What Retail Goliaths Can Learn From Challenger Davids

With estimations of 2017 holiday sales said to have broken records, it would be easy to think that all the talk of a “retail apocalypse” is overblown. Trust me, I’m not here to up your fear factor, but all signs point to a seismic shift rocking forever how consumers discover and buy products. One segment that could have things figured out: up-and-coming “challenger brands,” which are poised to successfully ride this wave and have a lot of lessons to offer marketers of traditional brands.

As noted in the apocalyptic predictions, retailers face two huge fundamental cost challenges from over-expansion and massive debt burdens. This year alone, offline commerce locations are expected to shrink by 6,800 nationwide. That’s a lot of store closings. Close to home, major shopping corridors in Manhattan and Brooklyn already resemble ghost towns — just imagine what this retrenchment will look like all over the country.

This year alone, offline commerce locations are expected to shrink by 6,800 nationwide. That’s a lot of store closings.

Economic and behavioral shifts have caused a devastating temblor for retailers, but they face an all-out assault from ubiquitous challenger brands. Name a category and you can surely rattle off new, emerging, digital-first brands filling your inbox and Instagram feed right now. Hot fashion companies like subscription challenger StitchFix have mastered sourcing, distribution and marketing. Consumer packaged goods (CPG) giants like P&G and L’Oreal are being credibly threatened by young upstarts like Lime Crime and Honest Co. across a range of categories. Direct-to-consumer brands have successfully upended the luxury fashion sales and marketing model. I could go on and on with examples, but what many challengers have in common is they sell direct to the consumer (online and off), they have a deep understanding of how their audiences want to discover and buy products, and they are free of the legacy marketing models that hobble a lot of traditional brands.

In the past, building a business required generating massive brand awareness on the handful of costly media platforms that would reach the most people. As traditional media goes the way of the dodo for a generation that reads “newspapers” on their phone and doesn’t know what the “nightly news” is, brands scramble to get the massive scale deemed necessary to drive brand discovery. For example, in the past, a luxury brand would launch a huge advertising campaign, banking on the fact that potential customers would know where to find its products. Now, a modern consumer knows they can buy those products everywhere, at a discount and not always in channels owned by that high-end brand. And those consumers are harder to find at scale, their attention divided across thousands of apps and every size device and screen.

As a stop-gap, the digital ad industry has salved panicked brands with a balm of spray and pray drives for clicks on banner ads and views on video ads that they are told are always seen by a human, above the fold. Scandal after scandal — exposing bot, transparency and click fraud scams — show the inefficiency and inefficacy of relying on online ads to drive the desired scale of brand discovery.

As a rule, challenger brands haven’t bought into this false promise, they know that paid media has never been shown to be effective for shepherding consumers along the discover-to-buy pathway. The brands we work with know that networks like Pinterest and Instagram provide invaluable channels to get their products in front of the right audiences. But rather than backing away from paid media, they use it to support and enhance their earned media campaigns. Companies like mine have developed new tools that allow fast-moving, fast-growing brands to dig deep into who, what, where and how their visual content is shared and engaged with — helping them to set smart marketing strategies that can be amplified with paid tactics and across their marketing mix.

It’s fairly obvious to most in the industry that 2018 will bring more change on the retail landscape and how consumers engage with brands. If more marketers pay close attention to the examples set by challenger brands, they may get a better view of the consumer path to purchase and set off on a new road to retail riches.

Jonathan Gardner

Jonathan Gardner

Director of Marketing at ShareIQ
Jonathan Gardner is a veteran marketing and communications executive and director of marketing at ShareIQ, the visual content performance platform for brands. Follow him on Twitter @thejongardner.
Jonathan Gardner

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