Are these the best or worst of times for consumer brands?

Discussion
Photo: Birchbox
Nov 10, 2017
Chris Petersen, PhD.

Through a special arrangement, presented here for discussion is a summary of a current article from the IMS Results Count blog. With Adam Simon.

Brands now have unprecedented opportunities to reach consumers, yet they’re facing massive disruption to their historical retail models.

Why these are the best of times for consumer brands

Today’s omnichannel consumers have disrupted the traditional linear model — manufacturers to distributors to retailers — and now expect to shop, purchase and take delivery anytime and everywhere.

  • Direct sales: As consumers increasingly shop online, manufacturers have greater opportunities to sell direct, often at a higher margin, and form direct relationships with consumers.
  • New marketing opportunities: With more than 70 percent of customers beginning their purchase journey online, brands can engage customers early and often through multiple touch points as well as at stores.
  • Inventory reach: With stores limited by physical space, “virtual inventory” online can present a fuller range of products to shoppers with more in stock at more points of purchase.

Why these are the worst of times for consumer brands

The pendulum has swung to be more customer centric. 

  • Commoditization of products: Everyone’s products are available everywhere at any time, with price becoming the lowest common denominator. Even if brands go direct, they are still competing with over 400 million products available on Amazon alone.
  • The missing 5th P – Personalization: E-commerce has for the most part been an electronic catalog of what’s available at a price. Brands have little opportunity to differentiate product or their value added services selling through e-commerce.

Brands have more opportunities than ever to reach today’s consumers. Herein also lies the challenges of having the right media and resources to leverage those points of contact to optimize the brand experience.

The reality today is that few brands have the capacity or resources able to do it all. Indeed, future success for consumer brands lies in how effectively they can collaborate with retailers and distributors to:

  • Optimize brand value beyond commoditization of product and price;
  • Create an engaging brand experience across multiple channels;
  • Optimize supply to be there at the right time and place;
  • Solve the last mile challenge;
  • Provide personalized service that meets customer expectations. 
  • Are these the “best or worst of times” for consumer brands? – IMS Results Count

DISCUSSION QUESTIONS: Would you lean more toward saying this is the best or worst of times for brands? What other challenges and opportunities do brands have as a result of retail’s ongoing transformation?

Braintrust
"It’s neither the best or worst time for brands. The direct-to-consumer model is simply the new reality. "
"The adjustment huge CG brands will have to make in terms of DTC could potentially be catastrophic."
"Direct-to-consumer opens up a world of opportunity to establish deeper, more personalized relationships with customers."

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15 Comments on "Are these the best or worst of times for consumer brands?"

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Kim Garretson
BrainTrust

I lean toward it being the worst time for brands. The major reason has to do with the transformation of the agency business from many independent agencies with long-term relationships with brands, to a few global holding companies now having all the big brands as clients. The holding company agencies now have to be super nimble to be profitable in these relationships, and I think long-term brand value in the minds of consumers can suffer because of this.

Stuart Jackson
BrainTrust

These are the best of times for brands. In the past physical retailers had a monopoly on the most effective channel to market, i.e., High Street and malls.

They used to protect this tightly. As a result, retailers would demand incredibly favorable terms from brands. They knew that brands had very little choice unless they opened their own physical outlets, which were expensive and capital intensive.

As a result, brands had to sometimes sit on their hands and just agree to whatever the retailer told them. It was a huge barrier to entry for new brands — and suppressed innovation.

Online has shattered that. It means that brands can go direct-to-consumer in a way that they simply couldn’t in the past, complemented by social media. It is much cheaper and much easier. Of course, physical retailers still have a lot of bargaining power — as do new digital retailers. But it’s much lower than in the past.

Frank Riso
BrainTrust

I would say that these are both. it is the best of times because of the opportunity to reach the consumer directly and there needs to be changes in brands’ thinking to take advantage of it. And it is the worst of times because the consumer is still king and can now go anywhere to find anything at any time.

I think the major challenge for most brands, not only luxury brands, is counterfeiting and the buying of a product one thinks is the real thing. Too many consumers want a deal and that makes the $430 billion dollar counterfeiting industry a viable solution and brands need to find a better way to protect their products while still selling direct to the consumer. As always the consumer will help the brands experience the best or the worst of times.

Kiri Masters
BrainTrust

It’s neither the best or worst time for brands. The direct-to-consumer model is simply the new reality. With many traditional retailers going out of business, manufacturers don’t have much choice but to build their own brand and consider how to transact directly with the end-consumer. This requires investment in marketing and distribution at the very least, but the benefit is that these companies are building a defensible and scalable asset instead of relying on third parties to merchandise their inventory. It’s a brave new world and there will be some casualties. But the industry is moving in this direction for the simple fact that consumers favor this model over the past model.

Art Suriano
BrainTrust

I am not sure if today we see the best or the worst times. I would say what we are seeing is the most challenging times, but that’s not necessarily a bad thing. We have had many periods throughout our history when how we were accustomed to doing things seem to change overnight. In the late ’80s the entire world of selling and marketing changed with the invention of the toll-free 1-800 phone number and direct mail. Suddenly every business was chasing after direct marketing. Of course, that is nothing compared to today’s challenges, competition and buying opportunities customers have both online and in-store.

