What does the future of retail look like? ACRS re-imagines retail as promoting wellbeing, strengthening community connection and social interaction - while increasing visitation, dwell time, engagement, consumer satisfaction and sales.
Japanese clothing company Original Stitch made waves on social media with the launch of their Pokémon themed dress shirts earlier this year. In addition to featuring fabric designs for the beloved creatures, the shirts stand out for their customisation. Customers are not only able to choose the style of their hand-made shirt, but also the specific fabric design of each individual component, as well as their favoured type of collars, cuffs, and buttons.1 Retail customisation enables consumers to tailor products to their liking, suiting their personal tastes. In a retail landscape that has long held mass production as the norm, individual customisation offers an avenue for consumers to express their uniqueness.
Why are consumers interested in customisation?
Consumers may desire customisation for multiple reasons like function, aesthetics, or self-expression. Taking an active role in designing their purchase gives customers exactly what they want, generating greater feelings of customer loyalty to the brand.2 Customisation has also been found to have a further relationship with task motivation, where individuals exhibit greater persistence, concentration, and diligence when performing tasks related to a customised product.3 By personalising a product to match their own style, consumers satisfy a self-expressive need and extend their identity into the product. Such a prospect holds great appeal, and has been leveraged by a range of brands in categories from footwear to fast food.4
Nike is recognising the potential of customisation in their retail space
A notable implementation of retail customisation is in Nike’s flagship House of Innovation 000 store.5 A ‘Sneaker Bar’ is set in Nike’s most innovative location, allowing visitors to full customise their shoes from the ground up. Including embroidery, printing, lasering, and a full range of laces and zippers, patrons of the store can fulfil their wildest shoe desires, making the Sneaker Bar a hugely popular feature.
1 Krabbe, E. (2019). Source.
2 Valenzuela, Ana, Dhar, Ravi, & Zettelmeyer, Florian. (2009). Contingent response to self-customization procedures: Implications for decision satisfaction and choice. (Report). Journal of Marketing Research, 46(6), 754-763.
3 Kaiser, U., Schreier, M., & Janiszewski, C. (2017). The Self-Expressive Customization of a Product Can Improve Performance. Journal of Marketing Research, 54(5), 816-831.
4 Kimmorley, S. (2016). Source.
5 Golden, J. (2018). Source.
In early 2019, IKEA opened its most sustainable store in London to cater to the growing consumer interest in mindful consumption.1 The store uses 100% renewable energy and utilises natural lighting, while also offering sleep assistance programs in partnership with The Sleep School, an agency specialising in improving sleep patterns.
Why should brands encourage mindful consumption?
Mindful consumption refers to a consumer’s ability to pay attention to internal and external stimuli and their effect on consumption.2 This allows consumers to become aware of their consumption habits and makes choices that may be more beneficial to their overall wellbeing after deliberation. Aside from helping consumers cope with the stresses of modern life, mindful consumption can have positive effects on consumer-brand relationships and behavioural outcomes. For example, Ndubisi argues that consumers with high mindfulness have significantly higher levels of trust, satisfaction, and commitment, which lead to positive behavioural outcomes such as attitudinal loyalty and behavioural loyalty.3
How can brands encourage mindful consumption?
Academic research suggests that brands can employ something termed the ‘self-creation effect’, where consumers engage in more mindful consumption when they are involved in the product’s creation.4 Meal kit companies such as HelloFresh and tap into the self-creation effect by allowing consumers to be involved in the creation process. Alternatively, some brands have adopted a more tongue-in-cheek approach to mindful consumption. For example, mineral water brand Blu is cleverly encouraging consumers to enjoy the company of friends during meal times with a specially designed plate that contains a hidden QR code. When consumers take photos of the food on the plate, the secretly scanned QR code displays a branded message encouraging the consumer to enjoy the moment.
1 Dorfer, S. (2019). Source.
2 Bahl, S., Milne, G. R., Ross, S. M., Mick, D. G., Grier, S. A., Chugani, S. K., Chan, S. S., Gould, S., Cho, Y., Dorsey, J. D., Schindler, R. M. Murdock, M. R., and Boesen-Mariano, S. (2016). Mindfulness: its transformative potential in consumer, societal, and environmental well-being. Journal of Public Policy and Marketing, 35(2), 198-210.
