The New Consumer and the Science of Shopping
By Fred Richards and Bruce Dybvad
As a group, the fast-moving consumer goods companies on our 2012 Best Global Brands list increased in brand value over last year. For many of these industry leaders, ongoing product innovation and the continued expansion into new geographic markets drove top line business. However, these companies compete in a market with a daunting pace of change led by the new consumer — seemingly half human and half digital.
Like a sleeping volcano, new behavioral trends will inevitably disrupt the current landscape. Brands keeping up with the pace of change may find themselves vulnerable. Winning depends on leading the pace. The good news is that significant untapped opportunity lies in the creation of a brand strategy that integrates a digital strategy informed by consumer insight.
Change is driven by consumers, not technology
Much has been said about the new consumer — they’re informed by online reviews and corporate transparency, empowered by price competition and have redefined brand loyalty. But the newest new consumer is even more challenging: the Millennial, age 25–35. This tech-savvy group tends not to shop in traditional mass or supermarket formats where FMCG companies compete via breakthrough package design and product innovation. Instead, Millennials are attracted to distribution outlets that are less conventional and more convenient. You’ll find them online, at food trucks, in bodegas, and other grab-and-go places. Even the most engaging and effective aisle experience in the supermarket might totally miss this influential young target.
Take, for example, Gillette’s impressive success in creating a “guy aisle” in stores, devoted to men’s grooming. It makes the brand a category hero, synonymous with shaving and personal care. Contrast that with the irreverent and funny, not to mention cheap, appeal of the Dollar Shave Club.com, the $1 monthly blade subscription service. Is it an amusing side player or an indicator of tomorrow’s market? Food for brand thought.
Given that consumer relationships straddle the physical and the online space, clearly, a digital strategy has to be more than a website, a coupon, and a Facebook post. Too few consumer goods makers bring their brands to life digitally. Brands do have personalities that consumers want to engage with, as demonstrated by the multiple-millions who adore Wrigley’s eccentric candy brand, Skittles. Visual wit flows between the brand and its community, with videos and images of candy-covered projects from bundt cakes to ukeleles. Skittles is fully alive in its digital incarnation.
Around the world, consumers voice ever louder concerns over health and obesity, demanding healthier and more flavorful fare, whether from cereal, frozen dinners or soup. It’s been an eventful year for Campbell’s, certainly, faced with the weakening popularity of soups, the failure of its low-sodium offerings, and a serious packaging problem. Its soup cans are made partly with BPA (Bisphenol A), a chemical found in plastic, which Canada has declared a toxic substance. The brand’s leadership team conducted a comprehensive strategic business review this past year, emerging with new strategies to aid growth through the next decade. Plans include alternative packaging, bolder flavors — not to mention an engaging tribute to iconic Pop artist Andy Warhol to commemorate the 50th anniversary of Warhol’s famed piece “52 Campbell’s Soup Cans.”
Not going away: the threat of private label
While national brands still make up the vast majority of US consumer goods purchases, private label goods are set to double their market share to half of all goods sold in supermarkets by 2025 (Rabobank Report, 2012). US retailers have taken a page from the leading stores of Europe. After studying the success of companies such as Sainsbury’s and Tesco, they’ve refined their private labels to offer both cost savings and quality across many categories; shoppers feel good about buying them even if they don’t necessarily need to save money.
Manufacturers are fighting back by creating new products. While private drugstore labels might be keeping the CEO of L’Oreal awake at night, the brand’s research and development teams off set the threat by developing dozens of innovative beauty products to stay on top of the market. Health care and pharmaceutical goods giant Johnson & Johnson spent the last year climbing back from product recalls that cost them consumer trust, only to find private labels not only competing, but accruing true brand loyalty. Even a popular, brand like Kellogg’s, known for its honesty, isn’t completely immune to the consumer’s willingness to try less expensive alternatives. To stay one step ahead of the private label competition, it too, introduced many new products this past year, including a gluten free cereal. To win back market share, brands look for news ways of reaching consumers, often in the form of expanding into emerging markets.
The tenuous future of package design
Consumer goods makers traditionally look to new packaging to win trial and share. Kleenex introduced charming boxes, shaped like wedges of watermelon and other fruits, to increase summer sales. Heinz is still riding on the good feeling derived from its 3-ounce “dip & squeeze” carry-out ketchup packet, a consumer-pleasing innovation. In answer to issues of sustainability, both brands found a solution in packaging. Kleenex launched an initiative to reduce its UK products 33 percent in size to use less material, require fewer truck miles, and reduce carbon emissions, storage costs, and shelf space. Heinz now makes up to 30 percent of its packaging from plants instead of petroleum.
However, along with their new shopping behaviors, consumers bring with them the early warnings of a prodigious challenge: subscription replenishment. The promise of never running out of toilet paper has become part of the changing customer journey. As more people forgo trips to the store and simply sign up at Amazon, what’s the impact on the packaging design community? It certainly increases the pressure to bring the brand to life digitally. Is it that we are doomed to the limits of a one-inch-square jpg on the website’s page, or should we consider the changes in buying behavior to create new ways to educate and entice?
How could one inch become the entry point to a whole experience? How does a designer bring brand equities to life when the nature of shopping is changing so fast? It would certainly appear that the demands on packaging to help with in-store “way-finding” and differentiation will significantly reduce. But will the nature of physical shopping experiences change? And what of the on-line experiences themselves? Many were created with download speed restrictions in mind, but with full HD and 3D always on and at your fingertips, couldn’t we be on the verge of a new paradigm in on-line shopping? Perhaps packaging will become functional versus aesthetic — with designers trading the pursuit of shelf impact for the ideal in-home dispensing package. Perhaps we need to rethink the whole way people will buy? Forward-thinking brands are well advised to undertake this challenge as a thought experiment, if not an outright R&D initiative. The trend is already underway.
As always, there’s more risk in playing defense than innovating a new offense. Yes, there’s always a chance that in pushing the envelope, a brand may make a packaging or public relations error that lights up the internet. But top brands recover quickly. The companies named “best brands in the world” need to be the leaders that others can only hope to copy — they must elevate the game, their sense of innovation, and their digital brand expression. Doing so requires that they never forget the “consumer” in consumer goods, and avail themselves of the modern methods of shopper science and analytics to search for fresh connections with their customers.