Top trends in shopper marketing in 2018

With a more and more savvy consumer and digital and technology re-shaping it, shopper marketing became in the last years almost a science, relying a lot on research and customer observation. While in the US, the Shopper Marketing magazine developed a very strong research on this year’s trends that can be read here, we asked 3 local advertising specialists to give us their thoughts as well.

Cristina Oncescu, Head of Strategy pastel

What do you believe will be the biggest shopper marketing trends of 2018?

I don’t know if they are the biggest, but they are certainly hot in 2018:

• Personalised shopping

There are many in-store technologies that can be used to provide a personalised shopping experience. NFC (Near Field Communication) chips, QR codes, iBeacons and Visual Light Communications are just some of the emerging technologies used. These, when linked to previous shopping histories via a loyalty app for instance, can provide disruptive yet compelling interactions with the shopper as they enter the store.

• Virtual assistance

From voice to chatbots, going through messenger apps, one-to-one communication is on the rise. Being available and being helpful, when the shopper needs you, is making the difference.

• Augmented Reality

The use of Augmented Reality on mobile devices provides an engaging way for marketers to reach their target audience – it’s quick, easy and very interactive. With the integration of AR on iPhones, it will be easier for marketers to engage larger audiences during their path to purchase.

What are they influenced by and why?

Technology, and especially mobile, led shoppers becoming more and more omnichannel. Now, this is an actual behaviour that the shoppers engage in (of course in a subconscious way). Web, mobile, social, apps – it’s all just shopping to consumers. The separation between retail channels is growing even more blurred by the day. Can they return online products in-store? Can they check if the store has their size and colour on their mobile phone before they leave their homes? Consumers expect a seamless experience across all channels.

What is pastel advising its clients this year?

Great content will always engage. Have an interesting, consistent story and a seamless experience throughout the whole omnichannel path to purchase.

Anton Gherca, Chief Innovation Officer at g7

What do you believe will be the biggest shopper marketing trends of 2018?

We believe that shopper marketing is an area of brand communication that has been kept largely untouched by the digital revolution that is reshaping the advertising industry for the past 10 years. So we expect that „digital BTL” will start gaining momentum, as today’s practices are deeply engrained in traditional approaches of point of sale communication. We think that we will see more connections between social media and shopper marketing, and geofencing and point of sale promotions, with the aim of delivering a more integrated omnichanel shopper experience.

What are they influenced by and why?

Like many things in advertising, the move towards a more „digital” shopper marketing approach is driven by the consumers themselves, or more precisely, by their lifestyle. As of 2017, the penetration rate of smartphones in Romania is 70%, while 41% of the population are already mobile social users. Peer-to-peer ridesharing like Uber makes people understand the benefits of the sharing economy,  on-demand services like Netflix put them in the driver’s seat while the wide 4G coverage makes them want everything now. This means people are getting more and more accustomed to having everything at a push of a button and they expect higher levels of service, increased transparency, embedded interactivity and all in all a better customer experience out of everything.

I know this sounds like a bunch of buzzwords cramped togheter in one sentence, and our agency has never been in the „buzz” business, but the reality is that the shift in consumers’ lives is happening with or without us. I think the bottom line is that today’s shoppers are just expecting something more out of marketing communications. More relevance, more engagement, more customization. This doesn’t mean that we, the shopper marketers, can’t still get away with the old „buy one – get one” or „scratch this to win a prize that you don’t even want” mechanics. But wouldn’t that be a pity?

What is g7 advising its clients this year?

Our agency has embarked in a digital transformation journey and once set in motion, it can’t be stopped. We will continue an initiative started in 2017, of hosting periodic innovation workshops together with our clients for identifying the opportunities put forth by today’s technology, and see where that gets us. Still, there are a couple of areas we keep tightly in our focus: Proximity marketing, Loyalty management and Gamification. We work towards integrating in an organic manner these three capabilities in the approach our clients are already used to: honest creative work, deep understanding of shopper behavior and solid deployment in the retail ecosystem.

