Mark Ritson: Voice search spells trouble for both brands and retailers

Voice search technology such as Amazon’s Alexa threatens to supplant brands with automated purchase decisions in which tech companies, not retailers, own the customer relationship.

Amazon echo voice searchThose marketers looking for a respite from technology might believe that FMCG remains an island of traditional approaches in the digital ocean that now laps around the marketing coastline.

But this week’s IGD Online and Digital Summit merely confirmed that grocery shopping and supermarkets are as vulnerable and transformable as pretty much every other industry. Each of the speakers at Tuesday’s event in London confirmed that technology’s impact on grocery shopping was very much the order of the day.

Whether it was Thomas Thomaidis explaining the intersection between Amazon’s Alexa and Ocado’s shopping service, or Tesco’s Rafael Orta noting that the small minority of shoppers using Alexa or Google Home for their Tesco shop were already behaving differently from other consumers, it was clear that the business of buying your bananas is changing forever.

There is no doubt that voice search will become one of the major innovations of the next decade. And after the initial minor advances of controlling your lights and garage doors, the big implication will be the effect it has on brands. It is highly likely that voice search and ordering will transform both the brands we buy in our weekly shop and the store we select from which to do it.

The target consumer is no longer in store searching vainly for a brand to guide them. They are in the kitchen discovering that they have just used their last scrape of butter.

In terms of manufacturer brands the implications are as unavoidable as they are enormous. Since the beginning of brand management with P&G 80 years ago, the basic principles of grocery marketing have remained largely unchanged. Despite most marketers’ focus on high-involvement purchases like luxury clothing or a new car, the vast majority of the brands we buy in our lifetime qualify as low-involvement purchases.

In low-involvement decision-making we find ourselves at the aisle with a need to buy toilet paper. We don’t care about the purchase because the risk – both financial and social – of selecting the wrong toilet paper is minimal to non-existent. And yet a decision must be made and a product selected. So we reach back for a nanosecond into memory and pluck a brand name or some other guiding insight like ‘the one on special offer’ or ‘recycled’, then we make our purchase and move on to the next similarly stunted decision.

Brands in the low-involvement world work in a very basic way. They must generate awareness or saliency and – maybe – a small sliver of brand image to attach to that brand. But nothing more. The target consumer is a ‘cognitive miser’, giving little thought to the decision and looking for a quick, easy win. The brand becomes the route to victory.

The disruptive influence of voice search

Despite the fleeting, almost superfluous role of branding in the process, this low-involvement path represents much of the marketing investment in this country. Giants like Procter & Gamble and Unilever are among the biggest advertisers in the UK for a reason. They need to keep their brands top of mind with TV and radio and two-second digital display ads, so when the crucial demi-second arrives and you need a brand to pop into your consciousness, they win the game.

But add the dangerous, disruptive ingredient of voice search and things change. The target consumer is no longer in store searching vainly for a brand to guide them. They are in the kitchen discovering that they have just used their last scrape of butter. “Alexa,” cries the kitchen dweller without even turning to register if their Amazon device has illuminated into action, “add butter to my shopping list.”

READ MORE: Unilever backs voice to deliver digital transformation

That mundane moment, which will soon take place a million times a day across the households of the UK, is a crucial revolutionary step in FMCG. As Tesco noted this week at the IGD conference, these consumers are building their baskets over many days and not in a few brief minutes as they rush around the store. But the bigger change is that suddenly the brand may no longer play a role.

Our newly voice-activated consumer orders butter, she does not order Lurpak. As Professor Scott Galloway from NYU’s Stern School of Business has noted several times this year, when you examine how consumers search for products online alongside the nascent trend in voice search, there appears to be a significant reduction in the use of brand names to make an order. The category is back, and the implications for marketing are stupendous.

Our consumer has been buying Lurpak since the 1980s, thanks to her own childhood experience of the brand via her own parents and a TV campaign that has run, pretty much without interruption, ever since. Lurpak has built enormous equity in this country by doing what all great brands do well: building a giant repository of brand awareness and a series of positive, enduring associations for its brand.

But now that same consumer is scraping the last vestiges of it from the packet and shouting “butter” at Alexa. From now on Alexa is making the choices on behalf of our consumer.

Maybe Alexa finds the brand on special offer, the one it thinks our consumer will prefer based on data from other similar segments it serves in other houses in the UK. Maybe it opts for the store brand because, in the event of not being prompted with a brand name, that is the setting our consumer has put Alexa’s shopping list on. Whatever the reason, Alexa is deciding and the role of brands, advertising and the way the two operate will need to change dramatically.

From now on, Amazon’s Alexa is making the choices on behalf of our consumer.

Now think even bigger to the store choice. Marketers have also worked at the macro-level to entice shoppers to one store and not another. If you look at the two most successful grocery retailers in recent years, Waitrose and Aldi, it is clear that brand awareness and image are not reserved just for products. They also direct consumers to select their supermarket of choice. Once you walk through the doors of whichever store you patronise you are in their hands. It’s a closed game from that point onwards.

But now those doors never close behind you. Alexa does not just have the capability to select products for you, it can also compare the different retailers for you too. Right now, Tesco and Ocado are boasting about how their consumers are able to shop through Google Home and Amazon Alexa. And why not? It’s a great way to attract newly voice-activated consumers to your supermarket.

