Retail 2021 — You’re nobody ’til somebody kills you

Nowhere in retail looks the same as it did pre-pandemic. In reality, the transformation began the day Jeff sold his first book, and it is getting faster every day. 

Shopping malls? Empty, maybe on the way to being a Data Centre. Shops? Deserted, quite probably rezoning to residential. Websites? Grew a lot during the pandemic, but visible? How congested is eCommerce now?  Brands? Might survive, but easily forgotten or wiped out by Amazon, Alibaba, and the other mega online retailers. Billboards? I don’t think so. Facebook? No, not my cup of tea. Instagram, oh yeah, they’re fine. Direct-to-Consumer? Weren’t we already doing that?

In my work, I talk to a lot of people, every day. They all have an opinion about the many moving parts in what we call the retail industry. Trying to get a handle on the current state of retail -- if you can describe the constantly reinvented process of product design and production, global supply chain management, abstracted intermediaries, bricks and mortar, social media, logistics, payments, and brands as the retail industry -- is hard.

For my sanity, and hopefully yours, I’ve started writing down the answers to four critical questions I hear again, and again:

1. Own Brand seems to be flipping from substandard alternative to powerhouse superstar. Is this it for consumer goods as we know it?
2. King Kong (aka, the world’s top 300 brands) is fighting to the death with Godzilla (aka, Facebook and Google) and there can be only one winner. Who are you betting on?
3. Is brand loyalty completely finished? If it still exists, is the loyalty to Amazon?
4. Who will turn up with the adrenaline shot to inject into the heart of the High Street, John Travolta style?

I’ll be publishing my four-part series over the next few months and I hope you’ll join me on the journey. Mostly, I hope you’ll let me know what I‘ve got right or wrong, either here on LinkedIn or if you still do email, please drop me a note at cyrus@evrythng.com

Own Brand seems to be flipping from substandard alternative to powerhouse superstar. Is this it for the consumer goods industry as we know it?

Who didn’t love ‘The Tipping Point?’ Just thinking of that book takes us back twenty years, to when people thought Malcolm Gladwell was cool and sketchy statistical manipulations dressed up as science were helpful. The term itself though, and that feeling we all recognise when a seesaw pitches up and over, is still extremely evocative.

Today, in 2021, we find ourselves at the tipping point for Own Brands (private label) and the near- to mid-term future of fast-moving consumer goods.

Early on in the pandemic, shelves in supermarkets were cleared out globally. People literally went physically into supermarkets and bought everything. Setting aside gags about 40 egg omelettes and mountains of toilet paper guarded under lock and key, there has been a measurable impact on consumer behaviour that has stuck and will no doubt live on in the post-pandemic era. As those shelves cleared, people’s favourite brands quickly became unavailable. Shoppers were rammed into new purchasing options and decisions. What they wanted wasn’t there. Consumers had to buy what was available and, as the pandemic wore on, have continued to do so.

The fact that own brands are usually cheaper has helped. With the majority of consumers feeling squeezed, as Britain’s supermarket chain Tesco loves to say, ‘every little helps?.’ The conflation of better availability and lower prices, without many perceptions of lost quality, has raised the desirability of own brands to its highest ever.

The opportunity has not been lost on retailers. Supermarkets have had challenges during the pandemic, too, but sales volume has not been one. Got 99 problems, but cash ain’t one, the CEOs of the big grocery chains sing to themselves (this may just be in my imagination).

That’s not the whole gig either. Selling products that by definition are only available in your shop can be a powerful driver of customer loyalty — if they’re good.

At EVRYTHNG we spend many happy hours looking at this puzzle. We’re on a mission to digitise the world’s consumer goods. Every physical product we touch has a digital twin in the EVRYTHNG Product Cloud? and often on a blockchain too. That digital twin creates new opportunities for the brand that made the product — providing a direct-to-consumer channel to deliver on demands for transparency, authenticity, and personalised experiences.