3 Ndubisi, N. O. (2014). Source. Consumer mindfulness and marketing implications. Psychology and Marketing, 31(4), 237-250.
4 Brunneder, J. and Dholakia, U. (2018). Source. The self-creation effect: making a product supports its mindful consumption and the consumer’s well-being. Marketing Letters, 29(3), 377-389.
Early this year The Conservatory, a new fashion boutique from New York City, opened its doors to customers.1 Unlike most other retail locations however, creativity instead of commerce lies at the heart of its operations. The retailer carries a range of 50 fashion brands, housed in a location filled with art and plant life, aiming to create a thematic experiential store for customers. But strangely, the store is a transaction free space- none of the products can be bought, only experienced. Customers register an online account with the retailer when they visit the store, the only way to open an account at all, and order the fashion and lifestyle products that capture their interest on The Conservatory’s website for home delivery.
Operating in this showroom format places the key benefits of the brick-and-mortar shopping experience front and centre. While online shopping brings convenience, physical retail is an opportunity for consumers to indulge in all of their senses, interacting with a tangible product instead of an intangible on-screen concept. Curating a particular atmosphere and visual appeal within a retail environment goes a long way towards contributing to perceptions of shopping value.2 Through transforming a store into a dedicated showroom where the focus is on understanding and not transacting, consumers don’t merely browse the products on display, they experience them.
Closer to home, another brand has embraced the principle of showrooming. LiTMUS LABS is a showcase of cutting edge consumer devices, from smart home devices to motorised skateboards.3 Located in the central plaza of Melbourne Central, LiTMUS LABS gives innovations typically distributed through online stores a presence in physical retail, allowing customers the chance to discover new products they wouldn’t have encountered otherwise.
Image source: Harper’s Bazaar
1 Saunders, N. (2019). Source.
2 Ainsworth, J. and Foster, J. (2017). Comfort in brick and mortar shopping experiences: Examining antecedents and consequences of comfortable retail experiences, Journal of Retailing and Consumer Services, 35, 27-35
3 Commonwealth Bank, (2019). Source.
Green spaces are areas within urban environments with grass, trees, and other plants set aside for recreational or aesthetic purposes. In addition to providing shade and reducing air pollution, green spaces have both mental and physical health benefits to individuals – a recent study suggests that people who grew up with substantial residential green spaces are 55% less likely to develop a mental health disorder.1 So what relevance do green spaces have for retailers?
Green spaces can positively affect key business metrics.
According to academic research, green spaces actually have restorative potential (such as reducing fatigue) linked to key business metrics. Rosenbaum, Otalora, and Ramirez found that customers who recognised a shopping centre’s restorative potential reported having higher levels of satisfaction, intention to recommend, loyalty, and Net Promoters Score.2 This was supported by Purani and Kumar who found that green spaces have positive effects on consumers’ psychological states, attention, and mood which in turn positively influences service preference.3
How are retailers incorporating green spaces?
At the store level, a number of retailers create plant displays to provide a welcoming green contrast to the often stark white shopping centres or concrete grey of retail strips. For example, the Suncorp Discovery Store in Sydney is decked with a variety of greenery along its walls, with pots plants and wooden furnishings decorating the seating area. The store was even shortlisted for the 2018 Outstanding Store Design category at the World Retail Awards.4
Another example is Burwood Brickworks, a new development in Melbourne that plans to be a world-leading shopping centre in sustainability once its construction is complete in late 2019. The shopping centre will be adorned with hanging greenery and spaces where shoppers can relax while being surrounded by nature. The broader complex – to be completed with apartments and living spaces – will embed nature into the urban environment and provide residents and shoppers with a sustainable space that promotes wellbeing.
1 LS:N Global. (2019). Source.
2 Rosenbaum, M. S., Otalora, M. L., and Ramirez, G. C. (2016). The restorative potential of shopping malls. Journal of Retailing and Consumer Services, 31(1), 157-165.
3 Purani, K. and Humar, D. S. (2018). Exploring restorative potential of biophilic servicescapes. Journal of Services Marketing, 32(4), 414-429.
4 World Retail Awards. (2018). Source.
Consumer preferences are shifting to prefer experiences over products, with spending on experiences expected rise to $8.0 trillion by 2030.1 While great for service retailers such as restaurants, how do other retailers compete when consumers are not buying as many things?