Very soon, however, with voice search an established and habitual activity, the connection between Tesco and Alexa will become reversed. It will no longer be consumers ordering their Tesco shopping through Alexa. It will become consumers ordering through Alexa and getting the delivery from Tesco.

Or Sainsbury’s. Or Aldi.

Or whichever supermarket Alexa recommends as offering the best deal. There is a very real possibility that physically visiting supermarkets declines significantly over the next decade and, with it, the branded differentiation of the big supermarkets too. The growth in voice search will ensure supermarkets start to experience a spectacular dependence on technology companies for their sales.

READ MORE: L’Oréal prioritises voice search as AR struggles to ‘ramp up’

Just as the big four supermarkets in this country squeezed the supply costs and payment terms of suppliers, it’s likely that they will find themselves in that exact same position as first Google, then Amazon and finally Apple come calling asking for special terms for their – emphasis on ‘their’ – customers.

It’s not going to happen straight away. As with any technology, it starts with a few geeks in Hoxton and a range of minor, thoroughly underwhelming capabilities. But it’s coming, and with it the very real possibility that P&G and Unilever and the large supermarkets may lose ground and that the usual cabal of tech companies find another market to enter, dominate and plunder.

Alexa, I am going to need more toilet paper.

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Comments
  • Frank Kowalski 11 Oct 2017 at 2:27 pm

    Shopping in a supermarket has to change, it’s a waste of time, definitely. However, I’m a bit sceptical that an algorithm will find the best offer for me by replacing my favourite brands. It will happen up to a point when some smartass producer will start producing products to fit algorithm needs rather than customers. There’s a line when a price can only go down by dragging product quality with it. Anyone can go to their favourite shopping place and buy only the cheapest items from each category, but they don’t.

  • Steven Graff 12 Oct 2017 at 12:05 am

    An interesting discussion. I am not sure it is as disruptive as Mr. Ristson has painted. I have been using Alexa to build the shopping lists for a year now, as have other household members. The brands purchased by the household have changed little in that period unless they have been specified by members of the household. A year later and none of the grocery shopping is being fulfilled through Amazon. The Alexa users I have created through gifting would seem to have similar habits.

    In my opinion, the opportunity for brand-disruption that has not taken place is the direct injection of e-coupons into the list by Amazon. Redeemable in-store, or to drive additional trial of AmazonFresh.

  • Pete Austin 12 Oct 2017 at 9:12 am

    Exactly – it’s about who owns the customer relation.

    But the adoption of voice will be slower than Mark suggests and only affect a minority of customers. Voice technology has been available for 35 years and it’s still mostly annoying!

    Will take until today’s middle-aged generation dies for voice to become universal. By which time there will have been repeated attempts by governments to steer the technology, so it’s impossible to make accurate predictions.

  • Francesca Dall'Olmo Riley 12 Oct 2017 at 9:13 am

    When I was a child my mother had a small plastic board in the kitchen with pegs which she would slide to reveal the name of grocery products she needed to buy – butter, coffee, washing powder – products not brands. Then she would call the grocer and ask for butter, coffee, washing powder to be delivered. I can still hear her voice asking for the products – not the brands. The grocer would choose the brands – most possibly the ones with the highest margin for the grocer. Alexa / Amazon sound like the modern version of the 1960s family grocer.

  • ERICH Joachimsthaler 13 Oct 2017 at 6:14 am

    Now, really, Mark Ritson, you are going on the bandwagon of: brands are dead? Brands are not dead in a AI era, brands will be striving. It is a ridiculous thought to think that I stand in the kitchen and order butter or mayonnaise. I would be really disappointed if I don’t get Hellmann’s Real Mayonnaise. Consumers don’t buy categories. Categories are actually irrelevant from a consumers’ point of view.

  • Jason Cross 13 Oct 2017 at 1:58 pm

    But then a brand consultant WOULD say that (and name check a client or potential client) wouldn’t they?!!

    In my non-AI world, I write down “butter” or “toilet paper” on a shopping list during the week… and then make a consideration within the supermarket as Mark describes for such low-involvement purchase.

    Why wouldn’t I do the same with a tech solution?

    My big issue with online grocery shopping is not having control over the look, quality and expiry dates of perishable goods (fruit/veg/meat etc) .. and also in being able to switch ingredients/ recipes if a key item that I am after isn’t available in-store (or stocked by that store) when I go shopping.

    Solve those issues with some intelligence and two-way querying from my robot shopper (alongside the preference settings around brands/price/discounts for about to expire etc) and I might be interested in getting an Alexa…

    Maybe next year.

  • Brian George 15 Oct 2017 at 1:14 pm

    Whilst Alexa may be pretty clever way for urban techies to minimise their real-life experiences, I’m not so sure that the vast majority of consumers will end up talking to a plastic box, however clever & friendly

  • Ashley Friedlein 16 Oct 2017 at 11:39 am

    This (voice search) among other emerging areas is part of the reason I made ‘data’ a top level element of my proposed M3 marketing model (https://www.marketingweek.com/2017/10/03/ashley-friedlein-m3/). I believe we are going to be marketing to machines, via data (particularly metadata), more in the future in order to be discoverable to our end customers. This has, of course, been happening for a long time in the form of SEO and using structured metadata to ‘teach’ search crawlers about our products/services so they appear in their best light in search results. But it also happens in app stores. And now it is happening with voice and things like Skills on Amazon’s Alexa platform. Brand is still important to drive demand, and conversion rates, but we’ll still need to play the optimisation game, using data, to make sure we can be found.

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