online, as long as they see the long-term benefits. We have seen leading beauty brands, amongst others; invest media dollars with pharmacies for example to acquire beauty buyers and drive them to these retailers and build the category together. The outcome helped expedite the growth of the beauty category to become one of the highest growing online within CPG.

Where does that leave us? It is time to fish with dynamite.

Retailers must accelerate their shift online before online players build steeper monopolies. They need to shift to a partnership mentality with their brands and manufacturers. They need to build a USP not only with consumers, but with their partners. The dynamic marketplace of eCommerce has impacted and even killed brands in its path of consumer-led experiences and traditional retailers are no different.

Ali Nehme is global lead for Publicis Media’s dedicated Commerce practice, which aggregates, scales and amplifies the Commerce expertise and capabilities sitting within Publicis Media’s Agency brands: Starcom, Zenith, Spark Foundry, Digitas, Performics and Blue 449.

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