Some retailers have addressed this through creating third spaces within their stores – spaces that foster community interaction, positivity, and psychological support for individuals.2 Traditional third places were places that people voluntarily gathered at to enjoy company such as cafes, barbers, or pubs. But now, retailers are incorporating elements of the third place, becoming a hybrid space other than work, home, or a regular store where people can meet, interact, and exchange ideas and culture. For example, telecommunications brand AT&T has introduced The Lounge in their Seattle store that combines their products and services with a co-working space and coffeehouse designed to encourage collaboration and interaction – complete with high-speed internet.
Another example of how retailers can create third places for customers to interact and engage in meaningful activities is Apple’s community engagement initiative, Today at Apple, that encourages customer creativity and learning. For example, the brand’s Michigan Avenue store in Chicago has little retail space for product displays, acting more as a place for customers to enjoy the numerous activities the Today at Apple initiative has to offer such as music, coding, and art workshops that are run in collaboration with local artists and talent. Of course, these workshops focus on how to use Apple products, providing a great way to engage customers with the brand.
While the internet may now be the most convenient place to purchase products, it currently cannot replicate the opportunity for connections that physical retail stores can provide. The physical store of the future may be a place that has little focus on sales – that can be delegated to online channels – but instead offers consumers meaningful social interactions with other consumers, staff, and the brand itself. For now, Australian retailers should focus on creating comfortable environments within their stores that, in the future, could be transformed into third spaces that encourage connections.
Image retrieved from Flickr. Source: Jorge Láscar.
1 Bremner, C. and Boumphrey, S. (2017). Source.
2 Project for Public Spaces. (2008). Source.
Nike opened its “House of Innovation 001” flagship store in Shanghai in October, 2018. In one month, it had over 600,000 visitors, or just under two thousand customers every hour the store was open.1 Nike then released an even more extravagant flagship store in New York City in mid-November. The NYC store has six stories and allows consumers to instantly shop through their smart phone, customise their own Nike shoes, as well as selling products exclusive to the flagship. Rather than focusing on profit, flagships aim to encourage consumers to visit their stores.
What makes a store a flagship?
Online shopping spend has more than doubled in the past four years.2 That is not to say that consumers are abandoning the brick-and-mortar store – recent ACRS Omnibus data indicates that the physical store is still the most important touchpoint for consumers – rather consumers are abandoning boring retail. Flagships entice consumers into stores as they are a showcase of a brand’s essence and create memorable branded experiences. For example, Lush’s flagship in London expresses their overall brand image through its own day spa where customers can relax and see how the brand’s products can be used within their own homes to replicate the experience.
Additionally, flagship stores are often known for innovative technology that provide consumers with exceptional shopping experiences that transform the store from being a location to a destination. For example in late 2018, Tommy Hilfiger opened their new flagship “store of the future” in Amsterdam equipped with interactive mirrors, personalised embroidery stations and a café. The company’s CEO explained that such technology and features excite customers and gives them a reason to enter the store. Furthermore, it allows the store to take an extra step in customer service, which assists in building stronger customer relationships.2 Another example of a recent flagship opening is footwear retailer Platypus who opened a store with a DJ and Instagrammable photo area to appeal to their young customer base.
1 Green, D. (2018). Source.
2 Statistica. (2018). Source.
Online retail is continuing to take the world by storm, with more than half of the growth in Australian retail from 2017-18 coming from online sales.1 An emerging trend helping to drive growth in the online fashion industry is the “try before you buy” (TBYB) initiative. Fashion brand ASOS was one of the first companies to implement the program in November 2017, allowing their customers to order multiple items before deciding what they would like to keep, with no upfront cost. Shoppers are only charged for anything they decide to keep after 30 days. In the UK, this increased ASOS’s sales by 23%.2
Why is TBYB appealing for consumers?
Having TBYB as an option for consumers serves to mitigate typical online shopping concerns like inconsistent sizing and poorer-than-expected product quality. A TBYB system is attractive in its ability to replicate the reassurance gained from an in-store shopping experience, being able to physically touch and try on a product before committing to a purchase, while still retaining the convenience of the online marketplace. By removing a barrier to purchase for consumers, online retailers are likely to see increased sales, explaining why 25% of retailers are planning to implement TBYB policies online by 2019.3 However, retailers working to take on such initiatives need to be aware of the challenges involved.
