By the end of the 1990s, consolidating retail and fragmenting media had put the traditional business model of consumer goods marketing under enormous strain. If the model wasn’t already at a breaking point by then, a number of profound changes in the last decade have brought it the rest of the way. Simply put, we are in the midst of a revolution in the way consumers and shoppers interact with the products they buy. Three dramatic changes have placed shoppers at the center of the equation in a way that leads us to believe that a corresponding revolution must take place in the way we market consumer goods.
Change #1: Media Has Become Personal
It’s no longer guaranteed that an ad will reach the target market. The option to illegally download and stream content online means that viewers might easily watch a version of the content that has the expensive American ads stripped out of it.
Facebook and YouTube are the upcoming generation’s entertainment of choice. Smartphone apps make content immediately available anywhere and anytime to a global community.
In short, media has become personal, and as a result, the central pillar of consumer communication since the 1950s–the TV ad–is, if not dying, clearly not the force it once was. As a consequence, the importance of intercepting shoppers at the point-of-purchase in an attempt to influence their decisions is more important to consumer goods companies than ever before. The rush to produce new ideas and leverage new technology that makes in-store communication more impactful has driven the power into the hands of the shopper.
Today, a Midwestern housewife can use a smartphone to compare prices at the aisle and redeem any number of coupons immediately. The shopper is now an important component of value creation for retailer and manufacturer alike.
Change #2: The Shopper’s Choices Have Proliferated
At the same time, shoppers have more places to shop than ever. While retail sales continue to consolidate around key players, these retailers have also gone through enormous structural change. Since the late 1990s, players like Tesco, Carrefour, Metro, and others have chased market share not by doing more of the same, but by creating multi-format approaches. Tesco’s offerings now extend way beyond traditional supermarket goods; the store’s stable now includes convenience stores, gas stations, community supermarkets, discount stores, shopping malls, and hypermarkets.
Change #3: Globalization
Geography is no longer an obstacle to finding and purchasing a product. Shoppers are not limited to the inventory on the shelves of their local stores. They recognize the value of shopping online and will pay a bit more for shipping to get exactly what they want and have it delivered.
Amazon.com’s 2010 entry into grocery and gourmet foods introduces a new, potentially global player to challenge the retail brands around the world.
Global e-commerce in anything beyond travel and tourism is yet to become a reality. But how long can shoppers in Singapore be expected to browse products on a U.S. website without being able to buy them online? There is little, beyond archaic trade regulations, to stop a smart, innovative player like Amazon or Zappos from applying their skills in online marketing and supply-chain aggregation to realize their global potential.
Thus, with the personalization of media, massive channel proliferation, and globalization, the control of the retailer has been transferred to shoppers, who now have many more options for where to spend their money and what to spend it on. The age of the shopper is here.
This blog found in Course 02: The Age of the Shopper.