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Top 3 Luxury Beauty Trends in APAC

Posted By: SGK October 21, 2019

This blog post has been contributed by Kathryn Sloane, Director of Growth (APAC), SGK.

Historically, in terms of communication, luxury beauty brands have based their identity on exclusivity, prestige, and impeccable service. They've prided themselves on being a discerning choice and keeping a distance between them and their customers.

Luxury beauty today, needs to engage directly with consumers – to gain insights into changing behaviour, to define new trends and to enable advocacy. The challenge for luxury beauty is to strike a balance between embracing omnichannel without compromising their brand values or expression, while retaining exclusivity and desirability. 

We apply 3 "Barometers of Beauty" to track the rapid evolution of luxury beauty brands in APAC: 

  • E-commerce collaborations – from TMall's Luxury Pavilion to Farfetch's JD.com alliance, we follow the VIP brands that hold their ranks, and how that mix is changing.  
  • Privilege programs – once only for those big spenders invited with discretion, member programs now drive differentiation and marketing integrity. We monitor newly established programs and how they're different. 
  • New Wave bricks and mortar – there is a slew of new wave Beauty roadshows and Luxe pop-ups across Asia. We benchmark the best breakthroughs that retain brand authenticity. 

The combination of these 3 Beauty Barometers is a powerful mix that brings a wealth of insight into changing consumer behaviour (how to introduce new products, adjust ingredients, expand colour palettes) and where the new spheres of influence are coming from; to keep pace with this rapidly shifting landscape. 

1. E-commerce collaborations 

Farfetch's recent merger with JD.com, to provide the 'Premier Luxury Gateway to China' for luxury brands illustrates a step-change in luxury beauty in Asia. This will mean Chinese customers are getting 700 luxury brands with JD's same-day delivery speeds and highly professional service. This also means luxury brands with a local retail presence (Saint Laurent, Balenciaga), will also have access to world-class omnichannel capabilities (i.e. click & collect and in-store returns), connecting the brands' physical retail stores in China to consumers. 

Alibaba’s Tmall's Luxury Pavilion aims to bring the same brand exclusivity and tailored shopping experience to the world of e-commerce. In 2018, the brands invited to participate were global beauty icons such as Burberry, Giorgio Armani and La Mer. In 2019 it added Chanel (previously only sold offline and via its own online store). 

Photo Credit: Chanel
Photo Credit: Chanel

Importantly, this year Pavilion has also introduced South Korean brands Sulwhasoo and the History of Whoo, reinforcing that they are in the same playing field as European luxury powerhouses. Sulwhasoo, though being a Korean home brand, is shifting from the hypes of K-beauty to A-beauty, where A refers to Asian. Slathering its website with mentions of “Asian wisdom” and “natural harmony,” Sulwhasoo continues to strive to appeal to its biggest Asian market, China.

Tmall said the brands on the platform would be able to access the same tools to engage consumers that many of the brands selling through Tmall have put to use over the past year, such as virtual reality and augmented reality. They will also have at their disposal omnichannel solutions that integrate online and offline commerce.

2. Privilege programs

With Chanel's online expansion (above), it now offers real-time consultation by online beauty advisors, and a membership program providing members with exclusive new product samples and invites to attend offline events. The continuous integration of online and offline marketing mix builds a stronger network for members to experience first-hand offerings by Chanel, improving brand loyalty. 

As brands continue to adopt exclusivity to grow brand loyalty, the innovation of products strengthens the bond between members and brands while recruiting a wider group of customers to be part of the committee. 

Shiseido's recent launch of personalised skincare subscription service, Optune, takes personal care to the next level combining technology and daily regime into one package. The paid subscription model exclusive to Japan creates a new dimension of customised skincare practice daily with a personalised formula twice a day. This illustrates that Shiseido's innovation allows for developing a unique program to build a niche community of personal care activists. 