What are the challenges for retailers?
With the security of free returns, consumers will make more purchases, but correspondingly increase their number of returns, at an average of an additional four items a month.4 Considering the costs of handling, shipping, administration, and repacking, the increased expenditure that results from a TBYB program may outweigh the benefit from increased sales. Processing returns is a complex process, on average a returned purchase passes through seven people before being listed for resale. Despite this, 69% of retailers are not deploying any technology based solutions to increase efficiency and manage the costs of this process.3 Retailers who seek to implement TBYB into their operations must be fully prepared to optimise their returns process to make the change profitable.
Who else uses TBYB?
Apart from ASOS, online giant Amazon has also implemented a TBYB program. In 2018, the retailer launched “Amazon Prime Wardrobe” where customers can select from a range of clothing to be delivered, and only billed for the items they choose to keep after a 7 day period. To streamline the process, the clothing deliveries come with a resealable box and prepaid return label. With a retailer as large as Amazon involved, TBYB has tentatively entered the mainstream, making it imperative for other retailers to turn their thoughts to considering its potential for their business.
1. Scutt, D. (2018). Source.
2. Wood, Z. (2018). Source.
3. Hook, M. (2018). Source.
4. Brightpearl. (2018). Source.
In late 2018, Instagram rolled out new accessibility features on their platform to enrich the user experience of visually impaired users. Support for alternative text, verbal descriptions of images attached to the image itself, has been implemented into Instagram’s app allowing users to add their own custom descriptive text to a post, available for screen reading aid software to relay to visually impaired users. Additionally, an automatic alternative text function that utilises AI to recognise and list the objects present in an image for screen reading software has also been developed for the app. This inclusive effort comes as part of a wider trend of accessibility and consideration for consumers with disabilities, with Instagram’s announcement of the features explicitly recognising the 285 million visually impaired people within the global population.1
Why should retailers pay particular care to accessibility concerns in their products and experiences?
Beyond the obvious moral reasons to make a product accessible for as many people as possible, regardless of their circumstances, there exists a legitimate business case in doing so. Consumers place value on Corporate Social Responsibility and take it into consideration when making purchase decisions.2 Through not only representing consideration for accessibility but also putting it into practise through service and product design, brands have an avenue to build a positive consumer-corporate relationship with potential customers. On a more straightforward level, people with disabilities represent an emerging market that has so far remained relatively untapped. Within Australia, one in five people have a disability that impacts on their ability to perform everyday tasks.3 This 20% of the population represents a combined AU$54 million of disposable annual income largely ignored by major brands.4
But how can retailers reconsider how they approach accessibility?
While Instagram’s recent change to accessibility was user oriented and specific to their service, there are more general initiatives that retailers may take. Creating a welcoming retail experience that normalises the act of shopping for people with disabilities through focussing on the key factors of staff interaction and store environment can result in considerable improvements to their experience. Retailers should strive for staff interactions that are helpful without being overbearing, allowing for the particular conditions of a customer to be accommodated without drawing specific attention it them.5 The store environment should take on a similar approach, with accessible store layouts and inclusive product displays that demonstrate that considerable care has been taken to embrace customers with disabilities.5 Moving forward, retailers have both a moral and business impetus to embrace accessibility for consumers, facilitating the shopping experiences integral to modern life.
1 Instagram. (2018). Source.
2 Kim, H., Hur, W. and Yeo, J. (2015). Corporate Brand Trust as a Mediator in the Relationship between Consumer Perception of CSR, Corporate Hypocrisy, and Corporate Reputation. Sustainability, 7(4), 3683-3694.
3 Australian Human Rights Commission. (2007). Source.
4 Diversity Council Australia. (2015). Source.
5 Baker, S., Holland, J. and Kaufman-Scarborough, C. (2007). How consumers with disabilities perceive “welcome” in retail servicescapes: a critical incident study. Journal of Services Marketing, 21(3), 160-173.
In 2018, Australian goods and services exports to China increased by 10.3% and 17.2% respectively.1 China’s demand for Australian products is high, with 84% of online Chinese shoppers likely to purchase an Australian product.2 China is not the only country to consider Australian products – beef exports to Vietnam increased 112% in the year leading up to October 2018,3 and the Middle East North Africa region has high demand for Australian-produced food and beverages.4 One reason for the high demand of Australian-branded products is the country of origin effect, where consumers evaluate products based on prior perceptions of the country the product was produced in.
