the tripping point: hold on to your marketing plans! than from the inconvenience of a crowded retail...

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January 2016

The Tripping Point: Hold on toYour Marketing Plans!The concept of "Black Friday" became very gray in 2015 — andwith it, the future of traditional brick-and-mortar retailing.

A total of 151 millionpeople shopped during thecritical five days betweenThanksgiving and CyberMonday, according to theNational RetailFoundation. But this year,there was a decided shiftin the types of shoppingtrips they took. Holidayshoppers were just aslikely to have shoppedfrom the comfort of their

homes than from the inconvenience of a crowded retail store.

According to the NRF, while 102 million shoppers visited stores over the longholiday weekend, 103 million people shopped online. So hold onto yourmarketing plans, because the retail industry has just blown past the proverbialtipping point - the moment when e-commerce shopping trips have become justas important as the more traditional kind. Think of it as the “tripping” point.

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Why are shoppers shifting their trips online? The answer is no morecomplicated than this: it's getting easier and more convenient to do so. This factis never more obvious than it is on Black Friday: Get up before dawn and waithours on a line outside the store, or simply shuffle over to your computer in yourbathrobe and log on? That's a no-brainer.

And this shift toward e-commerce is no longer being driven solely by digitallysavvy Millennials, who now comprise 26% of the U.S. population and will soonovertake Baby Boomers as the demographic with the largest share of income.More than 90% of all U.S. consumers shopped online in 2015, according toeMarketer.

What's more, the next retailing tripping point appears to be arriving already asthe digital begins migrating to the smartphone: About 18% of e-commerce salestook place on mobile devices this holiday season, according to comScore Inc.

But just as importantly,this year's Black Fridaysales took a strong swingonline because manytraditional retailers havefinally embraced theconcept of e-commercenot only as acompetitively defensivenecessity also but as acritical way to strengthenshopper engagement.

Walmart, for instance, stillopened its doors onThanksgiving night to kickoff a series of in-store-only promotions. But most of its holiday deals were alsomade available that morning on Walmart.com. And the retailer staged “Pre-Black Friday” offers on the website throughout the month of November, making



Mind theBaby, Not theDiaperProcter & Gamble's Pampers

a trip on that particular day far less necessary for many shoppers.

Rethinking the Role of Merchandising

So traditional retailers have finally, fully accepted the reality that shoppers arenow multi-channel and, therefore, have very different shopping expectationsthat must be addressed. As Macy's chief executive officer Terry Lundgrenrecently tried to explain to Fortune, “Consumers are not only going to shoponline. They’re going to start their journey on their phones, they’re going toenter our stores, they’re going to interact with our sales associates, learn moreabout product … They may not buy it in store that day. But without that storeinteraction, it’s likely the sale [won't] occur.”

No, brick-and-mortar stores won't be going away anytime soon. RetailNetGroup estimates that traditional retail will still command 80% of sales in 2020.For now, most online shopping will still culminate with an in-store purchase:According to Forrester, the ratio of online-influenced sales to actual e-commerce sales is still a whopping 19-1.

Nonetheless, the traditional role of the store must change to address theevolving expectations of consumers who can just as easily do all of theirshopping — and their buying — online.

And that need for change should have just as profound an impact on the waynational brands go to market as it does on retailers. For starters, merelyensuring that you've shipped enough sturdy product pallets before Black Fridaydoesn't come anywhere close to fulfilling your holiday obligations anymore.

Secondary merchandising is still crucial —perhaps more so, since brand loyalty is loweramong those now-dominant Millennials — agroup also far less likely to meticulously shopthe aisles than their predecessors do. Thoseaforementioned online shoppers will need tofind your product easily when they get to thestore.



has long understood the needto go beyond product-focusedmarketing to create strongerbonds with consumers byaddressing the needs andemotions behind their productusage.

Pampers.com provides alibrary of valuable informationfor new parents. Visitors to thesite can explore aninformational "World of Love,Sleep and Play” whilebrowsing Pampers' fullportfolio and other relevantP&G products.

Transporting that level ofconsumer engagement intothe store environment isn'treally possible, but Pampersprovides some basic guidancewhenever it can and steersshoppers to the website asoften as possible. The brandalso seeks opportunities toleverage these assets and thebrand perception they've builtto support the efforts of like-minded retailers.

