Where to Buy: Brand-building strategies in the retail industry

The 'why' behind the 'buy' series - article 2

Advice on building your retail brand to support long-term success and cater to consumer needs, powered by consumer insights.

In part one, we explored how a deep understanding of consumer mindsets is critical for retailers to maximize sales in increasingly volatile, saturated markets. Specifically, how this understanding can drive sales uplift in the short-term by empowering retailers to:

Identify key targeting opportunities.
Develop a launchpad for marketing messaging that resonates.
Optimize owned touchpoints to ensure consumers stick with retailers through the purchase journey.

Now, in part two of this series, the spotlight is firmly on long-term growth. Here, we dig into how retailers can build a brand that is resilient in the face of market stressors and continues to be the consumer’s number one choice when their confidence and spending returns.

Activate and retain consumers by strengthening your retail brand

Leading retail brands strike a dynamic balance: merging targeted activations for immediate returns with broad market brand-building. Getting this right requires a profound grasp of audience nuances and addressing the differences that truly matter to your brand. When power brands boast 2.6x higher sale volumes and a 58% surge in market share tied to their generating strong experiences, it’s clear: market mastery melds depth of insight with breadth of outreach.

Iain McGowan

GfK UK Head of Retail for Consumer and Marketing Insights, GfK

GfK Brand Architect research shows that 30% of company revenue is generated by brand alone. Thankfully, key marketing and brand decision-makers in retail recognize the importance of brand to their enduring success. According to the 2023 GfK CMO Outlook survey, 74% of global senior marketers working in retail invested at least 60% of their marketing budget in long-term brand building. Yet, the vast majority — 9 in 10 — see at least one barrier that prevents their marketing teams from delivering on their full data and insight potential. A third were missing critical data, and the same proportion were struggling to connect data across different sources.

Clearly, there is tension between marketing leadership’s desire to invest for the long term and the insights that teams need to ensure this investment is directed to optimize chances of success.

An expert framework for directing long-term brand investments

Our recent article on winning strategies for the future of retail outlines the key brand choice drivers that marketers must focus on when pursuing long-term growth:

Relevance — aligning with a shopper’s specific needs and preferences
Ease of Access — offering seamless and hassle-free access to the brand portfolio
Shopper Experience — delighting shoppers at every touchpoint

Our data shows that these are the fundamental reasons consumers choose one retail brand over another. However, there are significant differences when we drill into different retail sectors. For example, insights from GfK Retail Brand Measurement show that the combination of factors driving retail consumers to choose one FMCG brand over another is different compared to what drives them when choosing between two comparable technology brands.

For both FMCG and Tech & Durables retailers, ‘Relevance’, or the ability of the brand to meet consumers’ needs, is the leading driver of choice. However, ‘Accessibility’ is a more pressing consideration when consumers are shopping for groceries because they do this more often than shopping for new tech. Understandably, it must be a more convenient experience. The longer purchase journeys in Tech, and the greater likelihood that consumers will spend more, also mean that they are more willing to travel further.

Meanwhile, ‘Experience’ is a metric that shows potential as a future driver of growth in both sectors. However, what constitutes a positive experience is multifaceted, and varies per touchpoint and each unique consumer. Further, retail brands cannot only focus on delivering experiences to the exclusion of other drivers such as ‘Fair Pricing’, ‘Differentiation’, and ‘Trust’.

Uncover long-term growth strategies by mapping consumer needs and perceptions

To better understand how identifying consumer perceptions of a retail brand is critical to building resilience and a long-term growth trajectory, let’s dig deeper into an example from the FMCG sector. Here, we’ll see why ‘Experience’ is the critical growth lever: an area two of five FMCG retailers in Germany could improve to ensure they maintain their position in the market when the economic cycle shifts.

In our evaluation of retailer brands, we find that the top five competitors remain the same in consumers’ perception on both top-of-mind awareness and consumers’ claimed share of wallet.

However, the discounters have achieved an almost equal share of wallet, despite a large gap between them and the mid-priced retailers in top-of-mind awareness. Perception data, which maps how consumers see each brand in relation to key brand choice drivers, clarifies why.

Consumers’ strong perception that discounters offer fair pricing is clearly a significant factor in their overall success. In tough economic times, where fair pricing is a key driver of Brand Choice in the FMCG sector overall, the success of this retail strategy and associated perceptions is unsurprising. However, when financial pressures ease, these brands’ weaknesses in other key drivers (such as differentiation) is likely to impact their efforts to drive continued growth.

The relative lack of trust consumers have in discounters — as well as weak ‘Experience’ scores — may hamper their ability to retain their position over the longer term as the economy returns to growth. With mid-priced competitors offering similar ease of access, discounters could lose customers as pressures on consumers lessen — especially as they struggle to differentiate and offer something unique to these customers in exchange for their loyalty.

While their Accessibility is a strength, it offers diminishing returns if discounters try to mitigate their impending loss of revenue by expanding the retail network.

To succeed, discounters could aim to boost consumers’ perceptions of the quality of their experiences and the uniqueness of their offerings. These are both critical to building trust with consumers and inspiring loyalty that would make them the preferred choice during times of both pressure and prosperity. For a deeper look into our FMCG retailer evaluation for Germany, or to explore similar findings in other markets, read more in our latest FMCG shopper trends report.

Transform the meeting of consumer needs into sustainable growth

The success seen by some discounters in Germany is a good story, but their perception profile on other key drivers besides price is a great example of why it might also be a smart strategy for retailers to invest in brand building to ensure they can continue to drive share as the economic cycle shifts back towards growth.

Gaining a deep, contextual understanding of what is driving your retail brand’s successes and most pressing challenges is a key step toward delivering on your growth potential. GfK’s retail brand intelligence insights from a consumer perspective can do the same for you, by identifying:

Who your best-fit target audience is.
Which retailers they like to buy from, and when.
What the key drivers are that power these decisions.
How your retail brand is perceived on these key drivers.

This builds a clear picture of your retail brand(s), giving insight into:

Short-term marketing wins and the messaging that will resonate.
Strategic pivots that can better position your offer in relation to consumer needs.
Brand building that’s needed to drive positive perceptions of your brand, service, and experience and support growth over the long term.