During the pandemic, we’ve all be watching with horror as stores close and shopping behavior has turned upside down. Amazon’s sales are up 40% in the last 12 months. What’s the future of retail, we have to ask? Join us for an engaging discussion with Paul Leinwand and Samrat Sharma from PriceWaterhouseCoopers’s as they discuss the future of consumer markets and where the consumer shopping experience is headed. Paul Leinwand is global director of the Strategy& unit of PwC based in Chicago and teaches strategy and management as an adjunct at Kellogg Graduate School of Business. Samrat Sharma also works at Strategy& and has an MBA from Carnegie Mellon.
Cyndi Greenglass: Can you describe what you mean by the store of the future?
Samrat Sharma: You know, this is a great topic, we're having a ton of discussions with a lot of our clients today. As difficult as disruption can be, it often nudges us. We were already going through a trend where the store was being redefined to be more omnichannel, to be more experience rich in a really fusing the physical and digital world way. If at all, the pandemic just accelerated that. So, what does that mean? In a practical sense, it means technology will continue to revolutionize or enable both online and physical retail, forcing a real change, a real shift in business models, but, primarily driven by the consumers because what consumers like you and I are really looking for is a frictionless, completely tech enabled experience. The retailers and, quite honestly, the manufacturers, are trying to respond and serve the consumers where they meet the consumers, where they want to be met. As a result of that, traditional channels will continue to blur as retailers and manufacturers both embrace this whole direct to consumer model. The fulfillment experience will become an increasingly critical point of differentiation, execution and as a result of the pandemic health and safety, will continue to be a key component of the loyalty that any retailer will be able to drive in the future.
View the Future of Consumer Markets Report on PWC's website.
Ruth Stevens: What does that mean to us as marketers? What is this new retail experience and how will it drive us differently to be successful?
Paul Leinwand: That's an important question and just building off of Samrat’s description of the future of marketing and the manufacturers that are selling through retail, they are going to also have to step back and figure out why is that consumer visiting a store and how are they expecting a set of experiences to unfold, online, digitally connected to a store environment back to online in a way that really meets their needs and exceeds their needs. I think one of the things that you know Samrat and I often talk about is the fact that the consumer-packaged goods industry has the word consumer in the front, but actually has gotten way too far away from the consumer when you really think about. That relationship is really being done through retail. It may be digital retail or maybe a brick and mortar retail, but the manufacturer’s connection to the consumer is really through things like traditional market research and that's a core marketing function. The consumer-packaged goods companies are going to have to rethink how do they learn what consumers really want in today's environment. How do they build their own experiences that engage consumers and bring them part of that overall experience? I think figuring out the retail side of it is just one challenge for marketers. I really think stepping back and figuring out what that relationship is and how do we understand what consumers are doing is a much bigger objective.
Cyndi Greenglass: How are the manufacturer and the retailer going to change the way they do business together?
Samrat Sharma: There is a role that the retailer plays for a manufacturer and there's a role the manufacturer places for the retail. The core capabilities that a manufacturer has is category management, product development and I think they're just a power of the brand. The brand instills trust in the console, instills trust in the consumer, so there is a value that the manufacturer brings. There is a value that the retailer brings, I don't personally believe that the relationship that retailers have will continue to exist, the lines are going to blur, and it's all driven by the shopper’s journey as it becomes more intricate. Both the retailers and the CPG will need to establish where those strong touch points and engagement points are to attract, engage and retain that shopper together. This is all being led by the consumer and what's happening as the consumer path to purchase shifts toward more of a digital discovery and purchase versus in store. Many consumers prioritize lower prices, faster purchasing, easy access to the customer service, better loyalty rewards — it is putting a premium on making those capabilities points of differentiation. So, what does that mean from purely opportunity? It means that they will need to invest in personalized bundled solutions like, you know, a sprinkler collection selected for the individual versus a lip, nail and cosmetic package. It will mean being more targeted, kind of targeting the shoppers, for example, based on purchase behaviors. Like a paid search sponsoring results product displays and not only through retail shelves, but also to retail media networks, etc. Then, in turn, optimizing the digital content to be able to drive that whole conversion together again. It's going to be, as I said, the lines are blurring the partnership.
Cyndi Greenglass: The millennials are the first to say they want to go back into an experiential environment, so can we talk a little bit about what your point of view is around experiential retail?
Samrat Sharma: Everything starts from the consumer. The consumer doesn't go seeking out a product in isolation, right, as you look at the journey that a consumer goes through in a day, there are some routines they have, like in the morning. Consumers are often looking for some sort of curated experience around how, for example, one would get their kids ready for school or take the train, be at work, there are all these different moments throughout the day that are important and the experience during that day is and in the evening, if she has some time and is walking on the street and comes across the story, you will walk in and maybe make a purchase, but throughout that entire journey they are the different moments where brands are learning about what the context is and being able to engage and provide more context around how they can fulfill those needs or an experience. For brands, it is about understanding what the shopper goes through during the day and then being able to, in a very disciplined way, engage at the right time, at the right frequency, with the right message to highlight the value that their products can deliver to make the shoppers life better.
