The brands cashing in at home

Consumers are looking for ways to maintain their habits for good food, socialising and entertainment on smaller budgets, creating a market for premium at-home products and services. MaryLou Costa looks at the innovative ways companies, big and small, are getting on the trend.

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Home may be where the heart is but it is now also where the money is as people shift to spending more of their social time at home, thanks to retail price inflation running at above 5% and household spending being squeezed.

It seems that, at least until the economic situation in the UK and Europe takes an upturn, the stay-at-home trend is here to stay. In response, the smartest businesses are working hard to cater for customers within their own living rooms. The latest ONS figures show that spending on home goods and services increased 4.8% between 2009 and 2010 and is running at £11.2bn for Q2 of this year.

“What we’re seeing increasingly is people going to the supermarket to buy food then going home to watch telly [instead of going out],” Virgin Media finance director Eamonn O’Hare told Reuters in October.

But it is not just cable TV subscriptions or Marks & Spencer’s Dine In For £10 promotions that are on the rise. Innovations in the home shopping market are helping to ensure that consumers can find varied ways of spending their time at home.

Housebites, for example, is an upmarket takeaway website that is tapping into the demand for good food at home among consumers used to eating out. Diners can log on to the website to order from local chefs who will deliver restaurant-quality food to their door at takeaway prices. Founder Simon Prockter says it was a series of poor takeaway experiences that led him to spot a gap in the market for high-quality, home-delivered food.

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Housebites

Food purchasing, and even eating out, has held up well in the recession, Prockter claims, but he says that people are either cooking at home more or eating extra ready meals. He says the home food delivery market in general has been increasing for 20 years and projections for the next three years indicate a further sharp rise to come. Mintel statistics show that 38% of British people claim to have spent more on in-home food in the year to September.

What makes Housebites different from previous food delivery businesses, he says, is that it uses technology to drive its service in a way that was not possible only a few years ago.

“The internet has been able to disrupt [things] so much that it allows people to come up with new ways of doing things,” he says. “Why do you have to deal with an estate agent to buy a house, for instance? Why not deal direct with the owner? Sarah Beeny [TV presenter] has come up with Tepilo, a website for property buyers and sellers so people can do just that.”

Prockter has found that online is the fastest growing area in terms of how people shop for food delivery. Consequently, Trip Advisor-style user reviews and chef profiles are a crucial feature of his website.

Another online start-up, Hubbub, delivers from independent local stores such as bakers, fishmongers and delis. Its founder Marisa Leaf was a barrister working long hours, and felt frustrated that the only places open when she needed to shop for food were supermarket chains that she felt didn’t meet her needs.

“What I really wanted to do was support local businesses because they have an important community role. But I didn’t want to spend my limited spare time visiting and queuing in stores,” explains Leaf. She says that while consumers have a desire to support their local producers, they too are often working long hours so do not have the time to visit the local shops and farmers’ markets.

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Creating a hubbub: former lawyer Marisa Leaf launched her delivery service for time-poor foodies

Hubbub plans to roll out around London and then the rest of the UK. But regardless of Hubbub’s growth, Leaf insists that each area will only be serviced by its local stores.

The site’s expansion will appeal not only to consumers but to independent stores that lack the expertise and finances to establish their own online delivery services. And rather than cannibalising from shoppers who actually visit the shops, Leaf says the online function is attracting people who have not visited the stores before.

As a result of being connected by Hubbub, these stores are also marketing each other using fliers within their own shops, she adds.

As well as recreating the ’eating out’ experience within their own four walls, people are increasingly bringing the entertainment factor home. The home party model, once confined to the stereotype of the pre-wedding Tupperware party, is now bringing eating, drinking, friends and entertainment to people’s living rooms.

Jamie Oliver, with his Jamie at Home brand, has seen success in this area. Starting in 2009, it now has more than 4,000 consultants selling his homeware and garden products through home shopping parties.

Directory FindaParty.co.uk hosts company and consultant profiles for well-known brands such as Ann Summers, Avon and Body Shop. Children’s books, crafts, gardening, fake tanning, jewellery and even exchanging gold for cash are all party genres added to the site in the past two years.

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At your service: Jamie Oliver’s home shopping parties include webcasts of him and answering questions

And it’s not only brands with the clout of Jamie Oliver that are exploiting this trend. FindaParty founder Gavin Reynolds has noticed a trend for smaller firms adding parties to their services as an extra income stream. “They may have just operated out of a single area or shop, and instead of expanding by opening another store, they are recruiting party organisers to build their brand and exposure,” he explains.

