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Local Is The Future of Effective Retail Marketing

By July 8, 2019 No Comments
local target advertising

I’d guess it must be an ambition of all us to invent a law. Who would remember Messrs Moore, Pareto and Boyle if they hadn’t had a moment of genius named after them? They will now be remembered for eternity.  Roy Amara achieved this in 2006. His law was:

“We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

In the digital information economy everything new is over-claimed at the expense of proven technology. The reality is often hype over purpose.

Apply the same the same insight to retailing, there are endless reports on how technology will save the high street decline, many m

mentators obsess about experimental one-off experiential stores in affluent areas that are unlikely to be ever be practical at scale. Similarly, niche technologies, like beacons, are hailed as saviours, when they will, at best, have a marginal impact.

UK retail sales decreased by 3.0% on a like-for-like basis from May 2018. This was the steepest like-for-like decline since December 2008, excluding Easter distortions. It’s dire.

There are two causes, the shift to digital and decline in consumer confidence. Real average weekly wages are 3% lower than they were ten years ago. Add to this we also work longer than anyone else in Europe (42.3 hours a week.) So, we’re poorer, working harder than ever but are better connected, this is bound to effect how people shop. Customers expect rock bottom pricing and they know they can find this somewhere online.

However, these are national averages, there are parts of the country which are far worse off.  The town centre with the starkest decline is Stoke-on-Trent, which has lost 23% of its 415 stores in just five years. Also decline is also driven by sector; the steepest declines are in clothing, bookshops and mobile ‘phone stores, whilst there is a growth in the experience economy (for example, tattoo parlours!) However, online sales are still under 20% and they are skewed by category (clothing/footwear and department stores being the highest.) Online food sales are around 5%. Successful retailing depends on a mixed approach, digital at the core, but understanding how people behave in difficult circumstances. Consumers have more choice and decide how they engage. This requires a shift in marketing strategy.

 

People First

The UK is fractured in terms of economic prosperity, with wealthy communities living closely to ones suffering economic hardship. The divide isn’t just north south, it’s hyper-local.

Add to this a quite startling fact, about three in five Britons live within twenty miles of where they lived when aged 14. We’re pretty immobile and wedded to where we grew up and strongly attached to our communities, the areas of greatest incoming migration are the major cities (something like a third of London’s population was born abroad.)

Retail brands should consider a community first approach. Until recently traditional brand theory is that one message to many people was the best way for retailers to market themselves. Mass media was cheap (but inflexible,) also people aspired to new ways of shopping, travelling to new out of town malls, it was a perfect combination.

However, changes in media technology and consumer aspirations mean that there is very strong case for localised communication. We’d argue a customer in Stoke on Trent has little in common in with someone in Stockwell, why communicate to them both with same message? Advances in technology and data handling mean that it is possible to personalise communication on a mass scale.

In the next 3 years a major retailer will test hyper-local personalised marketing at scale.

This is especially true if as traditional methods of branding are becoming less effective.

Public favourability towards advertising hit a record low of 25% in December 2018, according to advertising thinktank Credos, which has previously found trust in advertising is “in long-term decline”. Favourability has almost halved since 48% in 1992, the earliest point for which like-for-like data exists, (but it has dropped even further from the ‘60s, ‘70s and ‘80s.)

This means that three in four of us are unfavourable towards advertising. Credos found four main areas of concern: volume, repetition, obtrusiveness and irrelevance. These are all linked to over-investment in digital channels. If 1992 was the high point of favourability, it was just before the launch of iPhone and the mass penetration of the internet.

Over investment in digital channels is a real issue. Now two-thirds of all advertising spend is digital and nearly a quarter is on digital display (machine managed digital pop-ups that chase us round the internet.) Brands are over-investing in solutions that their customers don’t like, we need to find better solutions that include traditional channels and emotionally engage with consumers.

YouGov data shows that TV advertising has the greatest potential to grab the attention of members of retailers loyalty schemes attention?

yougov loyalty card statistics

Tesco recently won the Thinkbox, the TV marketing bodies award for the best ongoing use of TV. “Tesco’s approach has driven returns in short-terms sales and long-term brand health and has put clear blue water between itself and the competition.”

Evidently retail advertising needs to be use multiple channels and always be relevant, this means both personalisation and localisation. Localisation can now be delivered through any media channel.

The great economist, John Maynard Keynes, also had a theory named after him, he also said “it’s better to be approximately right, rather than precisely wrong.” This has massive implications on the future of retail marketing. Data driven digital marketing drives a relentless search for marginal improvement rather than looking for significant gains through innovation.

Automation and the development of new media technologies, like Sky’s AdSmart, means that brands can easily target local communities. It means national chains can again become part of the community, contributing at a local level with relevant messaging. It’s a new approach based on how real people live their lives.

Charlie Makin is MD of Pintarget. Pintarget is an award winning hyper-local media agency that uses data and insight to drive effective hyper-local advertising solutions. Follow Charlie and Pintarget on LinkedIn.

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