August 25, 2022 — Article
We like to invest in tangibles for our retail businesses. Warehouses. Websites. Shopfronts. SaaS products. And we love the data around KPIs: CPC. Average transaction sizes. Sales per square metre.
It’s comforting and logical because tangibles seem to offer the presence and process that drive sales.
But what if most of our sales are made before customers even enter those spaces? What if tangibles don’t drive sales but purely facilitate them? What if customers are seeking out locations to gain access to the intangibles our brand offers?
If that’s true, if it’s the things we offer beyond the tangible that will help us thrive, retail brands need to be built for the long haul, rather than just short-term return.
And when I say building your brand, I’m not just talking about the tangible brand assets of colour and voice, but the things you’re saying (and standing for) with your voice, the meaning you are building, over time, in the minds of your customers – as well as the design of products or services that deliver on your promise.
In this current climate of uncertainty, as interest rates and prices along the supply chain continue to increase, how can you build that?
Building in value upstream
Today, slowing sales from increased ad spending often aren’t reflective of constantly shifting media algorithms, but rather short-termism: a failure to build more trusted, meaningful brands that address the unchanging needs of humans.
Is it possible to build ‘sales overnight, brands over time’, so that customers can say that our products cost less but are trusted to mean more?
The answer lies in a more sophisticated appreciation of brand and the emerging power it holds, one that builds on core principles that have survived the firestorm of digital disruption.
Because even though the channels your brand needs to appear in have climbed, the noise is even harder to cut through and consumer behaviours continue to change.
Building intangible value into brands, then, requires work upstream to determine how your retail brand is greater than the sum of its business parts. You need to consider how your people, processes, and products work together to create value and an advantaged position in an advantaged ecosystem.
Business leaders who understand the power of brand ensure their teams are clear on the role and value of brand-building. They’ll often design their organisation to ensure brand-building is a part of key decision-making. A value driver, not a marketing cost.
To thrive, you need to ensure your whole team is innovating processes and product, services or experiences in ways that build your brand. This requires designing innovation processes to last and scaling them into every corner of the business, hence the emergence of strategic design as an enterprise discipline.
In a market competing for talent, training the whole team in design processes and mindsets creates value faster than hoping one area can deliver on its own.
The importance of trust
One of the key intangibles for retail brands is trust. As something intangible yet immensely valuable, it can’t happen by accident. Both brand and trust need to be designed into product, service and experience moments; therefore, you need to invest in a longer view.
One enterprise struggling to keep pace with societal changes is Airbnb, a brand that is starting to lose its social licence, particularly in Australia. Once seen as a start-up unicorn and a boon for society, it’s now losing trust rapidly as neighbours protest outside buildings used for parties or left empty while renters are forced onto the streets by a lack of available accommodation. There are even calls for legislative changes.
On the other hand, department store Myer is one of the most improved retailers in Roy Morgan’s latest Net Trust rankings.
Myer has doubled down on designing ways to do more with less, rationalising its store network while focusing on a customer-first strategy and redesigning the business itself. The brand has also been working on how it fulfils orders while improving the customer experience across digital channels and linking into store experience. To turn its business around, Myer has had to move away from the tangibles and think about the bigger picture. And this shift is clearly working. More than 70 percent of its transactions now come from customers involved with the Myer One loyalty program.
When the focus is so often on short-term monthly or quarterly returns, it’s tempting to go back to what is clearly tangible. Thinking about the intangibles is radical but it will separate you from the pack in the long term.
This article first appeared in Inside Retail.