Those 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.”
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.
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.