Photo Credit: Shiseido

The future of membership programs is tapping on technological advances that the beauty industry is innovating to premiumise the service and create a closed knit of membership program to maximise the efforts to provide best-in-class offers for members. J&J sees one such example. 

J&J's 3D printed personalised face mask in Asia (due to launch 2020), beginning with China. The product, MaskiD, is a tool that meets the needs of customers who are looking out for products that are beyond the one-size-fits-all category. The individualised solution creates a community that opts for privileged offers to meet their sophisticated demands.

3. New Wave Bricks & Mortar 

We're seeing beauty luxury brands unleash their creativity in Asia – pushing their brands in entirely fresh ways to drive social media exposure via pop-ups and new takes on bricks and mortar. What we see across Asia, is a movement from 'masstige' to 'massclusivity' - about making them truly exclusive available to everyday consumers.

Following the success of Clarins' Ice Cream Bar, from a couple of years ago, we've seen similar success with Clarins' Garden. Play an augmented reality game, where you 'catch' the plant extract ingredients that go into Clarins' Double Serum with your phone. Explore 'washing machines' with materials hidden within for you to touch and experience, which depict the different textures of their cleansers. And enter the Beauty Kitchen for a personalised recipe card following a skincare analysis.


Photo Credit: Clarins

Coco Game Centre (by Chanel) kicked off in Tokyo, and it generated so much social media buzz, that reservations were booked out a week before it arrived in Shanghai the following month. The game-themed pop-up stimulated fans to record their experiences and post them on social media, creating authentic content for brand reach without the need for paid promotion. This helps to reach out to the younger consumers expanding the brand's customer base and improving sales.  

What do luxury brands needs to know?

It is imperative for luxury beauty brands to adopt and apply the above mentioned beauty barometers to keep abreast of industrial changes influenced by consumers. E-commerce retail collaborations, privileged offers and new zone of interactive channels are ways on how luxury businesses can address beauty trends and embrace exclusivity and inclusivity.

 

About Kathryn Sloane: Kathryn has lived and worked in Hong Kong, Singapore, Shanghai and Melbourne. With 20+ years of experience (6 in Europe. 14 in Asia) in brand strategy, design strategy, workflow optimisation and change management. Kathryn has partnered the likes of J&J, Coty, P&G, Unilever, Beiersdorf, Mary Kay, Martha Tilaar and Watsons.

Kathryn sits on the APAC’s leadership team, helping drive growth in APAC, through creating, building, and protecting brands across channels, markets and sectors.

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Generation Z’s Online vs. In-Person Purchasing Habits

Posted By: SGK July 11, 2019

It takes a lot of information and time to understand what compels people from across generational lines to purchase a product, and with Generation Z on their way to becoming an estimated 30% of the workforce by 2030, it is vital that brands take the time to recognize this younger generation’s habits.

The most obvious defining quality of Generation Z (people born between 1996-2012) is the extent to which technology and social media influence their day-to-day lives. Unlike previous generations, Gen Z grew up with technology from childhood and have developed an inherent and unprecedented ability to adapt to change as technology rapidly evolves.

This interaction between Generation Z and the internet for daily use is especially highlighted through this group’s reliance on brand content on social media. For instance, 73% of Gen Z-ers surveyed stated that they search for branded content the most on Instagram and prefer brand engagement through this platform.

However, this preference for brand interaction on social media is not necessarily straightforward, as Gen Z has also expressed that they, “Feel like they get too much information on their phones and don’t appreciate an advertiser adding to that overload with a notification,” according to eMarketer research.

Therefore, despite a very close relationship to the internet and online shopping, this research also notes that brick and mortar stores are still Gen Z-ers preferred purchasing channel. In fact, over two-thirds of consumers ages 13-21 who were surveyed expressed that shopping in-person is better than online shopping.

One reason that brick and mortar stores are favored by this group is that the experience itself of shopping in person is optimized perfectly to create their own social media posts to Instagram or Snapchat, not only to foster engagement via these platforms with mutual followers, but also the brands themselves that they interact with in that brick and mortar setting.