Ondina Olariu, Business Director Geometry Global

“Fragmentation, increased competition and e-commerce are key words for 2018 and beyond in our region. After seeing a huge expansion, somewhat even inflated for some of the retail players, we will witness a new battleground, named proximity. As global retailers keep expanding, we will live through a great variety of formats, more flexibility and adaptation to micro-retailing needs. Proximity will be influenced as well by the increasing degree of urbanization, as well as the new generations of shoppers, more dynamic, digital savvy and format switchers (in Romania, 25 cities cover 31.3% of total population and 55.6% of urban population – source:  INS, Romania, 2017).

And when we say flexibility and adaptation, think beyond format, as we see discounters aggressively stepping in the services territory, while share of consumer spend reached 68% in services vs 32% in goods in 2016 (source: Kantar Global Trends 2018). Goods subscription – meaning bundle goods as a service is something that we preached our clients for a couple of years already and it’s approaching it’s turning point in 2018.

E-commerce in Europe is predicted to reach 10% of total retail (source: Kantar 2018 Global Predictions, WPP Data), with a clear future towards what we call omni-channel, especially since gen Z takes the scene as newest shoppers. At global level we see the switch and struggle of most pure e-commerce players in becoming physical as well, to the level where blogs impersonate the physical space in temporary shops where experience blends with sales, while in Europe we are taking steps into developing the brick-and-mortar into e-commerce, especially for FMCG area, which are the most shopped for categories. Retailers will continue or start monetizing opportunities through their own apps, following the evolution of more mature markets, such as Spain (+210% in app sessions growth in the last 2 years) or Germany (+130%). Here again, it seems that pure digital players have a degree of advancement, since digital-first retail apps saw more that 2x the average sessions / user each month and saw stronger growth in the last 2 years. (source: App Annie 2017 retrospective report). This means we will see accelerated growth for digital players apps, as the new arrivals from physical retailers will need to extract good lessons and apply on fast track.

Blending online and offline expresses also in automation, such as automated cashiers. As retailers will increasingly see value, watch for a retail unemployment crisis, especially in more mature markets. The proliferation of private labels will increasingly force out brands from the physical shelf. Most of these private labels continue to be supported as brands rather than price options, from food to fashion (see Esmara for Lidl and Tex for Carrefour) and home appliances (eg Carrefour Home consumer electronics). Health and Wellness is an increasingly appealing theme, for both brands and retailers. Watch the shelf space growth in store, as well as the latest positioning of certain private labels, trying to capture value and exploit the trend.

As a shopper agency, we are not only advising but already working with our clients on the omni-channel shopper journey models, including retailer strategies and new channels opportunities in this process. We build with them strong e-commerce fundamentals for the Romanian market and expand to e-commerce experiences and integration of channels for more mature markets. We operate with an increasingly complex model that includes data management and A/B testing applied to shopper initiatives and integrate thorough shopper knowledge in every solution we bring to the table. Bonus: an emerging trend, still less visible to this market is the return to D2C (Direct to Consumer). It will be highly influenced by retailers’ behavior, however, more brands become conscious they cannot rely exclusively on retailers and distributors in building their relationship with shoppers and consumers, therefore they’ll be trying to find ways to cut it short to them and bypass the “official” channels.”

How is the digital changing the retail experience

According to “The new digital divide” report created by Deloitte, digital influence has grown from 14% of all sales in 2012 (USD 0.33 Trillion) to a whopping 49% in 2014. That’s USD 1.70 Trillion worth of sales influenced digitally. And the number is rising steadily. Moreover, in 2016, digital influence continued its rapid growth, although at a slower rate than we’ve historically seen. At the time of the last study, USD 0.56 of every dollar spent in a store is influenced by a digital interaction. And when we include the primary source of growth in retail—online sales—the impact of digital influence is even greater.

This survey was commissioned by Deloitte and conducted online by an independent research company April 25–May 5, 2016. The survey polled a national sample of 5,014 random consumers. Data were collected and weighted to be representative of the U.S. Census for gender, age, income and ethnicity. The national random sample, sample of device owners and sample of smartphone owners have a margin of error of plus or minus 1-2 percentage points. Additionally, subsets of randomly assigned respondents were asked to provide information about how they use a digital device to shop for a product subcategory (such as cosmetics or perishables) with a margin of error of plus or minus 7-8 percent. Specific digital behavior data represent consumers who use digital devices to shop.

