Twitter
Facebook
Linked In
RSS
Login or Register
New to InternetRetailing?
Register Now
Internet Retailing
IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

You are in: > Home > Research > Research Articles

This is your 1 complimentary article for this month

Become a member for unlimited and immediate access.


Register
Already a member? Log in here

Strategic Overview

Linked InTwitterFacebookeCard



Strategic context



It’s increasingly important for retailers to use a combination of social media, search and apps, all geared towards establishing companies as trusted brands. Jonathan Wright explores why





IT WAS A moment that may come to encapsulate the beginnings of a shift in the way customers search for products. Or at least a recognition this is occurring. Speaking in Berlin in the autumn, Google chairman Eric Schmidt said its main competitors weren’t the search engines Bing or Yahoo, but Amazon.



“People don’t think of Amazon as [providing] search, but if you are looking for something to buy, you are more often than not looking for it on Amazon,” said Schmidt. “They are obviously more focused on the commerce side of the equation but, at their roots, they are answering users’ questions and searches – just as we are.”



A December survey from Searchmetrics supported Schmidt’s contention. It found that 61% of 1,000 UK shoppers said they would find Christmas gift ideas via Amazon, as opposed to 50% for Google. When two such behemoths of the digital age are competing for attention in this way, it’s clear that other companies, including retailers, need to pay attention.



That’s especially true because it’s a development that needs to be seen in conjunction with other developments in the market – including social media networks such as Pinterest and Twitter continuing to gain ground; niche operations such as the crafts marketplace Etsy offering new ways to reach customers for even the smallest retailers; and emerging competition from marketplaces overseas, notably China.



ATTENTION-SEEKING BEHAVIOUR



It’s against this backdrop that our research into Brand and Engagement, which studies and measures how effective UK retailers are at building brand awareness and engaging with customers, needs to be seen. There’s huge competition out there, yet there are also huge opportunities for retailers that can cut through the noise and reach customers, to become the brands consumers turn to first and trust.



Consider the enviable success of fashion retailer Asos in becoming a familiar name to UK shoppers, and increasingly to consumers in other territories too. Its sales for the financial year ending 31 August 2013 were £753.8 million. More than respectable but, to put that in perspective, Marks and Spencer had revenues of £10.3 billion in 2014.



Asos’s high brand recognition factor appears out of kilter with its footprint, but why? One answer lies in the company’s aggressive growth plans and its attention to traditional PR and marketing. Hardly a week seems to go by without the company appearing in the newspapers. Yet there’s another story here too.



Asos is part of the Elite group of companies in the IRX Top500 for Brand and Engagement. Its strong showing here is driven by its use of social media. Of the nine social networks surveyed, Asos uses Twitter, Facebook, Google+, Pinterest, Instagram and Tumblr.





The most successful retailers in the Brand and Engagement Dimension are adept at using social media and search to reach out and communicate with customers





It uses these networks highly effectively. For two years running, for example, it has been the most popular retailer on visual bookmarking site Pinterest. On 7 January 2015, it had more than 311,000 followers on the site, up from around 49,000 in December 2013. It’s achieved this by maintaining a comparatively small number of ‘boards’, but curating these thoughtfully.



Proving social media and ecommerce can mix, it’s enabled ‘Rich Pins’ so that product images contain information on price and availability, and a link to a product page. Asos is a particularly modern success story. While it first garnered attention for its AsSeenOnScreen pitch, an dotcom boom business selling clothes and accessories popularised by celebrities, it long ago went past selling brands favoured by the rich and famous. Instead, it’s now established as a brand in its own right, a company with instant recognition factor.



Granted, it will be interesting to observe how Asos copes with slowing sales growth linked to the strength of the pound last year, and that’s a story we’ll be following on the news pages of InternetRetailing.net. Within the context of our research, what’s far more intriguing is to draw out the common threads between the approach of Asos and other retailers.



MIDDLE MARKET, HIGH PERFORMERS



It would be easy to see the company’s success in achieving its high profile as growing primarily from its interloper status. In this narrative, a hip and hungry retailer disrupts the market. But this ignores the fact that other companies in the Elite group in the Brand and Engagement category are organisations with more conservative images.