Unlike in previous generations, Gen Z expects brands to provide the consumer with meaningful content that showcases the brand journey in a sincere, social media-savvy way. This could take the form of an emotional advertisement that is optimal for going viral on Twitter and the social media landscape, or a pop-up experience where consumers can form their own content in line with what the brand wants to convey.

These in-person experiences can successfully take the form of interactive exhibits similar to museums, like the Color Factory in New York City, or 29Rooms in Chicago, both of which combined have garnered over 90,000 individual Instagram posts with the location tagged.

This type of personal experience from Gen-Z consumer to the brand is ideal for spreading brand awareness and allowing the consumer to create their own content that aligns with the brand journey presented in the in-person experience. Pop-up events like these perfectly hybridize what Gen-Z is really looking for: the seamless combination of a social, physical, and in-person experience with the potential for adaptation of the experience onto online social platforms like Instagram or Snapchat.

This hybrid of online and in-person experiences can still be very tricky to perfect, as those who are a part of Generation Z also heavily value brand authenticity and sincerity, so a balance between what the brand wants to convey and what consumers will take away is also important to understand.

Since Generation Z is always looking for that perfect, “Instagram-able” moment, brands should consider this when creating both packaging of products for brick and mortar stores, but also when developing a social media presence on platforms like Instagram, Snapchat, and Twitter.

According to Barkley’s research on Generation Z, this group spends an estimated $143 billion every year, and perhaps now more than any previous generation, Gen Z encapsulates a true balance between online and in-person retail, which provides a compelling opportunity for brands to capitalize on both purchasing channels.

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3 Ways Technology Is Changing Retail

Posted By: SGK May 25, 2018

Consumers are now more empowered to use technology to assist in their purchasing decisions than ever before. With a constant stream of new channels to explore, it is key for retailers to be in the right place at the right time when it comes to engaging their consumers.

According to a recent TrendWatching guide, in 2018, consumers will expect retail brands to offer personalization in new ways including emotional data and eye tracking. The need for tailored experiences is on the rise, and retailers must take note.

Innovation and collaboration is where it all starts.

WATCH: The Age of Collaboration: Mastering the Modern Retail Experience 

Here are three ways retailers can start building dynamic journeys for consumers:

Get outside your comfort zone.

Brands are looking to make greater impact by partnering with like-minded brands to offer more value. An example of this in a more fashion-forward collaboration, is one of the most talked about partnerships in recent retail history — the Supreme and Louis Vuitton collection and sub sequential pop-up store. This effort was structured around risk.

Could two very successful brands in two very different marketplaces double their success if they combine forces?

The store was only announced two hours before their opening, but fashion gurus around the world were already waiting in line up to 72 hours prior. These two brands drew such large crowds what it was called a global shopping stampede.

Louis Vuitton was able to harness the kudos of one of the hottest brands in the industry while Supreme became a beneficiary of Louis Vuitton’s vast resources and reach. Stores were shut down because of the amount of hype around this collection, and pieces from this collection sell online for up to $20K. Both lines have seen increase in sales and cross-pollination from loyal clients of one brand to the next.

Make it about the consumer.

Let’s take open-source code as an example of this. This is a whole system built on sharing. The idea behind Open Source is that it’s crowdsourced, essentially free, adaptable content that everyone can contribute to and draw from. It’s not about whose idea it was or what gets created with it — it’s about community, and it has some pretty amazing benefits to back it up:

  • Transparency
  • A constant support network
  • Reliability
  • Better security
  • Faster time to market
  • Merit based work
  • Cost effective solutions

This is all great, but who’s using it? Wordpress, an open source platform for creating websites and blogs currently powers 28.9% of all websites on the internet right now. That includes big brand names such as The New Yorker, BBC, MTV News, Sony Music, The Rolling Stone, and Beyoncé’s personal website.

Not convinced?

