It is always fun to meet and talk with friends from the retail industry and hear their thoughts as well as experiences on how the landscape is and has changed.
Finland used to be quite protected area for trade. Local distributors ruled the land in many cases it seemed like there was a monopoly or duopoly nicely sharing the profits available.
These days nordic and european chains have arrived to the shores and brought in fierce competition. Power of scale, fast flow of merchandise or focus on exceptional customer service have put traditional companies into a bind and forced them also to adapt.
Interesting dimension has also been different private label products that all these arrivals have brought into the marketplace — at the same time as they have also continued to sell similar products from the high street global brands. Though there are clearly consumers who will always want to get products from the leading brands and buy the best of the best products – a way larger population is keen to buy good enough products that look and feel almost like the leading brands, but are significantly cheaper.
This is really interesting dynamic and it will be interesting to see how the marketplace develops as retailers are becoming also manufacturers and building their own brands that will no longer be a third grade no-brand-value private label products, but start to be comparable to leading high street brands.
Another interesting dimension is e-commerce directly from the high street brands. Many goods can be purchased these days more conveniently and sometimes even cheaper directly from the brand web store. Modern logistics via DHL, UPS and others deliver goods directly to your home or office faster from Germany than local web shops can deliver within Finland through Finnish post.. and as the kicker.. with smaller costs.
Local retailers can and have naturally combated these e-commerce efforts with their own webshops and improved service — for example with free delivery to the brick and mortar store, and additional cross selling to e-commerce customers when they come to pick up their packages. Those who are unable to respond these changes and benefit from these new e-commerce + brick and mortar dynamics are bound to have bad time and become showrooms for other retailers and webshops. Being a showroom is not necessarily an impossible position to be, if you can successfully monetize those moments when a consumer visits the store and create otherwise relevant experiences that provide enough value or interesting experiences to the consumer to make them make new purchases at your location.
Third interesting change is changes in marketing concepts from simple advertising more into new concepts and experiences that engage consumers with the brands in new, deeper ways. Social media allows brands to extend these concepts to larger groups and co-participate to real life events and concepts that only a smaller fraction of the consumer base can see, touch and feel. Participatory concepts / competitions in Instagram, Twitter and Facebook are just the beginning.
Personally I am a believer of experiences.
Brands will create more revenue and value from their ability to reframe and change the perception of the world around us. As the differences between products’ capabilities become smaller and smaller – the differentiating factor will be the experience and perception of the world you buy with one brand compared to another.
If you can create relevant experiences and be relevant in reframing consumer’s perception of the world – you can lead the future instead of participating in just the race to the bottom.
Whatever the future brings, retail landscape is interesting domain to be watched and kept an eye on.