By Robert Hocking, Head of Strategy, Saatchi & Saatchi X London.
The IGD’s recent London conference focused on ‘disruptive innovation.’ The organisers brought together industry heavyweights formed of retailers and brands, several spoke, and all claimed the new reality of business was a universe of shoppers who expected low price. Let’s call their view ‘the problem.’
These speakers were then followed by others, mainly suppliers, who presented various forms of technology ranging from Google Glass to 3D food printers with much of the application of this so-called disruption really centred on being ‘new’ rather than being beneficial to shoppers. Let’s call their offers ‘the solution.’
The whole thing felt to me like an endorsement of that classic phrase, ‘just because you can doesn’t mean you should’, one where the problem was underestimated and the solution overestimated.
Shoppers seek low-price in the absence of additional drivers of value in what they’re purchasing. The UK grocery industry isn’t suffering because of a lack of technology, it’s suffering due to a lack of disruptive innovation in the area of ‘stuff that matters to shoppers that’s different than what our competitors offer.’
The tradition of much of retail, grocery in particular, is to create stores that are more like warehouses that act as purchase centres. There’s very little to inspire shoppers who consistently state their desire to find inspiration when they visit a grocery store; people whose average repertoire includes just four recipes yet they have a need to put 21 meals a week on the table. Online they find even less inspiration. And yet grocery retail’s common solution is to streamline operations, strip out value, and claim to pass the savings on to shoppers. But there’s a greater need that’s being missed.
There’s an old saying, ‘low prices only rent you customers, it doesn’t build loyalty’, and if I were the CEO of a UK grocery retailer I’d be asking my team to figure out what it will take beyond price (with its accompanying lousy margins) to earn the hearts and minds of their customers, what we at Saatchi & Saatchi X refer to as ‘loyalty beyond reason.’ In a recent interview the CEO of Whole Foods said, ‘we have a simple strategy, buy high and sell higher’, a risky proposition unless you deliver on it. Seems to be working though, their year on year top line growth is up 10%, and the bottom line up 20%.
Let’s put away the ‘big data’, the technology, and the in-built biases that say ‘but that’s the way we do it’ and get back to the basics by asking ourselves if what we offer matters enough to the people we count on to pay our salaries. Knowing what matters to people – truly, deeply matters – isn’t something you find on a spreadsheet and it can’t be spied through a Google Glass. It’s found by thinking like people about real human needs.