By James Russo, Senior Vice President, Global Consumer Insight, Nielsen
Consumers today have less time to devote to shopping and more sites that deliver products with a simple click of the mouse. They shop less in stores and are less loyal to brands and retailers due to the ever-increasing fragmentation within the retail space–both in products and retail outlets. This could spell trouble for some retailers and manufacturers. So how can companies rise above the clutter online and on store shelves to capture an audience that is bombarded with options?
It’s all about keeping up with—and in many cases, staying ahead of—consumers. And despite the myriad challenges, it’s not as hard as you think. Consumers are more engaged than ever in this hyper-connected world, and a little innovation and effort to reach them where they already are can bring big results.
Even though global consumer confidence ended 2013 three index points higher than a year earlier, today’s shoppers continue to make trade-offs or buy less. Sales from 2013’s much anticipated holiday season were the lowest in three years at 1 percent growth from the previous year, below the 1.9 percent forecast. And in the past six years, Americans' trip frequency has fallen 15 percent while basket size increased only 9 percent—a trend that spreads across income levels.
But although shoppers are visiting the store less frequently, they’re more engaged. Each month, over 1 billion people log in to Facebook and 238 million log in to Twitter. In line with consumers’ growing connections and the trend toward saving, sales increased in only two retail channels: online sales rose 8 percent and dollar store sales grew 3 percent. The opportunity to engage with consumers is greater than ever, but you have to know where they are actually making their purchases and meet them there.
While companies and consumers are more connected than ever, increased choices also mean a shopper has a greater chance of getting lost. Customers used to face a simple set of decisions when they got to the shelf, fueled by a few media touch points before they arrived. Today, however, fragmentation continues to grow across distribution platforms, as well as type, availability and volume of content, as technology continues to evolve. And an outgrowth of fragmentation and choices is loyalty—or more often disloyalty. In the U.S., the average brand loyalty level, across a subset of categories, is 22 percent, meaning 78 percent of consumers are not loyal to a particular brand!
Despite these negatives, however, technology presents a wealth of opportunities for marketers to meet shopper demands. More technology means marketers must spread their reach across the multitude of platforms available to consumers. In our Nielsen/ANA cross-platform survey, when asked about the importance of integrated multiscreen campaigns in effectively delivering marketing messages, double the percentage of respondents expect them to be “very important” by 2016.
The variety of platforms means marketers can have a big impact with minimal content. For example, Nielsen research shows that 15-second television spots—when done right—can be 94 percent as effective on brand recall as 30-second spots, so many marketers are incorporating shorter spots into their comprehensive campaigns. Not surprisingly, the number of 15-second commercials jumped more than 80 percent between 2008 and 2012. In the same vein, short tweets can see big results; Oreo’s 2013 Super Bowl tweet “You Can Still Dunk in the Dark” was retweeted 10,000 times in one hour. As a result, this simple seven-word ad was one of the most buzz-worthy ads during the game, and it wasn’t even a commercial! For this year’s Super Bowl, some companies made big investments to try to create the next 140-character show stopper—proving marketers are willing to put dollars behind minimal content with the potential for a big impact.
The good thing about disloyalty is that it means companies have more chances to attract new and willing consumers with the right combination of insightful segmentation, product development, pricing innovation, packaging, and advertising to make sure they know what exists on the shelf or online. One of the least effective ways to build loyalty—price—inherently encourages switching. One of the best ways to win these new shoppers is through innovation—by launching new products or reinventing mature ones.
While it’s more difficult to reinvent mature products, doing so can breathe new life into old favorites. For example, Cheerios removed genetically modified organisms (GMOs) in response to the consumer trend toward healthier options. In a more thorough overhaul, Ford re-launched its F150 pick-up truck, which has been the best-selling vehicle in North America for the past 32 years. With a new design, stronger and lighter materials, and updated technology, it’s attracting and re-energizing its audience.
Any way you slice it, companies trying to succeed in 2014 and beyond will need to locate shoppers in an increasingly fragmented world and then encourage them to loosen their tight grips on their wallets. Talking to consumers through their favorite mediums and aligning innovations with consumer lifestyles can help businesses get noticed in today’s chaotic markets to drive purchases and loyalty.