While expanding into home parties might pose a lower financial risk than increasing a retail footprint, Reynolds warns that a party business relies on trusting consultants to be brand ambassadors. But he suggests that the party model could be added to most businesses as long as the products have a common-interest following and lend themselves to a group activity.

Home party models must also have a strong unique selling point, argues Phil Moran, co-founder of gourmet ingredient party firm My Secret Kitchen. “The party model can absolutely translate to other products and this trend will continue. But if you’re only competing with big retailers you’re never going to win because you’ll never have the same buying power,” he says.

“In our case, we have unusual products that need explaining. Our products have a story, we offer recipe ideas and the parties provide interaction, compared with standard supermarket food demonstrations that get lost in the background. We give people a reason to buy the products.”

My Secret Kitchen’s growth has been spurred by the increase in cooking programmes on TV such as Channel 4’s Come Dine With Me, which has spawned a trend for dinner parties. This growing audience is impressed by the company’s unique foodie products such as white wine and porcini mushroom finishing sauce and balsamic reduction, claims Moran.

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Secret to success: TV shows such as Come Dine With Me have sparked a trend for holding dinner parties, helping My Secret Kitchen’s success

Moran says My Secret Kitchen keeps its events educational rather gimmicky, avoiding the usual party games. He adds: “We were also put off by the direct selling model a little because there is nothing worse than the obligation to buy. We offer a different selling atmosphere.”

Jamie at Home managing director Kim Claxton also says its parties are focused on demonstrating the product range, and that its consultants’ role is focused on bringing out each one’s story. The parties also use the personality of founder Jamie Oliver, showing webcasts of him cooking, answering questions and running competitions, which can be broadcast live into the homes of people having a Jamie at Home party.

Claxton says the parties appeal to cooking and entertaining enthusiasts looking for cookware that doubles as party accessories, also fuelled by the dinner party trend. With this in mind, she says next year’s product ranges will be vintage-inspired to ensure demand stays fresh.

Taking home parties to the next level as a marketing tool is Come Round, which bills itself as a new form of direct selling and experiential marketing. Set up two years ago by former lawyer at record label EMI, Giles Harris, the firm began by using its founder’s music heartland as a base to set up a new party promotions model.

Come Round has run home parties for big music names such as Lady Gaga, JLS and Justin Bieber, as well as TV entertainment properties such as Dr Who (see case study, below).

Other home service mechanisms marketers should keep their eyes on are a new breed of subscription models emerging in the fashion and beauty sector offering greater choice and convenience to a time-poor audience. For example, subscription-based websites such as Hoseanna in the US and Men Are Useless in the UK provide a monthly supply of personal care essentials to women and men respectively for a monthly fee.

In the UK, shoes, handbags and jewellery subscription service Stylistpick promises people a monthly round-up of items collated to fit with the style survey they have filled in. If subscribers choose to buy any of the items from their list, they pay the monthly fee of £39.95, but can skip months and not pay if they see nothing they like.

Stylistpick chief executive Felix Leuschner says he was inspired by the success of new subscription models in genres as diverse as DVD rentals and wine clubs. His brand is resonating with an audience keen to be catered to in a personalised way.

“When entrepreneurs see something working well in one market, they will be eager to test it in others. The reason I developed this model was because I saw subscription models in general being successful,” he reveals.

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Chef up: Waitrose has launched cook-at-home kits for its celebrity chef recipes to help customers achieve professional results

“We live in a world where there is a lot of communication being pushed in people’s direction and there is too much choice and not enough time. Having a platform that is personalised, curated and at one price point makes sense.”

Home delivery innovations and home parties give an extra edge to the discipline of direct marketing. Direct sales emphasising consumer experiences in the home are proving to be key in emerging markets too, as beauty brands Natura and Oriflame show.

In its Brazilian home market, Natura boasts over a million home sales consultants as of the end of October, up 15% on last year. In its other markets, such as Mexico, Colombia, Argentina and Chile, consultant numbers have grown 23% from last year, reaching 230,000.

Swedish firm Oriflame has pioneered successful expansion into Eastern Europe, Asia and most recently Africa, off the back of its consultant model. Oriflame vice-president Stefan Karlsson says the consultant is key because they become well-known and trusted within a local community, driving a social experience and word of mouth.

With so many innovative young brands moving into the home market, it is unsurprising that some established companies are also planning to target this area more. M&S chief executive Marc Bolland predicted last month that more people would be staying at home this New Year’s Eve, while revealing that the company is to pour £650m into improving its online operations and making its food range more upmarket.

Meanwhile, Morrisons has enlisted five celebrity chefs to create exclusive product lines, such as Aldo Zilli’s Pizza Calabrese. And Waitrose’s latest outing with chefs Delia Smith and Heston Blumenthal features a range of cook-at-home kits that simplify the celebrities’ recipes but aim to provide professional results.

