Winning retail in a post-trust era – the economic climate crush
Demonstrated in Kantar’s assessment of the world’s most valuable brands, Australian trust in businesses is dangerously low. James Brown says brands must double down on experience and purpose.
Brands involved in the new digital retail economy are clear leaders in mastering innovation and experience – two key drivers of brand growth in this tough economic climate. The power of combining consumer trust with being highly meaningful and different to the competition is a compelling mix – and those brands that achieved that performed six times better in this year’s ‘BrandZ Top 40 Most Valuable Australian Brands‘.
Australia’s most valuable brands saw an overall 5% decline in value. Despite a combined brand value of almost US$97 (AU$142) billion, this fall is largely attributed to a tougher year for brands navigating industry-wide pressures and weakening consumer confidence – perceived trust was the dividing line between many of the best performers and those that struggled.
Retail contributed around 19% of the total top 40 brand value, and despite inclusions for Woolworths, Coles, Westfield, Bunnings, BWS, JB Hi-Fi and BigW; four brands dropped out of the ranking – with some electrical retail and department stores having it toughest.
Trust has damaged our banking; what about retail?
While bricks and mortar retail is facing some challenges, the sector still boasts some of our most trusted brands. Aussie consumers do trust those brands that are highly meaningful and different to their competitors; yet our most valuable brands are less trusted than the global average – and they must work harder. Making improvements in trust is key to navigating a touch economic climate – and we can look to Bunnings for some key lessons.
Bunnings retains the enviable position of Australia’s most trusted brand and a value growth of 46%. It is also a leading example of a ‘meaningfully different’ brand, which is helping to fuel its success. This accolade of great trust is also driven by several other factors including being seen to be fair, responsible, really caring for consumers and such things as having a well-designed set of products and services.
Learnings from across the pond
Analysing UK trends driven by huge changes within the retail landscape reveals that big brand salience on its own is not enough to maintain leadership or grow – brands must not only have meaning for consumers, they must also be different. Obvious maybe, but many retail brands around the globe that do not do this have failed in their respective markets and those that did have enjoyed growth.
Notably, discount retailers in the UK have continued to grow significantly in brand strength over the past few years – not through their pricing but by being meaningfully different driven by innovation and disruption, well ahead of other retailer peers. This is an interesting learning given the growth and entry of similar discounter retailers into the Australian market and what is still yet to evolve in this retail space.
Innovation, brand love, experience and purpose
These four measures must be a priority for brands that want to be meaningful or different. There is no magic formula in terms of which of these elements should be prioritised over others – it comes down to what individual brands do well and where they need to focus more time and energy on.
However, within retail, we know that great experiences mean a lot and not just in physical stores but also as shoppers cross into ecommerce. Consumers are increasingly placing more value on the acquisition of experiences over products and hence the notion of how retail environments are adapting to do this is extremely sensible.
We are seeing numerous examples across the globe of traditional physical retail formats changing to be less about places where things are bought but more about where products and services are experienced – think Nespresso, Apple and IKEA. The transformation continues for beauty and luxury brands like Sephora, Tiffany & Co. and L’Occitane. These same environments are set up to provide a seamless conduit into other ecommerce channels where the transaction can ultimately take place.
Getting the brand experience right
Great experiences in some retail environments is about the injection of technology, but for many it, it should first be about getting the basics right around human interaction, friendly and knowledgeable staff, great layouts and many of the other fundamentals that shoppers seek.
So, there is certainly strength in our retail sector and some standout brands to benchmark, but the opportunity lies in how brands can grow through better shopper experiences, innovation and finding the holy grail of being different.
James Brown is head of retail and shopper at Kantar
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Image credit:Daniel Olah