It looks like consumer frugality is settling in for a long stay. For most shoppers, the new thriftiness is a cautious choice in the face of an insecure future. There is money to spend, but there is a new social consciousness around the idea of value. Value has less to do with price and more to do with intangible benefits, such as time-saving, problem-solving, convenience, consistency, creativity and confidence building.

In such an atmosphere, retailers would do well to redefine and reintroduce themselves. The key is a new and deeper understanding of brand and customer.

When it comes to retail brands, it is always difficult for businesses to get away from logo-centric thinking and question the company components that may or may not resonate with consumers. But devoting time to introspection now, while the economy is in limbo, could help find the crucial differentiation, credibility and greater relevance needed to win. Once found, these elements can be introduced into the brand experience, usually without the need for big capital-intensive physical transformations.

For example, although the extreme value category is seeing gains now, once the recovery takes hold, how will stores retain the trial customers driven through their doors by the recession? Dollar General knew that to go forward it needed to stand for something other than a cluttered, random, “cheapest” experience. By subjecting itself to a peeling back process, Dollar General revealed its original roots as an “honest and casual” brand. And after listening to its customers, the retailer discovered it needed to add a new dimension: fresh.

The subsequently refreshed brand is introducing itself through its almost 8,500 stores, supported by a conservative budget. The store plan is more shoppable and the brand benefits are clear; the regular customers are reassured that their favorite store didn’t change too radically and the new customers are encouraged by the experience. Even for the extreme value category, it’s a far better strategy to add value than pound the price drum.

It has always been difficult to create appropriate goods and services without shopper insight. Lack of it often leads to broadened assortments beyond a retail brand’s legitimacy. While stuck in the current economic limbo, companies can use the time to learn more about the new customer. It’s a given that today’s consumers escape traditional demographic conventions. Attitudes and values are a better predictor of shopper behavior than age and income. Decoding them requires a more sophisticated, retail analytics-driven approach to shopper research. These tools allow retailers to map the decision processes of each of their segments and identify both the connections and the gaps. Those with the highest to engage the shopper can be redesigned to be more effective.

This is where the idea of brand “touchpoints” comes into play. In the past, customers were “touched” by companies through the store, an associate or the telephone. It was easy to imbue those moments with a cohesive and consistent brand style. In a Web 2.0 world, the touchpoints seem almost infinite, from web pages to tweets. In the analog world they include new store concepts such as those planned, oddly enough, by Microsoft, which feels that people need something tangible in a digital world. And store formats designed to enter denser locations, such as Safeway’s urban lifestyle grocery in Washington D.C. From eBay to Hermes, pop up stores continue to be favored as way to surprise and interrupt consumer expectations. All offer the chance to put a new twist on brand so that people approach it in a different context, and see how it fits in their new framework.

Armed with endless touchpoint possibilities, how does a company choose? Three words retailers will be hearing more in the future are “prioritize,” “optimize” and “orchestrate.” Prioritize in regards to touchpoints, optimize in terms of ROI and orchestrate the elements of the brand experience—from flagships to digital sales receipts.

Hallmark, the specialty card and gift retailer, offers its products through its own stores as well as as supermarkets, drugstores and mass merchants. Its tradition of innovation has taken it into many digital territories, from television to in-store kiosks, online offerings and greeting card software. With so many touchpoints, each with its own potential for return, the challenge is to determine which of the many actions the company could take to please its customers, according to what priority.

Again, breaking down the big picture requires a repeatable analytics driven approach to brand impression management in order to guide thinking about the design of every touchpoint, so that all are aligned and orchestrated according to a brand that’s been refreshed and redefined according to shopper needs.

The new frugality is not solely about price. Quality, price and reason will share top consideration in the customer’s mind. For them, transactions will revolve more and more around ideas, information and relationships. As retail brands adapt to this new customer culture, they will redefine their ideas, values and positioning to stay in the game. In an age of frugality, thrift—the wise use of resources—is a cherished cultural value. It can also become a winning retail strategy.

Design Forum has changed its name… sort of.

When we became part of Interbrand in 2002, we kept the name of the company that I founded in 1978. Since then, we’ve evolved from a pure design entity into a multi-disciplined consultancy with a deep pool of talent, including a lot of brand expertise.

“Design Forum” contains valuable branding in its own right. Our name has touched hundreds of success stories and a lot of people who’ve become our friends during thirty years in business.

Anyone who’s been through a company name change is aware of all the ramifications, from switching the sign on the front door to an updated logo on the coffee cups. And the risk, of course, that customers will assume there’s been a change in leader-ship—in our case there has not.

The time has come to take on the new Interbrand Design Forum identity in order to focus more precisely on what our business does—global retail store design that incorporates business brand strategy, shopper analytics, retail architecture, retail-sensitive implementation—and to stress our ability to draw on resources from around the world: 1,249 creative minds in 36 offices and 22 countries.

This month, Interbrand publishes the annual Best Global Brands in conjunction with
BusinessWeek. It’s one of the top three published business rankings in the world. If you think your business is a potential leader, here’s where you can find out what it takes. And of these 100 brands, you’ll see who the top riser and faller were this year. (Spoiler alert: Google and Merrill Lynch.)

