2011: The year customers will take control

Over the last 30 years, there have been two big power shifts in marketing.

In the eighties, manufacturer brands still ruled. A fast-moving consumer goods company could release a new product, advertise it heavily on TV, and reasonably expect for it to be stocked by a retailer, and for consumers to flock in and buy.

During the nineties, power shifted to retailers. Companies like Walmart in the US and Woolworths in Australia began to grow exponentially and put increasing pressure on manufacturers to reduce costs, with a portion of the savings passed on to customers in an on-going “virtuous circle”. By the early new millennium, Walmart had become the biggest corporation in the world by revenue, and Woolworths and Wesfarmers were amongst Australia’s largest and most influential companies.

As we head into 2011, another power shift is occurring – from retailers to consumers.

You may well say, “Hasn’t the customer always been king?” And, of course, to some extent, you’d be right. Sam Walton once said: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

But this power shift is about more than just a healthy respect for consumer purchasing power; it’s about the customer aggressively taking control, aided by the web, social media and smart phones.

US Wired Magazine reported in their December issue on “how shoppers are beating retailers at their own game.” Wired talked of the rise of “retail hackers” and the “reconception of shopping as… a contact sport… in which consumers increasingly refuse to buy on the terms dictated to them.” In particular Wired cited consumers using collective bargaining websites like Groupon.

In Australia, the “Customers in Control” trend will go mainstream in 2011. We will see more “digital shoplifting”, where consumers do their research in store, and then buy online. We will witness customers in store using smartphone apps like Red Laser and Google Goggles to scan and/or view products, then instantly make a price comparison and perhaps a purchase. Shoppers will take advantage of mobile coupons to further reduce retailer margins. ‘Deal of the day’ sites like Cudo, Jump On It and Spreets will proliferate, as will comparison sites like Lasoo and Get Price. And if the Aussie dollar stays strong, we will watch as more money drifts overseas to sites like Amazon and Zappos.

Customers will wield their power in social media too, building up or tearing down retailers through Facebook and blogs.

You can’t fight this trend – the genie is well and truly out of the bottle. As a retailer, you have to work with it, making sure you are truly and transparently price competitive (especially on key items), introducing more exclusive buys, encouraging consumers to stick with you through innovative loyalty programs and communicating with them in their favourite social media. And above all you must have a seductive and well-differentiated offer.

‘Customers in Control’ is one of 11 trends I’ve documented for 2011. I’ll report on the other 10 in my last blog of the year next week in Inside Retailing Online.

Jon Bird is CEO of specialist retail marketing agency IdeaWorks (www.ideaworks.com.au). Email jon.bird@ideaworks.com.au. For more retail insights and inspiration go to www.newretailblog.com.

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