The tweet on the high street

What's in Store?

Business insights for the retail and consumer sector

As some of our sassier retailers move into social networking, we listen in to the tweet on the high street.

"People have been talking about the way the internet would revolutionise shopping for a while, but arguably it’s only now that we’re seeing what that really means."

In the last few issues of What’s in Store? we’ve looked in some detail at how consumer behaviour has been changing as a result of the recession, and whether this is likely to last into the recovery. As time’s gone on, it’s become clear that there are some important areas where temporary shifts could well turn into a permanent transformation, and one of the most obvious of these is the increasing importance of online shopping. The UK has the largest e-commerce market in Europe, largely thanks to the widespread availability of broadband and its fast delivery times. Sales are projected to hit £30bn in 2013, and though this may still represent only around 10% of the total UK market, the key point is that e-commerce is expected to account for over 55% of retail sales growth over the next five years. Small wonder that many traditional operators are looking to the web to deliver the sales they’re struggling to achieve on the High Street. But to do that effectively, they need to get as savvy as their customers about the dynamics of online browsing and multichannel shopping.

Power to the people

Bricks or clicks, the latest recession has certainly made shoppers a lot more astute. They’re more demanding when it comes to value for money, but they’re also much smarter at working out whether a cheap headline price really translates into a genuine bargain. Internet shopping doesn’t just make it easy to find the cheapest price; it offers instant access to everything that comes as part of that price: if the website offering the cheapest fridge or washing machine won’t take away the old one, it may be worth paying a bit more to get the full service.

The second big development has been a shift in the balance of power between buyer and seller. As in so many other areas of life, the internet puts influence back with individuals. They can voice their opinions, and connect directly with other people to find out what they think. When it comes to shopping, more and more of them are doing just that, and the impact on the choices they make can be quite marked. Traditionally, shoppers would start a purchase journey with a few brands they trusted in mind, and then shop around on the high street to narrow this down to the one they wanted to buy. Now, that process has been reversed: people start with a few brands or retailers that they know, and then broaden out to brands or stores that they might not even have heard of before. And the more experienced online shoppers get, the more willing they are to widen their range - PwC’s research shows that within five years of starting to buy online, a typical consumer will be using up to 15 sites regularly, compared to just six in the first two years. As Puneeta Mongia, Assistant Director in the PwC Strategy team says, “What gives them the confidence to consider new brands and retailers is the advice and support they’re getting from other consumers: people trust each other’s views, because they’re perceived to have no bias, and have had practical experience of using the products or services on offer.”

The challenge to the market leaders is obvious enough: there’s a very real risk that they lose long-term customers to small dynamic players who can build a robust online presence - a website like appliancesonline.co.uk is a classic example of a small pure player that’s successfully captured market share from large well-known retail brands. As this suggests, the concept of customer loyalty is more important than ever before, and finding ways to build and sustain that loyalty, absolutely key. And that’s where social networking comes in.

Turn on, tune in, shop out

Some of the most forward-looking brands are using their online presence to engage more actively with consumers, grow their sales, and even drive innovation. They’re hosting their own customer forums, and using them to gather feedback, and showcase their products. For example, the fashion site Asos has a ‘Saturday Night Style’ page where customers can upload pictures of themselves dressed to go out in Asos clothes. It taps in perfectly to their target youth market, and provides a powerful reason to revisit the site, as well as inspiration for repeat purchases. On the other hand, NikeID allows consumers to customise trainers, design team kit, and share their designs with other fans of the brand; while Ben & Jerry’s gets its customers to develop new products on their behalf: ‘Oh my! Apple Pie’ and ‘Fairly Nuts’ were created by consumers through competitions and forums such as ‘Do the World a Flavour’. Ben & Jerry’s have successfully launched these flavours globally, which shows how invaluable this kind of real-life input to the R&D process can be.

Other brands are exploiting social media to do the same thing. Fashion brands like Burberry and Louis Vuitton use their Facebook pages to tempt devotees with special offers and previews of their collections, while Asos supplements this with a steady stream of gossip about celebrities - the idea of ‘as seen on screen’ being at the heart of their brand proposition. In all three cases, the Facebook presence provides a reason for consumers to log on, sign up, engage, and become loyal - it’s part of the answer to ‘what’s in it for me?’

Twitter can be just as effective, when it’s targeted properly. Asda, for example, uses tweets to tell followers about new promotions, and there’s strong anecdotal evidence that this is helping to drive demand for certain products: when a George ‘body sculpt’ vest for men sold out in days, the company used its Twitter feed to tell consumers which stores were going to get new stock.

Innovation, participation, trust

Retailers and consumer goods companies have always tried to understand their customers through market and consumer research, but they’ve never been able to track every shopper through their store and watch how long they look at each product, in the way they can online now. But though that kind of data is immensely useful, it’s only the start. The brands and retailers who will really make the most of what the internet can do, will be those who use it to drive innovation, encourage brand participation, and build trust. Done well, this can - paradoxically enough - create an even closer relationship between the consumer and the brand than can be achieved through physical contact in a store. As Puneeta Mongia says, “People have been talking about the way the internet would revolutionise shopping for a while, but arguably it’s only now that we’re seeing what that really means.”