International Finance
Ideas Magazine March-April 2019

When brands work in harmony with retailers?

The ongoing battle between the two is apparently futile—because they share a common goal: customer retention. This means, them working closely might surface greater co-marketing opportunities.

Brands vs. retailers are a battle that has rumbled on through several ages. They’ve competed for our attention, money and loyalty from the High Street boom of the 1860s through to the golden age of the 1960s. The contest is even more magnified now in the digital age with the Internet playing host to online discount retailers as consumers look for the cheapest bargains, fuelled by the rise of price comparison sites.

Retailers embrace shopping change

It would appear that retailers are leading the way when it comes to winning customers. Once upon a time, consumers would buy into a brand’s message, style and values, but the tables have turned now. Millennials have embraced a DIY approach to shopping, with a wealth of choice and information at their fingertips, especially peer reviews which are increasingly powerful drivers of purchase decisions. Recent research has shown that only seven percent of millennials identify themselves as brand loyalists, while 75% are influenced to shop during a retail sale or promotion. Arguably, brand loyalty is dying a slow death as it heads toward the canvas.

So, what can be done from a brand’s perspective to ensure it can remain relevant in today’s volatile climate? After all, the most common debate is that retailers need brands to survive because without which they won’t have products to promote and sell.

Data is king

One big topic that harmonises the two is data. We already know the power it can give both brands and retailers in terms of insights on customer behaviour and purchase patterns. The rise of online shopping combined with the social media boom has opened up a host of new channels and platforms for brands and retailers to promote their message, which in return, leaves them with a mountain of actionable customer data.

Making sense of this data and acting upon it has proved to be a blessing and a curse for marketers. Done right, data can help to retain new customers, target and convert new ones, and ultimately boost sales. Otherwise, it might lead to customer dissatisfaction, resulting in a displeased word of mouth. Still worse, if data is not handled correctly following the introduction of the General Data Protection Regulations (GDPR) earlier this year, there will be a huge fine imposed on brands or retailers. There is a greater responsibility on data use,and it will have a bearing on people-based marketing. Data partners will need to know where the data is coming from and how it was consented.

Steve Martin
Steve Martin
Managing Director, LiveRamp

A second-party strategy

So if retailers and brands have the same end goalwinning and retaining customers, then why can’t they operate together to help achieve this? Surely the combination of the two sets of data on a single customer is better than one? So how can brands and retailers set about doing this? The answer lies in what is known as second-party data.

Second-party data is essentially data that customers don’t provide directly, but is obtained via a relationship with another entity. For example: Take any supermarket and Coca-Cola. The brand (Coca-Cola) is responsible for developing the product, but arguably knows very little about the end-user given that the majority of sales come through the retailer (the supermarket). It is therefore within the interests of the brand to work with the retailer to obtain customer data that enables them to tailor their product marketing for current audience. For example, targeting paid media to lapsed buyers and measuring the in-store sales impact of that paid media. In addition to a potential new revenue stream, the benefit for the retailer is a more engaged brand that invests more in paid media and brand-funded promotions.

Co-marketing opportunities

In addition to brand-retailer, second-party use cases, where brands also explore brand-retailer-brand opportunities. Imagine a world were brands can instantly understand how users buying their products in a given retailer are transacting with other brands associated with the same retailer. This opens up the opportunity for non-competitive brands to identify partners to drive co-marketing opportunities without costly market research. For example: a soft drink brand may identify which alcoholic beverage brand they can approach to develop a coupon discount partnership. Brands working together in this way could even create combined audiences for paid media targeting and measurement.

A long-lasting relationship

As shopping patterns and behaviours continue to evolve, the future will always remain somewhat uncertain for both brands and retailers. The next big phenomenon is always just around the corner and ready to shake up the industry once again. With this in mind, instead of competing against each other, like they have historically, brands and retailers need to recognise that they can actually overcome many hurdles in the landscape, especially if they forget their differences and work together.

Second-party data is a powerful tool if handled and actioned correctly. It largely depends on how brands and retailers can work in harmony to build relationships with their customers and ultimately remain relevant and profitable.

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