How about TensorFlow, another open-source library created by Google Brain Team for machine learning? That’s the idea that a computer gets smarter as it’s given more access to information. Why don’t they keep it to themselves? Because with more contributions from a variety of users, retailers like Airbnb, Uber, eBay, Snapchat, and Coca-Cola have more data to train their models on.

The reason brands are using this data is to create targeted messaging for consumers while providing a better user experience. Every major retailer’s website has some form of an open-source platform helping it to run. That’s collaboration at its finest!

The main idea is that without an unselfish, wide open collaboration of time, ideas, and resources, you will avoid success. The egos need to be checked at the door.

Create space for exploration.

Going back to the aforementioned pop-up store between Supreme and Louis Vuitton, let’s talk about how experiential retail is changing the shopping world. If foot traffic in stores is decreasing, the creative industry needs to know how to make a physical space that much more engaging.

Take the Nike and Finish Line “House of Hoops” pop-up as an example. Consumers today have comparative pricing data right on their phones as they’re shopping. It’s not always about selling a product while the consumer is in the store, it’s about convincing the consumer through creative installations and product display that they need the product no matter where they’re buying from.

READ: The Innovative Story Behind Nike’s Ultra Flyknit

Another example in the pop-up space is Storenvy based out of San Francisco. This one is a little bit different, as they are an online retailer emerging into the physical space temporarily. They provide a platform for smaller retailers to not only sell online, but to also test the physical marketplace in a low-risk environment.

But what about retailers that already have a physical space that may not have a product that can support the pop-up model? Consumers may initially conduct product research online, but they are still buying high-end items in-store.

Retailers such as Neiman Marcus don’t turn their noses up at the fact that consumers are busy — they embrace it. Neiman Marcus recently rolled out a virtual dressing room mirror — an augmented reality display that lets you see outfits side-by-side, explore different color options, and send images to your second opinion buddy.

This all boils down to the fact that we’re now beyond the point of convincing people that the current retail space is the best way of operating. It’s time to suit up and jump on the battlefield together. The key to success is technology, which is what makes all of this collaboration and innovation easier.

Things like new device platform and artificial intelligence have created a need for more content, all the time. We already have big things that are in the works like virtual reality fashion shows, automated sales assistants, better and faster manufacturing software, and faster delivery options. If we’re needing to create more dynamic content faster than ever, we need larger teams, more resources, more time to explore, and less barriers. Technology is great, but it’s just a tool and if we aren’t using it correctly, it’s useless.

The bottom line: the retail space is changing, and it will continue to change in our lifetime. Technology that feels innovative now will be irrelevant in what feels like minutes. Collaboration is just one of the keys for success and maintaining inspiration.

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Why Retailers in China Must Sell Experiences Over Products

Posted By: SGK April 18, 2018

This blog post has been contributed by Gary Yip, General Manager of Brandimage, China. 

Brands in today’s climate cannot afford to stay still. Earning and re-earning loyalty at every micro moment in the customer journey is crucial to staying relentlessly relevant.

This is especially true in China than anywhere else. In fact, five of the top 10 and almost half of the top 50 brands in China are in the technology field — while the rest have all invested substantially in digital to better connect with consumers.

Recently, China’s popular messaging app, WeChat reached 1 billion monthly active users. From tasks ranging from the basic texting and calling, WeChat as a platform has evolved to allowing users to pay bills, book private hire cars or more recently deploy health technology through artificial intelligence. WeChat has become an integral part of the Chinese identity.

The accounts created and used by companies and brands have also increased — totaling around 3.5 million in September 2017. Similarly, brands are concurrently utilizing the social media app, Weibo to connect with consumers and deliver their brand messaging. By using this “digital empathy” approach, brands are integrating social strategy within the retail mix — using these apps to sell items ranging from sports apparel to food products.

Consumers love browsing at stores and buying online, and that trend will continue to grow globally. However, that does not mean that physical spaces are redundant as opportunities flourish for online retailers to explore and benefit.

Are pop-up shops the answer?

