Why every western retailer brand should be visiting China now!

As retailers struggle, we keep hearing about the battle between traditional and online retail, but not enough talk about consumer-centric retail. China is moving ahead, starting with the consumer. They are mapping out how they want to shop, providing smart, creative solutions so retailers show up completely different. Brands like Alibaba are leading the way, with consumer centricity.

When I grew up cartoons were only on Saturday morning, which was the same time my mom went to do groceries. Now, cartoons are on whenever, wherever and however kids want. Pause, switch devices and keep watching.

Somehow North American retailers seem stuck debating offline versus online. And, many stores still fumbling around on the transition from old to new.

A few months ago, we purchased a beautiful desk, and the experience was laughably horrendous. Honestly, we saw carbon copies. The glass top for the desk was out of stock, and they would call us when it was available, two months from now. Then, we were given the number to call for a third party delivery company. The delivery company said they could get the desk to us in two weeks time. I felt like I was being transported back to 1977.  This is a big name retailer, in 2018!

Toys-R-Us is gone.

Sears is dead.

Macy’s has no clue if there will ever be another parade.

Even Sam’s Club is closing stores.

It is not just that these stores using old world retail thinking. They are barely thinking about the consumer, which results in a very boring and frustrating consumer experience.

Meanwhile, the Alibaba stock price has doubled in the past year.

China is moving beyond online, into a world of consumer centricity. 

Shop how you want, order how you want, deliver how you want and prepare how you want. You can order ahead and have it cooked for you in one of the store’s restaurants. You can browse fresh fish or vegetables, have it cooked the way you want, and then delivered to your home within 30 minutes.

Below is a video by Alibaba about their view on “New Retail.” This will give you a feel for the smart and creative areas where retail can go.

 

Hema stores from Alibaba

Hema supermarkets are the central retail choice to Alibaba’s push for “new retail,” that blends online and offline experiences. They have in-store restaurants so shoppers can select live seafood and eat on the spot. Shoppers, whether online or in the store, can receive free delivery within 30 minutes. No more carrying bags home, and if you get the food cooked by the store, you don’t even have to cook it.  Rather than loading up your grocery cart, then lining up at a cash register, shoppers can browse and pay as they shop.

Consumers are instantly provided information about brands through their smartphones. And once you want it, you can pay instantly with Alipay, the payment app used by over 500 million people in China.

Payment apps have become so common. On my last trip to China, the taxi didn’t take Visa, and one of the cabs didn’t even take cash. Just the payment app.

Old-school marketing no longer works, but the fundamentals of brand management matter more now than ever

The old logical ways of marketing no longer work in today’s world. These brands feel stuck in the past talking about gadgets, features, and promotions. They will be ‘friend-zoned’ by consumers and purchased only when the brand is on sale. The best brands of the previous century were little product inventions that solved small problems consumers did not even realize they had until the product came along. Old-school marketing was about bold logos, catchy jingles, memorable slogans, side-by-side demonstrations, repetitive TV ads, product superiority claims and expensive battles for shelf space at retail stores. Every marketer focused on how to enter the consumer’s mind.

Old-school marketers learned the 4Ps of product, place, price, and promotion. It is a useful start, but too product-focused and it misses out on consumer insights, emotional benefits, and consumer experiences.

Brands need to build a passionate and lasting love for their consumers   

How can brand leaders replicate Apple’s brand lovers who line up in the rain to buy the latest iPhone before they even know the phone’s features?  I see Ferrari fans who paint their faces red every weekend, knowing they will likely never drive a Ferrari in their lifetime. There are the ‘Little Monsters’ who believe they are nearly best friends with Lady Gaga.

It was amazing to witness 400,000 outspoken Tesla brand advocates who put $1,000 down for a car that did not even exist yet. I love the devoted fans of In-N-Out Burger who order animal-style burgers off the secret menu. Every brand should want this type of passion and power with their consumers.

Smart strategic thinking

A smart strategy turns an early breakthrough win into a shift in momentum, positional power or tipping point where you begin to achieve more in the marketplace than the resources you put in.

Many underestimate the need for an early win. I see this as a crucial breakthrough point where you start to look at a small shift in momentum towards your vision. While there will always be doubters to every strategy, the results of the early win provide compelling proof to show everyone the plan will work. You can change the minds of the doubters—or at least keep them quiet—so everyone can stay focused on the breakthrough point.