Businesses need to use today’s advantages to their benefit and find ways of avoiding today’s disadvantages. That’s how they will be successful. It’s survival of the fittest as it always has been. Stores, yes you need to have the best service because that is how you’ll win and e-commerce you need to have engaging websites and mobile apps that are easy to use to keep the customer shopping.

Jasmine Glasheen
Staff

It is the best time for start-ups with new ideas, since customers are more receptive to the next hot brand name than ever before. Gen Z is more interested in finding the next big thing than wearing a t-shirt with a big name, so small businesses have more opportunites to catch on and prosper with younger demographics.

However, since so many big name brands settled for producing lower quality goods in order to cater to consumer demand for off-price and discounted clothing, big brand names don’t have the sway that they once did.

If it weren’t for the influence of foreign apparel and ecommerce supergiants selling at breakneck prices, one might be able to argue that the retail playing field has finally been equalized.

Shep Hyken
BrainTrust

Every change presents an opportunity. Some take advantage of it and some don’t. We are in a world where retailers (unless they are specialized) sell a commodity. It can be found in multiple stores and online. The biggest disrupter won’t be another way a consumer can buy merchandise. It will be the economy. That presents another type of problem. But for those retailers who complain about the changes in the retail industry, it’s time to adapt … or die.

Jeff Hall
BrainTrust

We view this as being a great time for brands. Direct-to-consumer opens up a world of opportunity to establish deeper, more personalized relationships with customers. Online and digital sales channels allow brands to reach more customers in more places, more often and without the constraint of traditional brick-and-mortar channels. Those brands that best execute around the customer experience in both the omnichannel ecosystem and direct-to-consumer will be handsomely rewarded.

Ralph Jacobson
BrainTrust

Bottom line, brand loyalty opportunity has never been better. Those brands that leverage personalization, etc. will enjoy the best of times. Those that don’t will not thrive.

Adrian Weidmann
BrainTrust

Core online-only brands adding a brick & mortar presence to their shopper portfolio have a distinct advantage over traditional retailers to find a way to incorporate the digital world into their existing workflows, legacy systems, and infrastructure. Online retailers adding a physical presence can test, measure and integrate best practices at a pace and cadence that optimizes their investment. Physical retailers are frantically trying to remain relevant in a digital world — at scale! A very difficult challenge.

Peter Luff
BrainTrust

It’s the same as it ever was! The industrial landscape is already littered with remains of once successful companies that could not adapt their strategic vision to altered conditions of competition to quote Abernathy, Clark & Kantrow. As we all know change is simply faster now, traditional brands have a responsibility to embrace the new methods and if they do they can be successful, just like the new start-ups, and if they don’t, they won’t!

Jeff Miller
BrainTrust

If you take out massive economic crisis like Great Depression/Great Recession I think this the worst time to be “legacy” brand and the best time to be a start-up brand with a unique product, grit and access to a little capital. Legacy brands who depend on mass TV media and stocking other people’s shelves with products whose only differentiation is a brand they built via media face massive challenges are are mostly in decline. High on that list of challenges is a culture that does not foster innovation and for public companies having to compare to the past. The opportunities for new brands that solve a unique problem or offer a real value proposition beyond their brand name are huge, but their shelf lives will not be as long as the legacy consumer brands who just had an amazing run.

Lee Peterson
BrainTrust

Given the fact that a consumer can say, “Alexa, show me some toothpaste,” vs that consumer looking at a Colgate ad, I’d say it’s leaning towards the worst. The adjustment huge CG brands will have to make in terms of DTC could potentially be catastrophic. Especially considering the fact that they don’t really know how to do that at all right now.

The other factor facing brands is that private label from their biggest clients is getting better and better. The PL in Target, Kroger Walmart, etc, is top notch and in some cases better than what’s been offered for years from CG companies.

All the above adds up to a time of incredible challenge and change in the CG industry. Just as in retail, these challenges are going to bring about great change at all levels.

Ricardo Belmar
BrainTrust

From the perspective of opportunity, it has never been better. From the perspective of risk and challenge, it’s never been worse! So, while the rewards are tremendous for those who “get it right,” the challenge is overwhelming for many. Brands have a fantastic opportunity to build loyalty directly with consumers today but they’ll have to work pretty hard to achieve it! Why? Because competition for loyalty has never been tougher — it’s just much easier for any startup to get into the game and quickly build brand loyalty as a disruptor via social media or word of mouth. Big brands used to just need to place ads on TV during the right shows to build their brand loyalty. Now, that model is over — it takes multiple channels and multiple actions to generate engagement, plus it’s now a 2-way street, not just from brand to consumer. Brands that don’t recognize that will find themselves feeling this is the worst of times.

Michael La Kier
BrainTrust

Leaning toward the “worst of times” overall. For many of the long established CPG companies, their legacy brands are under attack and facing little if any growth. As large scale enterprises, growth is hard to come by when launching new, smaller niche products (which may be great businesses on their own).

wpDiscuz
Braintrust
"It’s neither the best or worst time for brands. The direct-to-consumer model is simply the new reality. "
"The adjustment huge CG brands will have to make in terms of DTC could potentially be catastrophic."
"Direct-to-consumer opens up a world of opportunity to establish deeper, more personalized relationships with customers."

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