It is beyond just being a social China — it is right now a 'cultural' China. Some brands are really spot -on with their marketing mix and they understand what drives success. They recognize it's not about the data, or the algorithms that you create on that data. The reality is that the Chinese consumer has created their own algorithms in their life.

With advancements in technology and digital shopping abilities, brands that create seamless connectability will stand out throughout the internet of life. From colourful graffiti to edgy architectural wonders, flashing neon lights to lush-green flora, people are more likely to share selfies and photos of spaces with interesting elements.

Here are a few questions to consider when building brand experiences:

  • Is this digital experience interactive and shareable?
  • Will customers remember this space?
  • Does this inspire awareness, purchase and loyalty?
  • What does this mean for brands?

As we transition to the Experience Age, brands are not only embracing creating brand experiences within a retail space, but have also experimented with dabbling in new verticals such as Muji dabbling into the hotel industry. These experiences are crossing into both digital and physical spaces, creating a cohesive look and feel in other areas.

Korean makeup brand The Face Shop has partnered recently with soft drinks giant Coca-Cola with a new unique cosmetics range. The makeup range collaboration includes cushion compact, powder pact, five cream lip tints, five lipsticks, three gel lip tints and an eyeshadow palette – all in Coca-Cola pattern packages.

Brands that have emotionally connected with the Coca-Cola brand can now enjoy a new touch point. As quoted by Jing Daily, “As beauty becomes a more nuanced and subjective concept in China, brands must choose the kind of beauty they want to represent.”

READ: The Winning Brands Differentiate with Digital Packaging

The Experience Age can also be seen in luxury brands with the latest example Hermès. The brand has recently relaunched a mobile app called H-pitchhh. Much inspired by the traditional horseshoe tossing game that can be traced all the way back to Roman soldiers, it allows players to virtually toss a horseshoe using a swipe on iPhone, not unlike throwing a Poké Ball in Pokémon Go.

While the Hermès game is available globally, it is an especially smart strategy for China, where the average luxury consumer is significantly younger and more receptive to gaming.

How far is too far?

By expanding product lines, brands in China must also be aware of unforeseen cultural issues. In a time where consumers are expecting brands to stand up for particular movements, there must be a deep evaluation to how this might cause a ripple effect for your brand globally.

All in all, retailers must use digitally driven strategies to offer differentiated and accessible online experiences that not just spark conversation, but also enjoyed on-the-go, anytime, anywhere.

About Gary Yip: Gary has over 25 years of Advertising and Branding experience in China & APAC. He is a result-oriented professional from Singapore with a proven track record of leading clients such as Virgin Atlantic, Pernod Ricard, LVMH, Bacardi and Sands Macao Cotai. Having held leadership roles at advertising agencies: Ogilvy & Mather, Y&R and Saatchi & Saatchi since relocating to Shanghai in 2007, Gary has a solid track record of positive and long-term business partnerships. Gary’s strong interpersonal skills, cultural sensitivity and fluent Cantonese and Mandarin enable him to lead local teams to global-standard operations and is a recognized expert on brand localization and international marketing implementation.

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Anthem Launches UK’s First Interactive Point-of-Sale Campaign

Anthem, a global creative agency that actively connects brands with consumers by amplifying desirability from package design to brand campaign to drive brand performance has launched the first interactive POS (point-of-sale) campaign in the UK, helping to usher in a new chapter in point-of-sale advertising.

See how Nestlé and ASDA reported achieving a 41% increase in sales through the creative application of this innovative technology.

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Digital Brands Going Brick-and-Mortar (Things Get Real, Real Fast)

The omnichannel buzz is all about broadcasting your brand across digital, mobile and traditional marketing channels in a consistent and compelling way. But what about your brand’s physical presence? What about its brick-and-mortar execution?

Historically, brand inspiration has flowed from the physical to the digital. Today, it’s instructive to look at the reverse flow – how brands that have been built in a digital world are taking their message to physical locations. Read this new case study from IDL Worldwide, a new member of the SGK family, and learn what two iconic screen-based brands are doing to make it real.