The magic of strategy happens through leverage, where you can use the early win as an opening or a tipping point where you start to see a transformational power that allows you to make an impact and achieve results in the marketplace. A smart strategy should trigger the consumer to move along the bug journey from awareness to buy and onto loyalty, or it can help tighten the consumer’s bond with the brand. 

Every retailer should be booking flights to China to explore what retail of the future will look like. And soon.

My new book, Beloved Brands, coming this spring.

How this Beloved Brands playbook can work for you. The purpose of this book is to make you a smarter brand leader so your brand can win in the market. You will learn how to think strategically, define your brand with a positioning statement and a brand idea, write a brand plan everyone can follow, inspire smart and creative marketing execution, and be able to analyze the performance of your brand through a deep-dive business review.

 

Beloved Brands: Who are we?

At Beloved Brands, our purpose is to help brands find a new pathway to growth. We believe that the more love your brand can generate with your most cherished consumers, the more power, growth, and profitability you will realize in the future.

The best solutions are likely inside you already, but struggle to come out. Our unique engagement tools are the backbone of our strategy workshops. These tools will force you to think differently so you can freely generate many new ideas. At Beloved Brands, we bring our challenging voice to help you make decisions and refine every potential idea.

We help brands find growth

We start by defining a brand positioning statement, outlining the desired target, consumer benefits and support points the brand will stand behind. And then, we build a big idea that is simple and unique enough to stand out in the clutter of the market, motivating enough to get consumers to engage, buy and build a loyal following with your brand. Finally, the big idea must influence employees to personally deliver an outstanding consumer experience, to help move consumers along the journey to loving your brand.

We will help you write a strategic brand plan for the future, to get everyone in your organization to follow. It starts with an inspiring vision that pushes your team to imagine a brighter future. We use our strategic thinking tools to help you make strategic choices on where to allocate your brand’s limited resources. We work with your team to build out project plans, creative briefs and provide advice on marketing execution.

To learn more about our coaching, click on this link: Beloved Brands Strategic Coaching

We make Brand Leaders smarter

We believe that investing in your marketing people will pay off. With smarter people behind your brands will drive higher revenue growth and profits. With our brand management training program, you will see smarter strategic thinking, more focused brand plans, brand positioning, better creative briefs that steer your agencies, improved decision-making on marketing execution, smarter analytical skills to assess your brand’s performance and a better management of the profitability of the brand.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Graham Robertson bio

 

 

 

 

 

If your brand is afraid of Amazon, then you should be terrified of Alibaba

[sg_popup id=”9″ event=”onload”][/sg_popup]Now begins the North American battle of Amazon vs Walmart, with the winner to take on Alibaba on the world’s retailer stage.

alibabaI love watching the Kentucky Derby, especially those horses that start off slow, then pick it up on the back straight, and then basically fly past everyone on the last turn, like they are standing still. That’s how I feel about watching the Alibaba brand.

The joint venture between Walmart and Google is a signal that both might be a little bit scared of Amazon. 

But, Alibaba is using their dominance in the world’s largest market (China) to pick up all that speed in the back straight and likely beat both Amazon and Walmart.

Walmart is a tough competitor. They won’t go down without a fight.

Obviously, Amazon has a huge advantage in the US, but things are about to get really ugly as Walmart and Amazon attempt to destroy each other. 

But, if you have ever dealt with Walmart, you would have to be an idiot to ever count them out. Their culture focuses on the relentless fixation on fast-moving items that helps drive cash flow. Sure, Walmart beats up their vendors over price–but that’s mainly to drive sell through. If your brand moves slow, there is no debate–you are told to speed up your sales, and if you don’t, you are gone.

I remember when Walmart starting sending us their weekly sales data. My first thought was “Wow, this is true partnership, amazing data, thanks Walmart”. Then the questions started to come. “Your 250ml cherry flavored cough syrup is not selling fast enough, what will you do to accelerate turns”. We lowered the price. Or even worse, “Your Listerine Pocketpaks product accounts for the highest theft of any product in our stores, fix it”. We changed the packaging, just because they asked us.   In the bricks and mortar space, while most department store retailers sell through their inventory in 130-150 days. Walmart sells through their inventory in 29 days. That’s cash flow.

I expect Walmart will go lower on price than Amazon can tolerate. What retailer owned the low price positioning before Walmart?  Sears. If you go compare prices at Walmart and Sears, you will see why Sears stores are empty and about to go bankrupt.