But even as digital influence has risen, retailers’ ability to influence the purchase journey has decreased. Why? Because the large e-commerce players, as well as digital platforms such as Pinterest, are operating at such scale now that they are shaping customers’ definitions of what a great customer experience is. Not only that, but they are also simply more connected to the customer’s needs than the typical brick-and-mortar retailer.

How did this happen? It’s quite very simple. A single retailer, doesn’t interact very often with its customer more than several times a year and the amount of information it gathers is not very profound in order to provide a meaningfully personalized experience for the consumer. That creates a big contrast to the kind of relationship, trust, and understanding of preferences and purchase intent that a digital platform like Pinterest can create when they interact with that same customer for several hours a day. Therefore, in most of the situations, the customers’ preferred method of locating, buying, and receiving products in-store has been redefined by their online experiences.

In addition, customers today can go to their Internet browser, have it search the broad, fragmented marketplace, and get exactly what they want. No longer do they have to settle for something that is close to what they want; the browser curates the exact assortment they are seeking, far more quickly and easily than a visit to the mall. According to the Deloitte specialists, this dynamic has led to a significant increase in the shift of market share as nimble small and mid-level players collectively steal share from larger, more traditional, at-scale retailers. This fragmentation and volatility in the market is reflected in Deloitte’s Retail Volatility Index. The competition is no longer coming from the big box across the street, but rather from a numerous newer, smaller competitors, most perhaps too small to capture the attention of the big players, but each eating away at market share.

Despite the impact of digital influence continually increasing, the ability of retailers to influence the purchase journey is decreasing. Digital platforms such as Facebook and Google are already hosting real-time interactions with customers for several hours each day. As a result, they are shaping and redefining the customer’s definition of a great experience through constant real time connection.

“Any retailer who thinks they can build their own personalized experience to interact with customers anywhere near the extent of major digital platforms and find success may be disappointed with their results” said Jeff Simpson, principal, Deloitte Consulting LLP and co-author of the study. “Their limited interaction with customers – about six to eight transactions per year – limits their understanding of the ‘moments that matter’ in a personalized experience such as purchase intent and preference. Instead, retailers should more aggressively embrace integration and the native capabilities of the major digital platforms where their customers have already chosen to interact and transact.”

Deloitte’s main advice for stores: Further integrate with those digital platforms. The report states, “Retailers should embrace the native capabilities of their digital touchpoints and integrate with platforms where their customers are already interacting at scale rather than trying to build such platforms themselves.”

According to the study, more than three-quarters (78 percent) of non-millennials are now using digital devices either two or three times throughout their shopping trip. Mobile device usage is no longer as heavily skewed toward millennials. Data shows that the age gap is shrinking as now – across all age groups – customers are turning to their mobile devices before and during the shopping journey.

“The important thing to remember is that most of today’s buying power still remains with non-millennials,” said Lokesh Ohri, senior manager, Deloitte Consulting LLP and leader of customer engagement, content and commerce offerings in the retail practice. “A better idea is to consider all the verifying types of customers, determine how they use digital differently in the purchasing journey and create a broad range of customized experiences for each.”

“It isn’t just what retailers do, but when they do it.  Research has also revealed that there are limited windows of opportunity to engage shoppers, with men getting bored after just 26 minutes and women after two hours, so engaging with purchasers has never been more important. By offering a variety of in-store engagement opportunities, mobile users open to an enhanced or incentivised visit will start to feel like their in-store experiences are able to offer them a similar one to those they enjoy online,” wrote Amy Keen for Extreme Creations UK. She also expressed the fact that many major high street players are actively seeking out solutions to this challenge. “Marks and Spencer has adopted ‘browse and order hubs’, Nordstrom has included ‘top pinned’ items in store to show retailers what social users are highlighting as key pieces. See more examples of technology being used by retailers,  here. By increasing personalization, retailers are not only nurturing their customers’ interest in their brand, but developing their loyalty. The better the experience, the greater the conversion into purchasing and return custom,” concluded Keen.

Moreover, according to 27% of senior executives, digital transformation is  “a matter of survival”, shows Shayla Price on Session Cam.  Customers are shopping on multiple digital devices. They learn, compare, and purchase products without leaving their homes. An  Altimeter report notes that “digital transformation represents the quest to understand how disruptive technology affects the customer experience.” With increased competition, businesses must differentiate themselves beyond product offerings. And that means mastering how to provide the best  online shopping experience to their customers.