For this and four more articles on improving brand performance from concept to consumer, read the complete Patterns report, Innovation Everywhere. Download Patterns, Issue 1, 2015.

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IDL's 2015 GlobalShop Highlights

Every year, those in the retail industry come together at GlobalShop to explore the best in store fixturing, visual merchandising, digital, store design and operations. This March, IDL walked the show to learn everything the 750 exhibitors had to offer in terms of retail design and shopper marketing. We’re eager to share with you what caught our eye the most at this year’s show.

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8 Tactics For Navigating The Retail Terrain Of Emerging Markets

Posted By: SGK May 13, 2014
8 Tactics For Navigating The Retail Terrain Of Emerging Markets

For most multinationals, the centre of gravity is shifting. There’s no question of the growing importance of emerging economies. And, in most markets, there’s no question of the significance of the traditional retail trade. Yet, this integral space between brand owners and shoppers is often misunderstood and neglected. 

Drawing from 30 years of experience building brands in emerging markets, Spencer ball, Creative Director at Anthem, Singapore and Kathryn Sloane, Director of Growth at SGK, Singapore share eight key building blocks for creating an impactful, profitable brand experience in the retail terrain of emerging markets.

1.    GET LOCAL BUY-IN FROM THE START
It pays to do your homework and speak to people in local markets to understand the factors that have led them to where they are. From the onset, take time to learn how and why local brand managers have reacted to market forces. Even if those reasons seem bizarre, quirky or off-brand, there are often a practical lessons you can learn from them. 

2.    ENGAGE RETAILERS AS ADVOCATES
For general trade markets, the in-store phase of the shoppers’ journey tends to be longer and more critical. General trade retailers are often the sole proprietors. They understand the strategy behind purchasing decisions and can negotiate product placement and promotional opportunities directly with the store owners. 

3.    INTEGRATE ON- AND OFF-LINE
Mobile phones are the device of choice for connectivity in most emerging markets. However, digitally integrated marketing is often focused in the modern trade. Consider mobile as the new currency to engage with shoppers and promote customer loyalty programs. 

4.    MERCHANDISE FOR REALITY VS ADDING TO THE CLUTTER
General trade is all about simplicity and being able to stand out. Confident, single-minded messaging and the creation of a unique space around the brand works best in these markets. For instance, a shop window where retailers need to climb a ladder to fetch your brand requires different messaging and design than a sari store where you’re invited to browse the sachet-laden fixtures.

5.    CONSISTENCY ACROSS CHANNELS
People who shop in general trade stores still visit the modern trade, in fact general trade shoppers are prepared to visit multiple stores multiple times to glean as much information as they can about their purchase, especially when considering high involvement items. Families also commonly window shop in modern trade stores as a day out.

6.    DEAL WITH INDIRECT DELIVERY
Protect the integrity of your brand all the way to the shelf by rethinking shelf-ready packaging and merchandising as a kit of parts, or “pass the parcel.” Recognise that the final stop between your brand and the shopper isn’t necessarily a retail environment. For example, tray-laden entrepreneurs now cater to people who are stuck in traffic. 

7.    MIND YOUR MESSAGING 
Success in this market hinges on understanding the penetration of your brand and adjusting the messaging accordingly. Don’t be guilty of ‘dumbing down’ your messaging. 

8.    FIND COMMON THREADS ACROSS MARKETS
Build for cities, not entire countries. Brands are likely to find better results and more effective design solutions when looking at commonalities between different channels or cities within the market, instead of addressing one market at a time. 

For retail success in emerging markets you must understand the context in which your brands will be seen. Start from the toughest environment and work out from there. Build a modular toolkit that works across a variety of retail contexts. And above all, don’t patronise your emerging market consumers. They’re worth a fortune.