Every moment is an experience, so, in fact, one of the things Paul and I often spoke about in the throes of the pandemic was we saw a real surge in the consumer shifting from brick and mortar to digital channels. And, in some instances, the experience was great, and, in some instances, the experience was not that great, but the consumer was just seeking products they wanted, whether it be toilet paper or whether it be whatever. The consumer is smart, the consumers remember that experience and actually will forget where they got it from, but they will always remember the experience — the number of clicks they have to go through, how the packaging show up, whether that product worked for them or not, and, while in the moment, they were looking for that product and settled for whatever and you saw a lot of switching as a result of that. If the brand is not able to fulfill or stand up to the promise to the consumer, the consumer would switch once things get better. I think that's where a lot of the focus with the retailers who did not manage or inappropriately invested behind that experience or even with the brands who did not fulfill that brand promise. To the consumer, I think that's where the biggest risk is for those brands and that's what separates the brands that are opportunistic.
Paul Leinwand: There's a great example from summer. I remember, we were debating a lot over the last year and that has to do with food. We wondered how sustainable is it going to be to cook any meals at home, and, fortunately, where we are now, you know there's an ability to sort of mix the caloric intake but one of the innovations that we think is going to continue to be developed is how do we not have two different avenues. You know you can cut out order taken, or you go to the supermarket and prepare food, or you go to a restaurant, but will we start to see manufacturers think about the experience of what would it be like to really bring a different cooking experience or different delivery experience, rather than the old model, which was delivery essentially. Rather than reimagine, and there's been some innovation already, but I think that might represent what someone's talking about, you know, if we really understood the consumer experience and what they're looking for. We might reimagine how some of these categories work and that's not incremental innovation, that's pretty breakthrough innovation.
Key Takeaways/Three Little Piggies:
- Look at the pandemic as a crisis that can also provide us with an opportunity. We’ve seen that retailers are actually embracing some of the digital opportunities and thinking differently about how to serve their customers.
- This is not a time for the faint of heart. Digital commerce will increase by 300% by 2022, but you have to embrace a true digital transformation and go all in to succeed.
- Consumers are driving everything and we can come up with our own great ideas, but unless you have consumer need as the base, you are likely not to be successful. That's something that is easy to forget in the rush of day to day marketing but it's such a fundamental marketing principle.
View their recent report "Digitizing Isn’t the Same as Digital Transformation" to learn more.
Marketing Communications Today presents Horizons, it’s forward-thinking, looking ahead, through the front windshield and beyond, into the marketing future. Join Cyndi and Ruth bi-weekly for new ideas, technologies, tools and strategies that are emerging to help marketers navigate over the marketing horizon.
Meet our guests
Paul Leinwand is a thought leader on strategy, growth, and capability building for Strategy&, PwC's strategy consulting group. Based in Chicago, he is a principal with PwC U.S. Paul advises clients on the topic of strategy, growth, and capability building, with a focus on the consumer product and retail sectors.
He is the co-author of three books, Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap (Harvard Business Review Press, 2016), The Essential Advantage: How to Win with a Capabilities-Driven Strategy (Harvard Business Review Press, 2010) and Cut Costs and Grow Stronger (Harvard Business Review Press, 2009), as well as several articles in the Harvard Business Review and strategy+business.
Paul earned an MBA with Distinction from Northwestern University’s Kellogg Graduate School of Management and a Bachelor of Arts in Political Science from Washington University. He currently teaches at Kellogg as an Adjunct Professor of Strategy.
Samrat Sharma is the US Enterprise Strategy & Growth Leader with Strategy& and PwC and the global leader of CMO Advisory, where he specializes in developing new business models to drive growth and reduce costs for CPG clients. He has roughly 20 years of consulting and industry experience in North America and emerging markets.
His wealth of expertise includes growth strategy, innovation and business transformation, go-to-market capabilities development such as marketing, revenue management, customer/channel management, and digital transformation with focus on commerce, data & analytics.
Samrat has been featured in publications like Harvard Business Review and Strategy+Business. He earned his Bachelors in Commerce from University of Delhi, and his MBA from Carnegie Mellon University.
Meet the hosts
Cyndi W. Greenglass is a founding partner and Senior Vice President Strategic Solutions at Diamond Communication Solutions, a data driven communications firm specializing in Healthcare, Financial Services and direct response solutions and an adjunct instructor in the Data Marketing Communications online master’s degree program from WVU.
Greenglass has twice been named into the Top 100 Influential BTB Marketers by Crain’s BtoB Magazine and was the 2012 CADM Chicago Direct Marketer of the Year. Greenglass is a member of the Executive Management team at Diamond Marketing Solutions where she is responsible for the strategic planning process, participates in strategic acquisitions, and manages the agency services division.
Ruth P. Stevens consults on customer acquisition and retention, for business-to-business clients. Ruth serves on the boards of directors of the HIMMS Media Group, and the Business Information Industry Association. She is a trustee of Princeton-In-Asia, past chair of the Business-to-Business Council of the DMA, and past president of the Direct Marketing Club of New York.
Ruth was named one of the 100 Most Influential People in Business Marketing by Crain’s BtoB magazine, and one of 20 Women to Watch by the Sales Lead Management Association. She serves as a mentor to fledgling companies at the ERA business accelerator in New York City.
Interested in growing your career with a master's degree in Data, Digital or Integrated Marketing Communications? Request more information today!