One of the most significant outcomes of delivering on the promise of product digitization is that all of the items in the trolley or in the fridge at home become sensors, sending data back to the brand. Need to reorder when you dispose of that box? Interested in how to recycle that carton? Want to register your loyalty points? Interested in seeing the video of the recipe on the label? All of these and more are available to you, the shopper, and every time I choose one of those actions I deepen my relationship with the brand.

With this in mind, it’s easy to see why it is so important for us to answer the magic question — inferred through this article — for consumer brands and retailers, alike. When the pandemic is over, will shoppers abandon Own Brands and return to their old favourites? My guess? Yes, they will — except where they won’t.

Buying behaviour, but not as you know it.

Looking around at the UK, where I’ve personally been locked down, my behaviours are profoundly different than they were in January 2020. When I use that date as a benchmark and compare notes with my friends and colleagues around Europe and in the US, my behaviour appears completely normal. Staying almost exclusively at home. An occasional trip to the supermarket. A lot of home deliveries of stuff.

Interesting side note, I’ve also had the chance to compare experiences with people in India and Hong Kong recently, and the situation is very different in those regions. Those countries are in a very different stage of the pandemic and/or post-pandemic lifecycle. Perhaps, a fifth blog topic in this series.

Based on my admittedly anecdotal example of maybe 500 people, my finding is people are extremely open to changing their buying habits. Everyone has tried new things over the past year — completely new ways of purchasing and interacting with brands and retailers. Not always but choice but rather necessity. Branded products they often bought were out of stock. New products were introduced, designed for an ‘At Home’ market. And of course, time (and boredom) opened the door to exploration. For instance, and this is for the ‘things not to try at home’ file, I had never microwaved Beef Wellington before, and I never, ever will again.

Why should you care? Own brands have been a serious beneficiary of this exploration of new things.

Europe continues to lead the way for own brands. Tesco and Aldi are great examples of retailers that have developed high visibility private label brands with advocates who drive sustained loyalty. Their own brand products tell stories about innovation, quality, and origin. Their brand architectures address multiple customer segments. They drive innovation, constantly delighting their customers with new ideas and offers. Critically — they take on responsibility for everything written on the label — ingredients, best before dates, health, all of it. This transfer of responsibility is the biggest unspoken change in the explosion of Own Brand.

Now, with product digitisation at item or SKU level, retailers have the opportunity to build on that leadership. Expect to see private label products with full traceability through the food supply chain, connected packs that trigger click and collect replenishment, or how-to videos. Also, as we have witnessed over the past 18 months, products with digital identities that have the ability to tell you, the consumer, they’ve been recalled or are no longer safe to eat, or even contain the exact allergen that will trigger a reaction in you.

In Japan and the US, the market for Own Brand/Private Label has traditionally been driven by value pitches to economy-driven consumers — ‘always low prices?.’ In these markets, there is an opportunity for retailers to leapfrog. We would expect to see changes in the regulatory environment on food as we come out of the pandemic, never mind a shift in consumer expectations. Digitisation at the pack-level reduces the pressure on brands to respond to those requirements. Connected packaging also upgrades environmental, social, and governance (ESG) strategies for consumer brands and retailers. Consumer goods packaging can now tell you where it was made, under what conditions, whether people are paid fairly, and much more.

In the past, the technology has been too difficult to implement, too expensive, and too patchy in performance for mass-scale production deployments to be real for retailers. Today, packaging companies like Westrock can print over a million serialised codes per hour onto boxes and cartons. Digital transformation beckons the industry to change its relationship with consumers forever.

I’d welcome your thoughts on the changes we’re seeing in the retail industry post-pandemic. Only through collaboration and the sharing of ideas can we improve the industry and make the world a bit better. I hope you will be here for my next blog in this series and in the meantime, connect with me here on LinkedIn or drop me a note at cyrus@evrythng.com.