Why should brands promote country of origin?
The country of origin effect can positively influence consumer perceptions of a product. For example, attributes of Australia such as healthy and clean have become associated with Australian produce such as health supplements and fresh produce. However, unfavourable attributes can negatively affect product evaluations. For example, Dekhili and Achabou found that while a country of origin with a favourable ecological image has no effect on ecolabelled product evaluations, a country of origin with an unfavourable ecological image negatively influences product evaluation.5
Additionally, country of origin effects go beyond a product category and can even effect brands. Newman and Dhar found that products manufactured in a brand’s original factory are perceived to be more authentic than identical products manufactured in an alternate factory – they develop a contagion, or a special kind of aura, that influence product perceptions.6
How have brands invoked country of origin perceptions?
There are a number of ways brands can invoke country of origin perceptions.7 Logos such as the Australian Made logo act as a guarantee that brands are produced in Australia. Brands such as Singapore Airlines have embedded their country of origin into their name, making it clear where the brand is from. In addition to overt country of origin strategies, other more subtle ways brands can invoke these perceptions include using symbols typically associated with the country. For example, famous celebrities such as Hugh Jackman or landmarks such as the Sydney Harbour Bridge could be used to invoke country of origin perceptions of Australia.
1 Laurenceson, J. (2019). Source.
2 Power Retail. (2017). Source.
3 Meat and Livestock Australia. (2018). Source.
4 Saudi Gazette. (2017). Source.
5 Dekhili, S, and Achabou, M. A. (2015). The influence of the country-of-origin ecological image on ecolabelled product evaluation: an experimental approach to the case of the European ecolabel. Journal of Business Ethics, 131(1), 89-106.
6 Newman, G. E. and Dhar, R. (2014). Authenticity is contagious: brand essence and the original source of production. Journal of Marketing Research, 51(3), 371-386.
7 Aichner, T. (2014). Country-of-origin marketing: A list of typical strategies with examples. Journal of Brand Management, 21(1), 81-93.
The luxury retail market in Australia is forecasted to grow at 6-8% annually through to 2024 which, in comparison with the broader retail industry expected to grow at 3% annually, is a rapid pace.1 Luxury brands such as Louis Vuitton have expanded well beyond just selling products to create unique artistic experiences within their stores. The Louis Vuitton store in Singapore’s Marina Bay Sands acts as a permanent exhibit, with pieces of art adorning the walls. Extending beyond the store, Burberry is deepening the concept of luxury is art by providing British schoolchildren with an arts and culture program that aims to explore how art and culture can enrich education. The program gives students experience in artistic mediums such as film-making, sculpting, and abstract dance.
Why are luxury brands bridging the worlds of art and commerce?
Joy et al. (2014) explore the notion of art and luxury in their study of Louis Vuitton stores in Hong Kong, explaining that consumers experience luxury stores that combine art and commerce through aesthetics, technology, customer service, and their connections to art, rather than as places to purchase products.2 Furthermore, the focus on aesthetics in the luxury sector is argued to contribute to memorable shopping experiences and brand loyalty. Additionally, art is a highly exclusive commodity, with no two works exactly the same – this heightens the exclusiveness and scarcity of luxury brands.
How can non-luxury brands incorporate elements of luxury?
While not all brands have the luxury of merging art with commerce, there are elements of luxury retailing that some brands are incorporating into their offerings. For example, US discount retailer Target has incorporated a concierge-style service into their stores that provides curated product advice and recommendations, tapping in to the high level of personalised customer service offered by luxury brands. Stores are also focusing on aesthetics, with brands such as Carrefour – a major supermarket chain from France – incorporating lighting and materials into their stores.
1 Deloitte. (2018, September 3). Source.
2. Joy, A., Wang, J. J., Chan, T., Sherry, J. F., and Cui, G. (2014). M(Art)Worlds: consumer perceptions of how luxury brand stores become art institutions. Journal of Retailing, 90(3), 347-364.
The Angad Arts Hotel in the United States is utilising colours to influence the mood of its guests. Consumers can book four different coloured rooms decorated to promote particular emotions – yellow promotes happiness, blue promotes tranquillity, red promotes passion, and green promotes rejuvenation. The rooms are fitted with corresponding art installations to create a multi-sensory experience. Not only is colour associated with particular moods, colours are frequently used by marketers as they can inform consumer perceptions of products and brands.