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5 Myths About Emerging Market Consumers Debunked

Posted By: SGK May 06, 2014
5 Myths About Emerging Market Consumers Debunked

With experts projecting the growth of the middle class in emerging markets to rise from $1.8 billion to $3.2 billion by 2020, it’s more important than ever for brands to find their right point of connection. 

Our Kathryn Sloane, Director of Growth, APAC, and Spencer Ball, Creative Director at Anthem (part of our brand development group), dispel five pervasive myths about emerging consumers. Global brands, take note!

Myth 1: Emerging market consumers don’t spend very much.
Although these consumers aren’t as wealthy as those in other markets, proportionally they spend more of their income (50-75%) on consumer goods than those in wealthier markets (35%). All of these incremental sales add up to big baskets. 

Myth 2: They don’t buy premium.
We often over-simplify traditional trade in emerging economies while over-complicating the modern. This has led to the view that modern trade shoppers are brand-savvy while general trade shoppers are easily led. However, regardless of the channel, the in-store purchase of a shopper journey tends to be longer and more important in emerging markets than in developed ones.

Myth 3: Emerging market consumers focus wholly on price.
Emerging market consumers take into account many factors other than price. They benchmark, are very restrained as shoppers and prefer not to use credit. In this market, shoppers factor in travel costs in their shopping basket, so geographic location is key. They also may not have the space at home to buy in bulk. 

Myth 4: They don’t shop in modern retail stores, but would if they could.
Emerging consumers do browse in modern retail stores for entertainment and ideas, but prefer to buy in general trade stores. Why? They like the noise, informality and personal service. They also trust the salespeople. Moreover, many consumers shop in both – they buy groceries in general trade and then head to Gucci!

Myth 5 – General trade retailers are not savvy.
Nothing could be further from the truth. General trade retailers often have greater visibility into shopper behavior than modern trade retailers do. They intimately understand their shoppers: How, why and when they buy. They adjust their mix accordingly based on their knowledge of real shoppers in real time. 

For more insight how to create an impactful, profitable brand experience in emerging markets, watch The Retail Imbalance in Emerging Markets, a BrandSquare Live Session hosted by Spencer Ball and Kathryn Sloane. 

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Five Behaviors that Define the New Exchange Between Brands & Shoppers

Posted By: SGK January 06, 2014
Five Behaviors that Define the New Exchange Between Brands and Shoppers

The purchase funnel has been a useful tool for marketers for over 100 years. But the fragmentation of media, abundance of retail channels, and rise of shoppers with unprecedented information access have weakened this model’s relevance, says Jim Lucas, EVP, Global Insights and Strategy at SGK.

Shoppers are no longer constrained by the purchase funnel. Today’s shoppers are keenly aware of the value of their behavior—so much so that they treat their behavior as a medium of exchange. Consumers trade personal information for better functionality (Google, Yahoo, etc.), for more relevant deals from a loyalty program (American Express’s Link, Like, Love), or for the ability to participate in something larger (Pepsi’s Refresh Program).

Looking at this new exchange between shoppers and brands, we’ve focused on the 5 transactions that are most common and best allow us to accommodate shoppers’ personalized paths to purchase, as well as the possible benefit to shoppers of each type of transaction.

  • Attention is how we connect to the world; it shapes and defines our experience. Attention is the mechanism that underlies our awareness of the external world and regulates our thoughts and feelings; a way to reframe a situation, category, etc.
  • Engagement helps the shopper achieve selective attention: focus on a task at hand, find a relevant solution, and devote attention to eagerly processing.
  • Purchase is about making it easier for shoppers to buy the right product for themselves, reaffirming choice.
  • Loyalty is a reminder of the value shoppers received from last use; reinforcement of how smart their decisions were.
  • Advocacy is about allowing the shopper to share her experience/solution with others—a way to pay-it-forward—and serves to help guide new shoppers.

For more insight read Jim Lucas’s full article, The Purchase Funnel Is Dead; Long Live Shelf-Out in Checkout, Vol. 1 Issue 2.