Does the Google partnership help Walmart?  A little. But both better step it up fast. If Walmart loses to Amazon, the case study class starts off with “Walmart should have started their on-line war with Amazon in 2002, not 2017.”

Even if Amazon can tolerate lower prices and eventually beats Walmart, it will do some damage to their profits. Amazon will experience lower margins, squeezed cash flow, and a divided consumer base. It will further open the possibility of seeing Alibaba entering the US market.

Why Alibaba will win

Alibaba, valued at $420 Billion has seen an 80% increase in the market capitalization in the past twelve months. In the same period, Amazon has seen a 20% increase, still with a slight lead at $465 Billion. 

Here are 5 reasons why Alibaba will eventually win the global e-commerce retail space:

  1. Alibaba can utilize their home-field advantage. Alibaba is dominating the Chinese market, which is the #1 e-commerce population in the world. China has 500 million active on-line users, is twice the size of the US market. Walmart and Amazon will divide up the US market.
  2. Alibaba has a business model that delivers higher profitability. Alibaba’s business model, with no listing fees, with the bulk of their revenue coming from keywords and digital-advertising is closer to the social media model. This gives Alibaba significantly higher margins than Amazon. 
  3. Alipay payment system.  Alibaba launched a digital payment system in 2004, just for their own customers. Along with WePay, it has become the accepted method of payment in China. They have moved to a cashless and even cardless payment world. 
  4. Alibaba will ride the growth curve of the Chinese Economy. Despite the recent slowdown, China’s economy is still growing at almost three times the rate of the US – around 7% over the last couple of years, compared to less than 2.5%.The US has a growing trade deficit – it imports more than it exports – while China imports significantly less than it exports, resulting in a trade surplus.
  5. Alibaba’s sales will benefit from the growth of the Chinese Middle Class. In the last ten years, the average income for China has tripled. It is expected that from 2012 to 2022, those in China making more than $34K US will increase from 3% currently up to 9%, and those in the growing middle class ($16K to $34K) will increase from 14% up to 54%.

So when will Alibaba move west? Likely after the Walmart vs Amazon dust settles. By 2020, I would expect both Walmart and Amazon to be weakened. Whoever wins will have to take on a very healthy, highly profitable, cash-rich Alibaba. Realistically, Alibaba could end up two or three times the size of Amazon.Then it will be like watching that horse in the Kentucky Derby, with Alibaba rounding the final turn on the way to the finish line.

To read more on competitive strategy, click on this link: 

Competitive Brand Strategy

 

In retail, the smart money should be on Alibaba for the win.  

 

To learn about strategic thinking, follow this powerpoint slide presentation. 

 

Beloved Brands: Who are we?

Beloved Brands is a brand strategy and marketing training firm that is focused on the future growth of your brand and your people.

It is our fundamental belief that the more loved your brand is by your most cherished consumers, the more powerful and profitable your brand will be. We also believe that better marketing people will lead to smarter strategy choices and tightly focused marketing execution that will higher growth for your brands.

With our workshops, we use our unique tools force you to think differently and help unleash new strategy solutions to build around. I believe the best solutions lay deep inside you already, but struggle to come out. In every discussion, I bring a challenging yet understanding voice to bring out the best in you and help you craft an amazing strategy.

We will help you find a unique and own-able Big Idea that will help you stand out from the clutter of today’s marketplace. The Big Idea must serve to motivate consumers to engage, buy and build a loyal connection with your brand. Equally, the Big Idea must work inside your organization, to inspire all employees who work behind the scenes to deliver happy experiences for consumers.

We will help build a brand plan everyone can follow. It starts with an inspiring vision to push your team. We then force strategy choices on where to allocate your limited resources. With our advice on brand execution, we can steer the brand towards brand love and brand growth.

To learn more about our coaching, click on this linkBeloved Brands Strategic Coaching

At Beloved Brands, we deliver brand training programs that make brand leaders smarter so they are able to drive added growth on your brands. We offer brand training on every subject in marketing, related to strategic thinking, analytics, brand planning, positioning, creative briefs, customer marketing and marketing execution.

To learn more about our training programs, click on this link: Beloved Brands Training

If you need our help, email me at graham@beloved-brands.com or call me at 416 885 3911

Graham Robertson Beloved Brands