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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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A brand evolution

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Brands are responding to the challenge as customers choose to buy across sales channels, finding new opportunities as they do so, writes Chloe Rigby



AS Shoppers across Europe are growing ever-more conscious of brands, they are also becoming eager to buy directly from them. A growing number are now keen not only to browse the brand website or store for information about the product they sell, but also to buy directly from the names they trust. They do so trusting that their products are more likely to be authentic and to be made to a global standard. They also expect that when their purchases do not meet their expectations, the brand will prove responsive. Brands, after all, have more to lose when things go wrong.

In interacting directly with brands, shoppers have started to learn their stories and understand their values in the face of growing consumer concern around issues ranging from employee welfare to the environment. Shoppers who buy direct from a brand understand they don’t always get the best price. Rather, they are buying into the greater certainty that what they receive in return will meet their expectations. These are ‘gold standard’ products that will, the expectation is, reflect the brand.

For the brand, the direct channel may well be a minority channel, existing alongside larger wholesale relationships with third-party retailers. Indeed, buying direct from the brand will not be a priority for every customer, with many opting for discounts and offers from other trusted retailers. But it will be an important channel and many are now realising its importance, responding as never before to the consumer’s growing desire to buy direct.

Brand successes



Some brands are already well established in the market. Computer maker Apple and shoe manufacturer Clarks (both listed Elite in the InternetRetailing Brands Index 2018), along with coffee company Nespresso (listed as Leading) are among the brands that have thriving multichannel relationships with shoppers. Each uses both its own website and stores to showcase its products in its own brand image. In its stores, US technology company Apple enables shoppers to try out the latest computers, smartphones, tablet computers and watches with advice and help on offer from knowledgeable staff and Genius Bar advisers. Nespresso, part of the Swiss-based Nestlé group, shows off its full range of coffees in a growing network of shops that demonstrate its range of coffeemakers while showcasing its environmental credentials with a commitment to recycling. Clarks, the UK shoe business, has built a global brand from a starting point of making sure its shoes fits its younger customers and feel comfortable for its older ones. More recently, its appeal has widened to shoppers including the millennials and rap musicians who praise its Clarks Originals range. Shoppers visiting one of these stores know what to expect, wherever it is located. That experience is often replicated consistently on their website.

But while a key attraction and strength of brands has been in their global standard, that has historically proved a weakness as well, since it restricts the way in which the shopping experience can be personalised. Brand websites have often been centralised and global, hosting the definitive shopping experience. That’s given opportunities to third-party retailers to sell goods in the ways that some customers in their local markets want to buy.

New disruptions



Now that’s being disrupted once more by new technologies. In the age of the Internet of Things and machine learning technologies such as chatbots, a monolithic brand has never been better placed to reach individuals and niche demographics. Nespresso, for example, now holds personalised conversations with customers about their orders and deliveries through its chatbot, enabling shoppers to ask their individual questions and receive answers that make sense to them within their context. US-based Nike , another Elite brand, has pioneered the personalisation of its shoes through Nike iD, available both online and in stores. These are examples of personal interactions that enable customers to get the exact information or item that they want, even when they are dealing with a global brand.

As such approaches develop, brands are likely to become ever more relevant to the lives of their customers. Another way this might happen is through convenient service. Burberry (Top100 brand) enables shoppers to take delivery of their goods in the way that makes most sense to them. On-the-move shoppers can order clothing or other products online for delivery to their address, to a convenient store or even to the airport that they’ll be passing through on their travels.

In the future, it seems likely that brands will increasingly automate their relationship with the shopper. Already, retailer Amazon is enabling its customers to order direct from a third-party brand at the touch of a Dash button. The related Dash replenishment service is an early practical example of Internet of Things-based automated ordering, moving towards devices such as dishwashers and printers eventually being able to reorder their own consumables. Top50 computer brand HP enables owners of its printers to order ink refills automatically, through its Invisible Ink service that supplies ink when it’s needed.

Understanding brand behaviour



This year’s InternetRetailing Brand Index asks new questions of brand performance in order to better understand how businesses are serving their customers differently across Europe. It found, for example, that brands in the Netherlands and Switzerland were among the most innovative, with 91% opting to enable barcode scanning through their apps. As a result, customers of those brands can now gain instant access to product information, adding items to shopping lists and, in a significant minority of cases, adding items to shopping lists. The research also looks at the use of different languages, as well as the sophisticated delivery and collection offers that often rival those available from leading retailers. Next-day delivery, for example, is most commonly offered by UK retailers, with 44% doing so, compared to 4% in Denmark. The level of competition in each market has a part to play in shaping the demands of customers. But as brands standardise their offer across Europe, it seems likely that they will have an influence on customer expectations in different markets, as well as on how other brands then behave.

The Brexit effect



By the time of the next edition of this report, the shape of Brexit may be clearer than it is now. That will have an effect on brands selling across Europe, whether they are British or from elsewhere in the region. But this is just one way in which European brands are working within a fast-changing environment. Consumer behaviour is changing at least as fast as regulation and economic borders, if not more so.

From next year, the Brand Index will reach a point at which researchers can start to measure trends in behaviour across the European market and to take lessons from those trends. In the meantime, it seems a sensible approach to planning for disruption is to plan to be agile. For disruption is likely to come no matter how the political environment changes. Shoppers expectations are rising fast and the brands that prosper in this 21st-century market will be those that change along with the people that they serve.
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