Walmart has been building an“Every Little Step” marketingplatform for its baby caredepartment that's similarlydesigned to present theretailer as a reliable source ofinformation and solutions fornew parents. The effortincludes a dedicated micrositeon Walmart.com, a baby

But how do you evolve in-storemerchandising to engage shoppers whomight have no intention of making apurchase in the store that day? Or,conversely, how do you change the minds ofshoppers who've already done their decision-making online — or who that very minute areon their smartphones comparing your offer toone from your competitor in a store acrossthe street? The communication surroundingthe product is now more important than ever.

Consider the consumer electronics channel,where once-major players (and now historicalfootnotes) like Circuit City and RadioShackfailed to respond to the changing needs ofshoppers who were steadily finding theonline experience at Amazon.com and othere-tailers to be a lot easier.

Rival Best Buy averted what for severalyears seemed certain to be the same fate byaddressing these new shopper needs head-on. Instead of fighting the practice ofshowrooming (which the chain did initially),Best Buy embraced this new trip type as apotential differentiator. So it has steadilytransformed stores into destinations forproduct information, not just purchase. And ahuge aspect of this transformation has beenthe introduction of brand showcases from keybrands such as Apple, Samsung, Dell andIntel.

"Our expectations as consumers are



registry operated through theretailer's mobile app and athemed "one-stop baby shop"in stores.

It also features prominentplacement for partneringbrands like Pampers that cangive the retailer's programgreater credibility.

“Parents are busy and willalways choose convenienceover complexity," DianaMarshall, vice president ofbaby for Walmart U.S., saidlast summer in a pressrelease announcing theinitiative — which, by the way,also spotlighted thesimultaneous rollout ofPampers Premium Carediapers.

changing," Dan Seymour, Dell's director ofshopper marketing, noted last fall at theShopper Marketing Expo. "When you go intothe store, you're looking for more valuelayered on top of what you already knowwhen you walk through the doors."

Rethinking the Product Display

So how does a brand reimagine itsmerchandising practices to add the kind ofvalue that will succeed in the new retailenvironment? By thinking beyond "productdisplay" in the following ways:

Display as fulfillment center: Go beyondmere practical thinking, like what is thedisplay's load capacity, to consider how toconnect shoppers to your brand's full (andshoppable) portfolio online. This not only canfoster stronger shopper engagement butwould let brands devote the store display tofewer, key items (which could become even more important if retailers, asexpected, begin reducing in-store SKU counts).

Display as advertising opportunity: The ongoing fragmentation of massmedia has made the store one of the few remaining opportunities to gain large-scale consumer reach. So make sure your brand message is prominent — but



also consistent with the rest of the media strategy.

Display as shopper communication center: Many retailers are developingtechnology-driven tools that can enhance the shopping experience, like appsthat create a list-specific route through the store at Meijer or deliver aisle-specific product recommendations at Target. Tap into these tools to help reachshoppers directly and, when possible, personally through targeted, data-drivenoffers.

Display asentertainment center: Ifconsumers no longerneed to visit stores, they'llactually have to want togo. Retailers will likely bemore interested inworking with brands thatcan elevate the store'sentertainment potentialthrough innovativemerchandising concepts— so it might be time to start working on those aislereinvention concepts.

Display as data collection center: More a way to gain retailer support than todrive sales, infusing displays with technology that can track nearby shopperactivity could be the differentiator a brand needs to continue earning secondaryspace. It also can better inform the development of future programs.

Display as brand engagement center: Product benefits and calls to action areno longer enough, because displays now need to deliver a greater benefit thanunit sell-through. Presenting the brand through the lens of a shopper solutioncan better engage both shoppers and retailers— especially if the solution willhelp differentiate the retail partner. Brands should analyze their marketingassets to find relevant content that can be brought to life in the store (seesidebar).



©2016 WestRock Company. All rights reserved worldwide.

This level of strategicreinvention won't comeeasily. Setting aside thetypical brand-centricmessaging strategy tofocus on shoppersolutions that will buildbrand affinity in subtlerways is a tough pill toswallow for manytraditional marketingorganizations —especially since itrequires moving beyondthe department-levelspecial interests that oftenisolate merchandisingprograms from the rest ofthe brand plan. But asretailers scale down store sizes and reduce SKU counts, a brand's ability toconnect with shoppers in relevant ways could be the key to maintaining astrong presence at retail — or to keep any presence at all.

For information on how WestRock is developing innovative in-storesolutions to turn shoppers into stoppers and browsers into buyers, callyour WestRock representative.

the tripping point: hold on to your marketing plans! than from the inconvenience of a crowded retail...

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