What is the role of colour in marketing?
Colour plays a role in many aspects of marketing. Branding research has identified particular colours that are associated with the five brand personalities (the human characteristics of a brand). White and pink are positively related with sincerity, red is positively related to excitement, blue is positively related to competence, black, pink, and purple are positively related to sophistication, while brown is positively related to ruggedness.1 This means that when designing logos, marketers should consider the colours used and how they relate to the five brand personalities.
In addition to the role of colour in branding, certain colours have specific associations. For example, in some Asian cultures, the colour red symbolises luck. Block and Kramer demonstrated that Taiwanese consumers are willing to pay more for a red product compared to non-red products, though also hold high expectations of product performance due to the superstitious associations with the colour red.2 Alternatively, colours have implied meanings when used visually, suggesting that when colours such as green are used, they implicitly inform consumer judgements of eco-friendliness and ethicality.3
Which brands are using colour well?
A great example of a brand using colours is a recent experiment by Honda which compared sales in a regular showroom to sales in a blue pod. The result was 35% higher sales in the blue pod compared to the regular showroom, suggesting that colour (in addition to other environmental factors) influence consumer behaviour.4 Another example is Google’s famous test of 41 different shades of blue before settling on one particular shade that resulted in an additional $200 million of advertising revenue.5
1 Labrecque, L. I. and Milne, G. R. (2012). Exciting red and competent blue: the importance of color in marketing. Journal of the Academy of Marketing Science, 40(5), 711-727.
2 Block, L. and Kramer, T. (2009). The effect of superstitious beliefs on performance expectations. Journal of the Academy of Marketing Science, 37(2), 161-169.
3 Sundar, A. and Kellaris, J. J. (2017). How logo colors influence shoppers’ judgments of retailer ethicality: the mediating role of perceived eco-friendliness. Journal of Business Ethics, 146(3), 685-701.
4 Hosea, M. (2017). Source. https://www.marketingweek.com/2017/09/08/brands-colour-influence-purchase-decisions/
5 Hern, A. (2014). Source. https://www.theguardian.com/technology/2014/feb/05/why-google-engineers-designers
The online space offers many advantages to retailers – lower overhead cost and greater reach for less expense, amongst others. But when it comes to consumer engagement, physical stores still retain the edge, with recent ACRS Omnibus behavioural tracking data indicating a preference amongst Australian consumers for physical retail.
For e-commerce-based sleep-product company Casper, the challenge of engaging consumers in a physical space has been met with the opening of the Dreamery – a New York location aimed at providing patrons with a luxury sleep and relaxation experience. While this is not the e-commerce organisation’s first foray into physical retail, the ‘nap spa’ embodies a unique approach to reaching consumers. Weary businesspeople, travellers, or anyone can book in for a 45-minute nap in a sleep pod outfitted with Casper mattresses and pillows, with additional luxuries like designer pyjamas, organic toothpaste, and boutique toiletries courtesy of partnering brands.
For retailers, innovations like this will soon be commonplace. The concept of slowing down in the retail space, creating value through experiential customer interactions, has been explored by a growing number of brands. The sensory nature of the Dreamery epitomises this approach, aiming to enhance the consumer’s interaction with the Casper brand, creating a pleasurable experience, positive impression and fond memory of the brand.
Casper’s strategy is also reflective of the broader trend of Integrated Wellness. Growing numbers of consumers are acknowledging the importance of maintaining not just physical health, but holistic wellness in their lives. And retailers are already responding in kind, integrating healthy lifestyle experiences into their retailing. Casper’s partnerships, however, demonstrate the abundance of modern brands who go beyond and uphold wellness as a core value of their organisation, embracing it as a central pillar of their offerings.
Image retrieved from The Dreamery by Casper. Source: Casper
Australian ecommerce brand Catch has temporarily dipped into physical retail with the opening of a pop-up store in Chadstone Shopping Centre. Featuring 500 of their most popular products, as determined by consumers, Catch aims to use the location to serve as a limited time display room to engage with their market. Customers have the opportunity to walk in and browse Catch’s curated offerings and purchase them online for instant pick up in-store. While ecommerce retailers have leveraged physical spaces for brand promotion, Catch’s use of product ratings to determine their selection highlights the importance (and functionality) of consumer reviews.
