How the Shopping Experience is Superseding Brands

in General Business Marketing

There is growing evidence and data about a significant shift in preferences and priorities in the way people shop and buy goods. There is no doubt that we are in the midst of a long-term fundamental shift in consumer and business buying behavior. Research from The Hartman Group based in Bellevue WA adds further and interesting evidence on this trend and changes for consumers and businesses.

Based on studying people’s shopping habits over many years, the Hartman researchers have identified a growing shift in consumer loyalty from specific products and brands to retailers that provide a shopping experience rather than just a store with a collection of branded goods. Although the current recession has accelerated this shift, it is a long-term trend that is gaining momentum.

Part of the problem is the proliferation of brands and choices has diluted the value of brands. There is so little differentiation between so many brands in a particular product category that consumers don’t develop strong brand loyalty like they used to when there were fewer choices and more differentiation. There are obviously some outstanding and notable brands with strong customer loyalty such as Apple. However, most businesses don’t have the wherewithal to develop a brand like Apple.

There is lots of evidence that consumers appreciate a positive shopping experience over brands. Trader Joe’s, the grocery store chain is a good example. It is a different kind of grocery store with primarily its own brand of products delivered in a unique and pleasant shopping experience with great customer service. Trader Joe’s does no traditional advertising – their primary advertising is a quirky newsprint booklet mailed to target households in each store’s geographic area and word-of-mouth recommendations by customers. Not stocking major brands that carry a huge advertising premium and limiting their own advertising enables them to offer customers different choices of high quality products at much lower costs. Trader Joe’s quickly builds a loyal base of customers within a couple of months of opening a store.

Another example is Zappos, the online shoe retailer – they built a $1bn+ annual revenue business in 8 years by providing customers a great shopping experience with excellent customer service, easy exchanges and enthusiastic staff. And they did it with minimal advertising and marketing expense by using social media and word-of-mouth marketing. Zappos has developed a huge and loyal customer base that has enabled them to expand into other apparel categories. While Zappos does sell brand name products, it’s the Zappos service and shopping experience that attracts loyal customers. Amazon understands what’s going on and acquired Zappos in July 2009.

A CNNMoney.com article ‘Dumped! Brand names fight to stay in stores‘ shows that many major retailers led by Walmart, are removing many brand-name products from their shelves. They’re also limiting the number of brands on shelves and offering their own store brands either as alternatives or exclusively in some cases.

Think about your own shopping habits – do you recognize any part of this trend in changes to how you shop?

Now consider how this trend may apply to your business and how you could capitalize on it for your business:

  • This watershed trend presents an unprecedented opportunity for businesses to develop a customer delivery, engagement and service model to substantially grow their business over the coming years.
  • Take a look at what is happening in your market. Do you see this customer shift from brands to shopping experience?
  • If so, what are you doing to provide a great customer shopping experience and develop loyal customers for your business?
  • If not, you have an opportunity to get ahead of the competition by using this long-term trend to your advantage.
  • Do some research on companies that have successfully transitioned or positioned their business to this trend and you’ll see 4 common key elements for success:
    1. New models of customer engagement that are conversational – it’s not about selling to customers; it’s about having a continuing conversation with customers.
    2. Employee models that foster enthusiasm and positive engagement with customers in a consistent manner.
    3. Streamlined business processes that make it easy for customers to do business with the company. It’s all about how customers want to do business with you, not how you want your business processes to operate.
    4. Use of Social Media for customer engagement and marketing to develop a participatory and loyal customer community.
  • This is a major long-term shift and trend. It requires a serious review and strategic shift for many businesses to be successful long-term. Tinkering at the margins won’t be enough.

There is no doubt that we are experiencing this shift in the way people shop and buy goods. It is time to seriously consider this trend in your business and go-to-market strategy.
All data for this article acquired from public domain sources.
Copyright © 20010 Ingistics LLC and Marketance™ www.marketance.com

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