Consumers are certainly feeling that there’s no place like home – and the brands that follow them will be in a good place too.

Case study: Come Round

Dr Who, Lady Gaga, JLS and Justin Bieber have all been the subject of parties put on by new business Come Round, set up by former EMI lawyer Giles Harris.

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Party hosts are chosen from the pool of people who sign up via the Come Round website to host a specific party on a certain date that usually coincides with a launch from the artist. They are then sent a box containing promotional material such as posters and balloons and often discount vouchers for merchandise and must invite nine guests to their parties.

On the day of the party, participants are invited to post pictures of themselves to the relevant Facebook page, with the most ’liked’ picture winning a prize. This could be exclusive content or even a meeting with the star involved. All participants are then emailed a survey the next day which Come Round uses to create an insight report to send back to the brands involved.

Polydor Records marketing manager Kelly Ridgway says the recent Lady Gaga parties were a good fit for the artist because of the way she already nurtures relationships with her fans through her prolific Tweeting.

“It’s fine to only focus on traditional above-the-line activity but it’s these details that sustain fan loyalty. This is fundamental to why Gaga is so successful,” she claims.

Home parties provide an additional platform for music marketers like Ridgway to promote new artists.

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“We are working with a new pop band that has done a cover of a Gaga song. We put a fanzine about them into the Lady Gaga party packs as it is a platform to introduce them to the right demographic,” she explains.

Ridgway says she needed to be mindful of existing brand deals Lady Gaga has. With a longer lead time, she would have approached Polaroid and make-up range MAC, brands that Lady Gaga has already worked with, to provide material for the parties.

She suggests the home party model could work as a long-term strategy for brands if the format remains flexible to suit the requirements of individual marketers.

Come Round’s Harris says FMCG brands such as Asda, Fanta and Sodastream have provided party pack ingredients to promote new products, but the next step will be setting up parties for them too. He gives the example of running food parties for brands such as Betty Crocker, and combining them with new music releases to maintain the appeal of exclusivity.

Events next year such as the 2012 Olympic Games and the Queen’s Jubilee will also be occasions to build parties around, Harris adds.

Q&A: Simon Prockter, founder of Housebites

Marketing Week (MW): How has the staying-in trend been part of Housebites’ growth?

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Simon Prockter (SP): There is a bigger trend than the staying in that we tap into – the ’collaborative consumption’ [renting or borrowing] trend. For example, Air BnB helps people rent other people’s bedrooms instead of booking a hotel room. There are other initiatives such as Zopa, where you can borrow money from other individuals, and WhipCar, where you can rent someone else’s car. There haven’t been that many innovations around food but it is rising now.

MW: How have you grown awareness of Housebites?

SP: We have only been running for a few months. We have created buzz on Twitter and have new ideas for using Facebook.

But one of the biggest things we do is deliver fliers to people’s homes. According to Mintel, 60% of people order home delivery through fliers they get through their doors, so that’s why we do that. Also, we try to get influential people to spread the message for us. We have been in touch with people like Danny Wallace, Chris Evans and Emma Bunton.

MW: As well as marketing to consumers, how do you entice more chefs to come on board?

SP: We have to balance supply and demand and we don’t want to over-supply chefs. When we first started recruiting chefs we had a phenomenal response to a simple £20 Gumtree ad. There are over 300,000 chefs in the UK and it can be a low-paid profession. We created a model that if they are enough of an entrepreneur and follow our values and service guidelines, they can turn over four times as much as a chef’s average salary.

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MW: What kind of competition are you noticing?

SP: I think we will see more people try to rival what we do. The Dutch press has picked up on us and similar sites have now popped up there. I know there is an operation in the UK that is building something similar. This model combines online and offline and the execution is so crucial, especially if you are positioning it as a takeaway.

Other companies position it as a personal chef to your door, and that makes people feel like it’s a treat. However, we want to provide a normal takeaway service. We have a good team here that have a strong background in communities and making things go viral.

MW: Do you think there is scope for big brands to emulate what you do?

SP: I think those brands have too much to worry about and tend to focus on what they are good at. But there are big brands that have taken on the collaborative consumption concept; for example, I heard the car rental firm Avis has launched a rental scheme similar to Streetcar.

I think big brands are more likely to invest in a business like us or buy one rather than extend into what we do. Firms like us will have already done all the intelligence and built all the templates.

MW: What kind of expansion are you planning?

SP: We are expanding to another UK city in January and more from February. Early adoption is the important thing, which is why we launched in London.

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