Reviews are a staple of the modern shopping experience. As tools for shoppers the thoughts and opinions of other consumers are an indispensable resource, with almost 95% of shoppers consulting an online review prior to making a purchase.1 Functioning as an electronic form of word of mouth, consumers treat online reviews as credible sources used to inform their purchasing decisions.2 Positive reviews have the power to convert undecided consumers into customers, making it a worthwhile pursuit for brands to encourage satisfied customers to share their experiences online. Conversely, negative reviews may deter potential customers- effectively resolving complaints around service and product failures becomes paramount to managing a product’s online rating.3 Additionally, review volume has been found to be associated with accuracy by consumers. The more reviews a product has, the more likely consumers are to trust the sentiment expressed in those reviews.4
Who else is paying attention to consumer reviews?
In New York, Amazon has employed the power of consumer reviews in the launch of ‘Amazon 4-Star’, a physical retail location where the majority of offerings have earned a 4 star or above rating from Amazon users. Some products feature information cards with direct quotes from online reviews. Besides providing further insight on the value of the item, the narrative style used in these reviews engage consumers more thoroughly, rendering them highly persuasive.5 Not only are consumer reviews an important consideration for retailers in managing the success of their products, they can also be a resource to be used in promotion strategies.
1 Spiegel Research Center (2017). Source.
2 Floyd, K., Freling, R., Alhoqail, S., Cho, H Y. & Freling, T. (2014). How Online Product Reviews Affect Retail Sales: A Meta-analysis. Journal of Retailing, 90(2). 217-232.
3 Malthouse, E., Maslowska, E., & Viswanathan, V. (2017). Do Customer Reviews Drive Purchase Decisions? The Moderating Roles of Review Exposure and Price. Decision Support Systems, 98(1). 1-9.
4 Salganik, M. & Watts, D. (2008). Leading the Herd Astray: An Experimental Study of Self-fulfilling Prophecies in an Artificial Cultural Market. Social Psychology Quarterly, 71(4). 338-355.
5 Hamby, A., Daniloski, K., & Brinberg, D. (2015). How consumer reviews persuade through narratives. Journal of Business Research, 68(6). 1242-1250.
Social Media Marketing
US homeware retailer, Wayfair, experienced a three-fold increase in traffic to their website via their social media channels in 2017 due to their adoption of new commerce features to their social media accounts, such as shopping tags on Instagram providing customers with a seamless link to purchase products promoted on the platform.1 With one third of the global population2 spending roughly two hours online every day,3 the integration of social media into marketing strategy is essential for retailers. Leveraging social media channels allow consumers to actively engage with the brands they purchase from.4
How have brands used social media to build customer relationships?
Social media is a tool that brands can use to interact and engage with consumers. This interaction brings multiple benefits, for example comments on a brand’s social media posts positively correlate with their financial performance.4 Furthermore, social media allows for brands to directly engage with their customers which assists in establishing brand awareness and loyalty.5 The development of this relationship contributes to improving customer loyalty by providing them with more than just a product to consume. Social media allows retailers to give consumers an experience which they will keep coming back for,6 and consumer loyalty can be used to maximise profits as loyal customers are willing to purchase more frequently, spend money trying new products, recommend the brand to others, as well as give honest suggestions for improvement.7
Social media can also be applied to foster consumers engaging with other consumers and not just brands. Consumer relationship management (CRM) practices have been influenced through social media’s ability to allow companies to directly engage with consumers in real time. This new power has a positive influence on consumer engagement, CRM levels,8 and customer satisfaction levels.9 Online clothing retailer ASOS saw great success in developing customer relationships with their #AsSeenOnMe social media campaign. The brand asked its customers to use the hashtag when they uploaded photos of themselves wearing ASOS clothing for the opportunity to be featured on the brand’s official Instagram page. Just under 1 million photos from ASOS customers were shared online with the hashtag. Social media platforms also improve brand awareness through enabling businesses to share their marketing content to large audiences immediately. Purchase intentions have a strong positive relationship with brand awareness, contributing to the importance of proper social media management for retailers.9
Brands can do more with social media besides directly promoting to consumers. Retailers can also build their brand personalities through social media channels, making posts embodying their brand philosophy or style that customers can relate to and share. Consumers, millennials in particular, seek inclusiveness and authenticity.8 Through building a personality for their brand on social media, retailers create a community for users to feel a part of. For example, Woolworths utilises their official Facebook page to share food-related memes to users, often incorporating their private-label products. These posts see interaction on the scale of thousands of comments and reactions, and are expected to benefit Woolworth’s financial performance.
