Chain Drug Review, April 29, 2019

40 Chain Drug Review April 29 2019 My Turn Establish higher brand value in a prosumer world By Laura Gurski Building a modern consumer brand value requires a deep understanding of how consumers process information from a multitude of brand interactions We all know that consumer demographics are changing fast But as Millennials become the dominant group and a rapidly growing cohort of Generation Z peers follows close behind whats the impact on companies looking to drive up brand value New research from Accenture Barkley and Jefferies provides some answers to this question First and foremost it suggests that todays younger consumers are becoming prosumers What does this mean Essentially they dont simply consume a brands product or service Instead they absorb and process information from every interaction with the brand what they see and read their engagements with employees as well as their experience of the product or service itself to generate their perception of what the brand means to them This makes having an authentic brand purpose more important than ever By understanding what a brand stands for its heritage its ethics its social values even its sense of fun prosumers are more likely to form an emotional bond It is this brand love that drives up value Whats important to a consumer and what makes them love a brand will vary with each individual each occasion and each interaction To build brand value in a complex and ever changing environment companies will need to be highly targeted agile and able to create relevance in order to generate consumer appeal and engagement Here are four ways to build brand value in a prosumer world Treat data with care The research highlights just how seriously todays consumers take the safety and security of their personal information In fact once baseline factors like value for money reliability and quality are accounted for being trusted with data is seven times as impactful as the other consumer levers a brand can pull To build a deeper and more valuable relationship with consumers companies need to do everything in their power to treat personal data with security and sensitivity Find new ways to win loyalty Rewarding consumers for their loyalty is another key brand lever and that means thinking beyond just monetary benefits Whether it involves providing expert how to guides personalized recommendations and subscriptions or rewards for introducing friends and contributing new ideas rewarding customer loyalty is over six times as impactful as the average brand lever Take beauty brand Julep which invites customers to become mavens who play an integral role in developing products From crowdfunding innovations to trialing new products and offering feedback its a smart way to create an authentic and lovable brand experience IntelligentX Brewing Co is another good example with a unique approach to product innovation and refinement IntelligentX employs artificial intelligence in gathering consumer feedback Each bottle has a label that details a website where consumers can go to provide input on the flavor carbonation level etc Feedback is then fed into the brewerys algorithm which produces new recipes each month and is refined through use of the most recent consumer feedback Although it is used on only a small scale today it is easy to see how this technology could be employed to increase the speed of innovation for category segments Understand what consumers value Consumers are constantly looking for something new and different from a brand and there is a whole host of levers that can be used to meet this demand These range from supporting social interactions embedding ethics and sustainability into products and services and making everyday life as simple and convenient as possible to making quality or value for money a key attribute But with so many levers to pull and so many different consumer demands to satisfy where should brands target their investment The answer will likely lie in consumer data and information Once identified brands must seek to deliver that value through preferred consumer channels Just look at SoulCycle By creating a community for indoor cyclers and fitness buffs supported by value adding elements like custom SoulCycle playlists on Spotify this brand aligns its purpose with its customers values of health and a positive environment Make the most of what makes your brand special Successful brands are those that understand what makes the brand special as well as the distinct characteristics of the category in which it operates For instance data shows that fast food restaurant brands benefit most from accelerating their omnichannel personalized Laura Gurski customer engagement while for personal care and beauty brands the biggest boost comes from positive peer reviews and tailored customer service Create relevance at scale with the consumer of the future There can be no doubt that the consumer is firmly in the drivers seat The onus is on brands to create relevance at scale in order to appeal to the new generation of consumer build value and capture untapped growth opportunities It means seeing the world in the frame of the consumer understanding the levers to pull and building the capabilities to sense respond to even anticipate shifting demand patterns Laura Gurski is senior managing director and global lead for consumer goods and services at Accenture Something is rotten with e commerce food sales Continued from page 39 CPG companies must be relevant targeted and agile Click and collect is not a savior dotes tell of how regular subscription Amazon Prime deliveries being delayed because drives have more deliveries to make and they face time pressures resulting in poorly organized loading of trucks Walmart has not been immune to fulfillment problems either which apparently caused the demise of its pilot program with Deliv Drivers from Deliv said they frequently had to wait 40 minutes or more to collect grocery orders for same day delivery since Walmart could not process online grocery orders fast enough according to one news story Even Peapod one of the earliest online grocery delivery services still has a tough time Convincing customers to order groceries online is still nearly as difficult now as it was in 1989 said a report from Deutsche Bank Securities which noted that 22 of apparel sales and 30 of computer and electronics sales happen online today but only 3 of grocery sales Unsustainable business model These examples clearly show that the supply chain for online grocery will never be at parity with brick and mortar But there are cost and scalability issues that further complicate the business model and doom it to unprofitability and unsustainability There are two costs that are not borne by brick and mortar retailers Order fulfillment Stores need employees to pick out grocery items and package them for delivery Depending on the number of orders theyre dealing with on a daily basis grocery retailers may find it necessary to hire more employees to specifically handle the online orders or use existing employees and reduce the services they can provide to brick and mortar customers Delivery costs There are costs of cardboard boxes for packaging items as well as gas mileage and driver time to factor in Recent research from Capgemini reveals that retailers net profit could fall by up to 26 in the next three years despite increased online grocery sales if they dont radically improve last mile solutions Some retailers are considering and piloting alternative delivery programs Think Amazon drones and Krogers unmanned delivery vehicles But these have their own logistical issues to overcome before they could go mainstream To address rising costs many large grocers including Walmart and Kroger are investing heavily to expand their click and collect services where customers order online but drive to the brick andmortar stores to pick up their purchases However clickand collect is not a savior Its not scalable since increasing online orders will require the store to have more employees dedicated to pulling and packing items increasing the cost of hourly employee wages and potentially disrupting traffic of in store shoppers Theres also a demand problem TABS documentation over the past six years shows that consumers desire for online grocery shopping isnt there It may be growing but there are not enough people on a nationwide scale to sustain the business model For example a typical grocery store sees at least 20 trips per year per consumer In comparison only about one third of the population buys groceries online once a year and only one sixth claim to make six purchases or more a year The convenience factor isnt strong either Research from Bain Co and Google uncovered that only 42 of shoppers say that the online experience saves them time A way out To break the cycle of low demand and fulfilment challenges online grocery companies must concede that they cant be price competitive Instead it should be marketed as a premium service particularly since many consumers are already paying premiums through third parties and their markups are quite significant Now is the time too for retailers to experiment with bounce back offers to encourage follow up purchasing as well as reminders and multitrip discounts to help move customers from just testing the online grocery shopping waters to creating habit forming adoption Grocery retailers have a long way to go to claim success They need to spur customer demand encouraging it to grow faster than it currently is and customer penetration must increase to achieve the needed scale The supply chain must be optimized for delivery operations And they need to undertake expensive investments to automate fulfillment to achieve the necessary scale Until this sector can check these items off their lists the outlook for online will remain grim Kurt Jetta is founder and executive chairman of TABS Analytics