To Survive The Retail Apocalypse, Keep Moving
These are tough times for physical retailers. It seems like every week, news breaks of another brand in trouble. In the UK, Mothercare closes stores and M&S fires its marketing team. In the US, national brands like teen accessory store Claire’s, and local brands like Milwaukee’s much-loved Bon Ton department store, have shared the same fate. And, of course, there’s Toys’R’Us, the third-largest bankruptcy in US history, which took the idea of the “retail apocalypse” out of the industry and onto the evening news.
What’s behind this slump? Adding to retailers’ woes are a chorus of finger-wagging armchair analysts arguing brands only have themselves to blame for not reacting sooner to the disruption represented by Amazon and e-commerce. Dig deeper, and less generic causes surface – from private equity buyouts to misguided earlier restructurings. It also turns out the ‘retail apocalypse’ is more of a ‘retail paradigm shift’, with some chains thriving, particularly at the low-income end of the market, serving customers who had dropped under the radar of other brands.
Understanding the wider picture doesn’t help tills ring in the short-term, though. With 60% of purchase decisions made in the retail environment, understanding and predicting shopper decisions is a critical task and one that deserves the appropriate investment.
In our previous piece, we looked at how fully immersive virtual reality (VR) is the ideal medium for shopper research – creating an environment as close as possible to the real world, but which can be altered at will, allowing for accurate pre-testing of promotions. Which in turn leads to better sales and improved margin.
What we didn’t get into in that post were the kinds of promotions retailers should be exploring. Virtual reality testing is way less risky and more cost-effective than in-store experiments. But it does have a price tag. So it’s important to make sure you’re testing the right promotions – ones which go with the grain of the shopper experience, not disrupt it.
For most customers at most retailers, the goal is to get through and out of the store as quickly as possible with their shopper needs fulfilled. At System1, we say that things which aid this goal – like familiar layouts, short lines at checkout, or easily recognisable brands and packs – have “moving power”. Moving power makes shopping easier and more pleasurable.
At the other end of the scale is “stopping power”: things that interrupt a shopper’s journey and slow them down. Long lines and confusing layouts, for instance. But also a lot of promotional and brand activity, which is often designed to halt a shopper in their tracks and make them consider a brand or offer.
Promotions that create stopping power may have good intentions, but they’re counter-productive. Our testing shows that the longer shoppers pause to make a decision, the less they end up spending. Make a decision less fluent – slower or more difficult to understand – and you risk the person not deciding at all.
But some promotions create moving power, not stopping power. Familiar, easy to understand offers. Endcap or POS activations which are clear and quick to understand. In-store branding which triggers recognition and positive emotion, for instance by using imagery or characters from familiar ads.
People are complicated, and so are stores. It’s very hard to work out in advance which promotions have moving power and which have stopping power. Which is why testing is so important, as the difference between the two is so important.
In one study we did, for Hershey’s, we tested two promotions. One was a generic brand promotion with the brand’s logo prominent. The other was tied to a recent, popular ad campaign and showed stills from the ads. Surprisingly, the prominent branding backfired and created stopping power: slower decisions and less money spent. The advertising prime created moving power, and higher spend.
It might seem we’ve come a long way from the retail apocalypse. Better promotions can’t save a failing brand by themselves. But they can help the survivors prosper. To survive as a retailer – or a brand who depends on them – you need every advantage you can get. That’s why testing promotional ideas to uncover which have moving power is so important.
It’s something Amazon, among others, understands very well. In one of history’s ironies, in September 2017, the same month Toys’R’Us filed for bankruptcy, Amazon’s 1-Click technology fell out of US patent. The 1-Click button was one of the central foundations of Amazon’s success. In 1999, at a time when every other online retailer was terrified of consumer trust issues and was building complex layers of confirmation and checks, Amazon patented a button that slashed the time and difficulty it took to make a purchase decision. They bet on moving power, and the rest is retail history.
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