2 Statista. (2018). Source. https://www.statista.com/statistics/278414/number-of-worldwide-social-network-users/
3 Statista. (2018). Source. https://www.statista.com/statistics/433871/daily-social-media-usage-worldwide/
4 Yoon, G., Li, C., Ji, Y., North, M., Hong, C. & Liu, J. (2018). Attracting Comments: Digital Engagement Metrics on Facebook and Financial Performance. Journal of Advertising, 41(1), 24-37
5 Guinn, K. (2018). Source. https://mayecreate.com/blog/6-reasons-your-business-needs-social-media/
6 Orzan, G., Platon, O., Stefănescu, C. & Orzan, M. (2016). Conceptual Model Regarding the Influence of Social Media Marketing Communication on Brand Trust, Brand Affect and Brand Loyalty. Economic Computation & Economic Cybernetics Studies & Research, 50(1), 141-156
7 Sánchez-Casado, N., Confente, I., Tomaseti-Solano, E. & Brunetti, F. (2018). The Role of Online Brand Communities on Building Brand Equity and Loyalty through Relational Benefits. Journal of Marketing Theory and Practise, 26(3), 289-308
8 Venciūtė, D. (2018). Social Media Marketing – from Tool to Capability. Management of Organizations: Systematic Research, 79(1), 131-145
9 Muaid, M. & Abdullah, A. (2016). Social Media Marketing: Utilizing Social Media to Advance Brand Awareness and Increase Online Sales. International Journal of Business, Marketing, & Decision Science, 9(1), 33-54
A number of big Australian brands such as Coles and Woolworths have rallied to support drought-stricken farmers. Coles pledged to match all customer donations throughout August and September – which is currently at $2.5 million, with all funds to be donated to the Country Women’s Association to assist farmers with household expenses. In addition to an initial $1.5 million donation from the brand, Woolworths donated the profits from its fresh departments on August 11 to Rural Aid to provide hay bales and other essentials for farmers.
So why do brands engage in corporate philanthropy?
The simple answer is that engaging in corporate philanthropy provides brands with a number of benefits if done correctly. A recent study by Hogarth et al. (2018) found that corporate philanthropy has a positive impact on shareholder value and the company’s ability to manage reputation risk. In other words, corporate philanthropy, while initially detrimental to profitability, contributes to improved corporate reputation and, in the long-term, increases shareholder value. Previous academic research also suggests benefits of corporate philanthropy such as the opportunity to educate consumers about the company’s values and improved corporate image as well as other positive consumer attitudes and purchase behaviours (Bennett, 1997; Hanjoon et al., 2009; Becker-Olsen & Hill, 2006).
Returning to the example of Coles and Woolworths, there are a few things the brands did right to generate such a positive customer response – after all, $2.5 million in Coles’ customer donations alone is no small feat. Firstly, the philanthropic cause is closely related to the brands – supporting the farmers that grow and raise much of the produce the supermarkets stock seems natural. Secondly, the brands were proactive in their announcements, rather than caving in to social pressure to help. Finally, the way the brands communicated their corporate philanthropy suggested altruistic motives, rather than self-interest.
Becker-Olsen K.L., Cudmore, A., and Hill R.P. (2006). The impact of perceived corporate social responsibility on consumer behaviour. Journal of Business Research, 59(1). 46-53.
Bennett, R. (1997). Corporate philanthropy in the UK: altruistic giving or marketing communications weapon? Journal of Marketing Communications, 3(2). 87-109.
Hogarth, K., Hutchinson, M., and Scaife, W. (2018). Corporate philanthropy, reputation risk management and shareholder value: a study of Australian corporate giving. Journal of Business Ethics, 151(2). 375-390.
Lee, H., Park, T., Moon, H. K., Yang, Y., and Kim, C. (2009). Corporate philanthropy, attitude towards corporations, and purchase intentions: a South Korea study. Journal of Business Research, 62(10). 939-946.