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E-commerce

How the hourglass effect is changing retail

Brands now find themselves in an environment in which they must evolve in real time in order to meet customer demands across an array of channels. Over time, these demands have transformed the brand landscape into a shape representing a metaphorical hourglass.

Applying the hourglass metaphor to the Australian brand landscape, a clear distinction between large retail platforms and specialised retail brands exists. One end of the hourglass holds the platforms that have expanded to accommodate mass consumer needs and adapted to evolving user experiences. At the other end of the hourglass are specialised retail brands that cater to a specific niche market.

Both platform brands and niche retailers at either end of the spectrum share in the success of digital transformation. For example, the Australian online platform, Kogan began as a television vendor and has since expanded across ten online retail categories ranging from appliances to health and beauty products.

From a global perspective, the phenomenal growth of global platform giants like Amazon, Google and Uber is not necessarily a result of the existing brand identity. Rather than relying on existing brand identity, their ongoing success comes as a result of the way they have embraced a shared commitment to the universal values of today’s customer’s – being efficiency, accessibility and simplicity.

On the other end of the hourglass sit retail brands built around a single, clear purpose. Take Aussie online wine retailer, Vinomofo. It launched with the objective of championing a ‘no fuss’ approach to wine culture, fostering a community of wine lovers built around a love of the product, irrespective of expertise. Although Vinomofo is contained to the niche market of wine drinkers, in just five years the brand has expanded globally, extending to the United States and Asia.

Squeezed in the middle of the hourglass are those retail brands unable to command the premium prices of specialists, and without sufficient scale to leverage a mass consumer base. Mid-market players pinched in the centre must learn from brands at either end of the hourglass. Brands in the mid-section must meet the challenges of the online retail space and optimise their strategies to remain relevant to an increasingly sophisticated customer base.

Three key steps are vital for retail brands to avoid being stuck in the middle:

  1. Define what kind of living brand you will be: Brands can begin by establishing their function across multiple environments. As a starting point, brands can categorise their behaviour as something to use (a utility brand), something to say (an audience brand), something to do (an experience brand) or something to be related to (a relationship brand).
  2. Find or re-find your purpose: To remain relevant and achieve success, a brand must aspire to achieve more than revenue growth – it must also align its identity with its overall purpose. Brands can convey their purpose effectively through the right communication channels – if purpose is shared and its essence is clear, coherence is guaranteed.
  3. Think beyond service: Those brands willing to make the investment in building meaningful relationships with their consumers will grow—as well as maintain—a loyal customer base. Take the ‘BBG community’, formed from fitness workout brand, Sweat with Kayla. Unlike big generic brands, the online platform goes beyond exercise to foster a common purpose, a journey of fitness, and a sense of belonging.

Glenn Heppell is Accenture’s managing director for products in Australia and New Zealand.

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