Consumers more cautious, better informed but with a predisposition to self-grant some licenses if the quality is superior. After years of crisis, the market breaks with the old postulates of volume and scale and gives way to a much more complex scenario, marked by Smart shopping. A more fragmented, dispersed and volatile demand is the main challenge facing small and large companies, as well as manufacturers and distributors. In this new scenario, how can we adapt to the profile of the new client?
What is the smart shopping?
Before 2008, it was rare to enter a store just to see and touch a product and memorize its price and then compare it with Amazon or some specialized ecommerce. Today this situation is repeated frequently and is more common as we talk about more expensive products. Even at craft fairs we can see people comparing the price of the position with the one offered in the online store.
This behavior, as well as the popularization of white brands and the growth of online sales, has completely altered retail sales. In fact, it has drifted towards a more sophisticated pattern. Today’s buyer analyzes several options, suspects the price for consumer products, but occasionally opts for better quality products if these match their personal values or suppose greater durability. This is what is known as smart shopping.
Towards a more complex market
Before this the big brands, but also artisans and makers begin to find new market. A clear example of this is the sector of organic products, which this last year has seen its sales increase up to 28%. Even Spain, the main European producer of eco products by cultivated area, has begun to find increasing local demand.
Other examples of this trend are gourmet foods, where the commitment to a better quality and a different premium image. But in addition, there are also sustainable products, healthy, handmade, proximity … configuring a very diverse and segmented map. Each client can now find not only a product according to their way of being, but a whole market and a community committed to their own values. And all this, without having to give up mass consumption products.
The most immediate consequence of all this is that it is increasingly difficult to retain our customers, as well as to position themselves in the top of the mind of the consumer. To this we must add the break with mass marketing and advertising strategies. As we have seen, the Internet is now the most necessary channel, sometimes even more than the physical point of sale both to sell and to promote itself in a specific way. But faced with this crisis of old values or strategies, a host of new opportunities are opening up.
Reinventing the market: the opportunity for new brands
The hyper-segmentation that the current market is experiencing has allowed and encouraged the appearance of new brands or business initiatives. The most well-known and trite example is that of technological start-ups, but in the field of artisanal and ecological products, we find a more interesting and promising future. Proof of this is that the big brands are also incorporating this philosophy into their products in order to satisfy the demand. A few months ago, the multinational Unilever bought organic green tea brand Pukka Herbs and Amazon the supermarket chain Whole Foods bio. Even the opening of the FICO Eataly World partially responds to this new scenario.
While the volume of sales remains stagnant for most distributors and manufacturers, it is in the segmentation and the bet for the premium where it has managed to raise prices and obtain greater benefits. The positive of it is that in this field the craft producers start with an advantage. They represent the authentic, the sustainable and bear the imprint of the human spirit. Furthermore, they are not vitiated by the stigma of multinationals that, unfortunately, tend to pay more attention to their monthly objectives than to listen to their clients. On a small scale, an artisan can adapt his production line in a more immediate and efficient way to the needs of his client, arriving to produce it to measure, thanks to direct and personal contact. In large companies, this information is often lost through the bureaucratic labyrinth of each department.
Tips to survive in a hyper-segmented market
All these reasons mean that one of the determining factors is customer service and the feedback we get. Even the most severe criticism from our clients can be a “gift” to improve our business strategy. Fairs, shops, workshops or events offer us the opportunity to sell, but also to capture important inputs. Online sales, as well as social networks, add another parallel level from which to feed and promote, reaching a more specific audience, segmented but related to our corporate values and with which to interact.
Another key element is the distribution. If the product is exclusive and of high quality, the places where we find them should be too. This implies the specialization of the distribution, adjusting it to the niche-model that fits our product. Let’s take the example of a high-end organic wine. It does not seem the most appropriate to offer it in a massive and indiscriminate way through supermarkets or restaurants. It would be better to start with those stores that fit the values of the product: specialty stores, liquor stores, exclusive restaurants … On the contrary, it is necessary to monitor more closely each point of sale and ensure that they fit our philosophy and type of product.
Finally, all these changes require modifying marketing strategies. Now we speak of a dynamic, volatile and highly fragmented environment, where the speed and precision of each decision counts to adjust (or anticipate) the needs of its customers. In order to offer an attractive but also profitable product, it is necessary to combine all these variables, aligning them with the values of the company.
What do you think? As a consumer, do you practice smart shopping?
We leave it here today. See you in the next post 😉