Even Topshop , aiming at a youthful demographic, has been around for half a century, starting out in the 1960s as a brand extension of the department store Peter Robinson, and selling clothes from then new British designers such as Mary Quant. So what unites these four companies? For more see Analysing the Numbers in this report and the overall IRUK 500, 2015 report, but the main point is that each in its way is adept at using social media and search to reach out and communicate with customers. In doing so, each builds brand awareness.



Here, the transformation of M&S has been the most striking. As David Walmsley , director of M&S.com, explains in our interview, when the company came to build a new ecommerce platform, it asked its customers what they wanted from a new website. The result has been a new site built around the idea of merging content and commerce, and where social is central to the company’s digital presence. After some initial uncertainty from consumers, it’s an approach that seems to be working.



A BLURRING AT THE EDGES



Why wouldn’t it? To return to the idea that Amazon might in some sense be a search engine, why shouldn’t M&S.com also be an online magazine offering advice on style and living? We’re seeing a blurring between content and commerce, search and social – and this will continue. A big idea, but while companies need to keep a weather eye on such developments, let’s get back to basics.



Retail is a practical discipline. Asos, for example, isn’t communicating with its customers via social just because that’s what a modern retailer does, it’s doing so because it sees building a community around its brand as a way to grow market share and also because it recognises its customers use social. Similarly, the exercise of building a brand, or subtly repositioning a brand around a digitally driven offering as M&S is doing, isn’t a cosmetic exercise.



It’s about preparing the company for the future. It should again be emphasised this is a future where it will have to compete for attention not just with other retailers but all kinds of companies, including search engines, niche retailers, marketplaces and luxury brands (see the feature, also in this report, on what retailers can learn from brands such as L’Oreal that also sell and market direct to consumers).



Of course, comparatively few companies have the budgets that Marks and Spencer, or even Asos, can bring to bear. But all retailers can make incremental improvements. One useful way to think about our research is to consider what practical lessons retailers can take from thinking about the four Subdimensions: Visibility, Audience, Breadth and Cultivation.



The first two Subdimensions are, as senior researcher Martin Shaw outlines in this report, predominantly the preserve of larger companies in that larger companies tend be more visible in searches when consumers search for generic terms, and have larger active audiences of regular shoppers. The latter Subdimensions, however, are where all retailers can make gains.



The idea of Breadth refers to how many channels, particularly social media, a retailer uses. This is a theme we explore in more depth in the in IRUK 500, 2015, but broadly we saw evidence that many companies could make improvements. In particular, too many companies still take social media to mean just Facebook and Twitter. In contrast, not just Asos but other clothing retailers have been pioneering the use of sites such as Pinterest and Instagram, a way to show off merchandise in new and imaginative ways.



There are opportunities for other retailers here too (see our social network summary contained in this report). The use of apps remains underdeveloped, surprising considering the growth in mobile. Many companies don’t have a Google+ account, something that can be set up within a day. Similarly, with Cultivation, the idea of interacting with those talking directly to or about a retailer via social media, many companies still lag here.



It’s not enough to have a Twitter account and push out automated sales messages, companies need to respond to customers. This isn’t just about dealing with complaints to head off potential Twitterstorms, as important as this is, it’s about a culture change, about opening conversations rather than pushing messages, about learning to turn even difficult conversations to advantage.



We’re back to the idea of competing for consumers’ attention and then genuinely engaging with them. This isn’t an idea that’s going to go away. While it’s understandable if retailers are suspicious of social media, principally because the idea of social commerce was over-hyped a couple of years back, the more subtle yet more powerful idea of using a combination of social, search and mobile to build brand awareness, loyalty and revenues is coming sharply into focus.

Linked InTwitterFacebookeCard

Become a Member

Create your own public-facing profile
Gain access to all Top500 research
Personalise your experience on IR.net
Internet Retailing
We are the magazine, portal and research source for European ecommerce and multichannel retail, hosting the board-level conversation for retailers, pureplays and brands across all of our platforms. Join the conversation.

© InternetRetailing Media

Latest Tweet

Internet Retailing
Tamebay
eDelivery
Twitter
Facebook
Linked In
Youtube
RSS
RSS
Youtube
Google
Linked In
Facebook
Twitter