Brand value is a simple idea. If retail brands play a role in choice, and shoppers must choose between competing products, then brands must contribute to earnings and profit. It then follows that brands must be quantifiable and valuable to its owner.

By using brand valuation as a diagnostic tool, we understand the precise economic benefit that brand has on every aspect of business. Insights into which brand attributes are relevant at each step in the customer journey tell us exactly what must be changed to make the brand perform better. You can then invest in the touchpoints that generate the most demand.

The topic of brand management has been generating more interest every year in the face of proof that strong brands, consistently managed, are more resilient in shifting economic climates. A study of Best Global Brands versus the S&P 500 conducted by Harvard and USC showed they outperform the market.

Yet, business pundits say we’re living in a post-branded world and that traditional branding is outdated. Perhaps that shouldn’t surprise me. Although the concept of brand value has been evolving since the ‘80s, it’s still misunderstood.

Brand is not an advertising gimmick. It’s a set of attributes and a promise: the attributes consumers have ascribed to store or product, and a promise made by the company to deliver those attributes through the way it does business. Ideally, the brand idea shapes the company and directs the behavior of everyone in it. That’s why we believe brands have the power to change the world.

There are some interesting new names on the list this year. BlackBerry makes its way onto the global brand stage. We’ll see if it can outperform the iPhone. Luxury brand Ferrari zooms onto list. The debut of H&M is a great example of a retailer understanding consumer demands, as is the entrance of Marriott.

Our longtime client Honda still ranks high; also new to Best Global Brands is our client FedEx, whose promise we’re bringing to life in the FedEx Office stores (formerly Kinkos). Like all the leaders, they have managed to strike a clear note of differentiation that we have translated into retail environments.

Although we can understand nervousness in a results-oriented world, we’re hoping the current slowdown will push retailers to change. The world is becoming one global economy. Competing in it demands a connected and holistic approach to brand management, not siloed 20th century corporate habits. In order to stand out from the crowd and engage our associates and customers, our businesses must become branding communities, resilient and flexible. Because—particularly in retail—there are always new and unknown challenges ahead. Thoughtfully,
D. Lee Carpenter

Recession or no, our research shows that shoppers enjoy finding something new in the store. It’s human nature. Whenever retailers bring energy and inspiration to the game—even when shoppers are thinking long and hard before opening their wallets—they still give the store credit for a better shopping experience. And from a better experience comes all good things: the engagement, loyalty and bottom-line bolstering that smart businesses seek.

“Something new” encompasses a lot of territory. It can be a new prototype, a store-within-a-store, a value product, a time-saving service or an educational program. For our client Burger King, it’s a combination of value and excitement, from Burger Shots to the Whopper Bar, a hip new restaurant design we helped them create.

The Whopper Bar is a great example of what many brands are trying to do right now—be more interruptive, opportunistic and dramatic with their innovations.

A key differentiator of the BK brand is flame-broiled burgers. We brought this attribute to life through various design elements. The overall look is darker and urban-industrial with textures of fire and metal, yet the space is simple to use and friendly. The smaller footprint of this concept has opened doors to new real estate opportunities. That plus the revitalized business brand strategy is helping BK enter venues no one would have considered them for previously.

One of the mistakes made most with new concepts is the lack of an idea that’s powerful enough to get you where you want to go. Companies know that doing something is better than doing nothing. And some are closing under-performing stores intending to do a better job with their best stores. But if your goal is disruption, you’ve got to really fire up the passion around your brand and find an aspect to dramatize.

The second most common mistake in retail seems to be lack of speed. While looking back on other times of crisis, a CEO of a dot-com recently recalled how his company managed to survive and thrive because he pushed for radical new ideas. But in hindsight he realized his biggest mistake was moving too slowly. Had he been quicker, he’d have a bigger share of the market today. The same often happens in retail.

Last year our clients were urgently asking us for “Quick Wins” in the store. This year they are more cautious. Despite the increased challenges facing them, moves are being carefully evaluated to minimize risk and preserve capital. But time is of the essence. We can’t let uncertainty rule. Surveys suggest that shoppers are taking more time to research their purchases both at home and in the store. That means they’re looking at your competition.

Most companies are quick to cut costs, but slow to find and execute the ideas that deliver a new bundle of value to the customer who’s looking for a retailer to help them reach a balance between frugality and the indulgences they’ve had to give up.

Today you can tap into the many innovative tools that help speed up decision making, such as research and modeling to create a business case for change or to deliver the solid insights needed in the creation of fresh strategies. Collaboration tools can help cut across silos so you can speed up productivity. You can make decisions with a replicable process that offers scale, speed and flexibility.

There are also optimization tools available. We’ve got one of the best that keeps proving itself very powerful and effective, StoreBoard. So if it’s simply not wise to make a radical change to your business, you can still do what you do better than anyone else. A top priority for your brand right now is generating ideas for improving relationships with customers. We’ve noticed creative retailers are putting more emphasis on service, getting credit for solving customer problems and earning trust. That will definitely score points.

Whether you decide on a dramatic brand update or a more simplified retail experience that’s emotionally engaging, the intelligence and invention available today can help you look past the challenges to see the opportunities. You can add intensity and difference without compromising—sort of like Angry Sauce on a Whopper.
Thoughtfully,
D. Lee Carpenter

The past year has seen an explosion of interest in shopper marketing. Reportedly 60 percent of brands and retailers are investing in shopper marketing efforts, up from six percent previously. Most, however, admit to being in the learning stages of the emerging practice.

Finding a common language is the first challenge. The term encompasses in-store media, brand marketing, trade relations and consumer promotions, as well as resetting shelves and rethinking categories, like the new initiatives recently announced by Walgreens. Basically, shopper marketing refers to marketing stimulus that is created based on a deep understanding of the shopper. The perceived benefits include increased sales, improved customer loyalty and overall return on investment, which certainly justifies the rush of interest.

A short but impressive list of case studies, from the few retailers who’ve made their efforts public, shows that although the in-store frontier may seem like the Wild West of trade activities right now, the physical space offers significant opportunity to support growth. What’s exciting is the increased industry talk around two things. Improved collaboration between retailers and manufacturers in order to share information and build on what’s working, and a growing awareness that customers alternate between being “consumers” and “shoppers.” The switch is flipped at the point where people are actually engaged in window-shopping the store or aisle, perusing the shelves, browsing the website or paging through the catalog. Knowing what’s happening at that moment is key. That’s why a significant factor in shopper marketing is high-quality behavioral data from which to draw the actionable shopper insights that help shape strategic plans.

“We use the term to encompass the strategies and tactics that engage and influence the customer inside the store,” says Tim Murphy, vice president, Interbrand Design Forum. “It’s a more holistic take on shopper marketing that starts at the top level—brand positioning, which informs the mid-level channel strategies, retailer requirements and category management—and goes all the way down to the promotional level. For the last seven years, we’ve been working on an approach we call Shoppernomics, created around our ability to understand what drives shopper decisions and then deliver that at retail. We’ve seen some very exciting results from Shoppernomics. It has the ability to address the whole store from brand to basket and it’s affordable, unlike a lot of the tools out there that are too narrowly focused.

”One store seeing a pronounced impact from the holistic approach to shopper marketing is arts and crafts specialty retailer, Michaels. By asking shoppers why they purchased, not just what, when and how much, it discovered their need went beyond craft materials to inspiration and fun. The store itself wanted more personality, so its brand positioning was brought to life through higher level category delivery, all the way to shelf and package level.

Michaels concentrated on five categories transformational to their business. Shopper marketing helped find the most productive opportunities, optimize those spaces and allow the retail brand to shine through. The refreshed jewelry section especially delights shoppers. Innovative design, merchandising and staffing gave it a boutique look and feel, while shopper insights led to a new shelf organization with the right breakups, flow and SKU placement. As a result, store productivity has gotten a boost and customers are giving Michaels credit for being fresh and inspirational. The new store experience has craft-related blogs buzzing.

Collaboration between manufacturers and their retail partners has always held the dual promise of reduced antagonism and gains in competitive advantage for both parties. Manufacturers often have more shopper data than their retail partners, who in the past simply merchandised categories based on POS data. But behavioral data from shopper marketing shows that consumers don’t think in categories.

“I hope we see more collaboration, and maybe the current sense of economic urgency will help overcome resistance to that,” says Amanda Yates, vice president of strategy and analytics. “The toughest part of the two groups working toward a new strategy seems to be getting both of them to decide to compromise for the greater good of the category. That means moving away from the proliferation of brand extensions, excessive SKUs. Things that often lead to a less rewarding shopping experience. Shopper marketing takes your thinking well beyond the planogram.”

A deeper level of intelligence allows the retailer and manufacturer to anticipate the needs of the shopper and arrange the store to influence them, not merely accommodate them. That was the thinking behind Cadbury Adams/Halls’ study to find out how shoppers behaved around the cold remedy purchase.

When the company conducted in-home and in-store communication research to find out what was involved in the decision-making process, it discovered issues around merchandising, packaging and experience. One surprising insight was that people shopped in a manner opposite to what the company previously believed. Additionally, it realized that light-reflecting metallic packaging was hard to read and soft bags were not conducive to storage at home.

Findings such as these give a CPG company the ability to improve packaging, strengthen aisle communication and modify assortments based on shopping styles, and include strategic brand-blocking to make a statement at shelf. Such plans for orchestration of the shelf set are seeing greater acceptance from retail partners.

“When you can flow with the shopper thought process, you have a better chance of connecting emotionally,” says Murphy. “It takes relatively little investment and has a huge upside. In the beauty aisle, for example, you may find that better educating her at shelf or including suggestions for new color combinations suits the prevailing shopping style. In a case like that, you’re not spending millions on media. You’re leveraging your assets to better connect with her needs.”

With the ability to interpret insights from shopper data and translate that into the physical space, retailers and manufacturers have a better chance of getting to that sweet spot—the shopping experience that keeps people in the store longer, strengthens a brand’s position, increases share, enhances ROI, saves marketing/trade money—all the while making life easier for the customer.