Context Matters: The Shift from Global Consistency to Adapted Retail Experiences
If you travel internationally you likely have noticed a growing diversity of food offerings in some unlikely places. Undertake a worldwide tour of McDonald’s locations (only iron-stomached, non-foodies need apply) and you would find a full vegetarian menu in India; Greek, Turkish, and New Zealand “Kiwi” versions of Big Macs; and sides ranging from seaweed flavored fries in several Asian countries to gazpacho in Spain. McDonald’s, the poster child for maniacal consistency, learned that success on the global stage requires a finer balance between consistency and adaptation.
We are seeing this same shift occurring with retail environments and experiences. What was once an effort on the part of marketers to build global consistency across their portfolio of retail spaces is now a deliberate attempt to be more adaptable to local tastes. Put another way, the use of consistent standards, which enables speed to market and minimizes legal exposure, is now being balanced with the ability to synchronize experiences with cultural norms, shopping nuances and even differing expectations of quality. The new focus is to create a more diverse, higher-octane retail portfolio with the right experiences and the right level of investment at each touch-point.
This of courses raises the challenge for marketers to implement a more diverse retail portfolio in a way that is scalable and manageable.
To accomplish that, we have identified 3 best practices that are being applied, or beginning to be applied, by RTC clients:
1. Level-set your retail organization to global objectives
A. Write the Rules for Brand Consistency
How much regional adaptation and differentiation will you allow? Is your organizational dynamic better suited to centralized control or decentralized autonomy? Apple stores and experiences are almost identical across global regions with strict adherence to the industry’s highest quality standards. A major sports shoe company provides general guidelines but allows regional teams almost carte blanche to adapt designs to local shopping norms and the context of the competitive playing field. There's no one right answer, but being on the same page will increase your speed to market and reduce organizational tensions.
B. Clarify a Sustainability Vision
Marks & Spencer was an early adopter of sustainability as a corporate pillar; their program includes a unique focus on physical and emotional wellness and highly defined targets across all aspects of their supply chain. A health & beauty retailer client mandates that we build an entirely new and sustainable supply chain in each emerging market they enter, to put teeth behind their effort emphasizing environmental sustainability and worker rights. With a drug retailing client, specific metrics are still in development, but initial forays include a major shelf merchandising system that now includes plastic components engineered for re-use over time and sharing among multiple brand companies.
Whatever your point in the evolution of a sustainability strategy, it’s important to deliver clarity to your organization. Physical in-store investments represent a significant investment and the supply chain variables are diverse. What’s the right balance of sustainability, cost and quality? How should priorities dictate engineering initiatives aimed at re-use and re-purposing; the creation of eco-supply chains; the selection of materials and manufacturing methods; plans for disposal? Make sure corporate expectations are defined so that trade-off decisions can be made intelligently and consistently across programs and regions.
C. Balance Regional Adaptation + Global Aggregation
Marketers differ in their guidelines for global consistency with respect to shopper experience, but we are seeing (and support) a movement toward global consistency with respect to process. An apparel marketer with whom we work went through a common evolution. Entering the global retail market 20 years ago with an emphasis on centralized command in order to control their brand equity, they started pivoting five years ago to accommodate regional team autonomy. Today, we are working together to achieve a more optimal balance: directional principles for the brand experience are provided to regional and local teams; concepts are adapted to accommodate shopping nuances, expectations of quality and cost; then, all concepts are fed back into a single global manufacturing and logistics plan. This approach connects the dots between regional programs and balances the benefits of regional design adaptation with global aggregation of the manufacturing supply chain. It requires rigor and an understanding of total global needs earlier in the process, but it reduces one-offs that are costly and higher risk.
2. Foster your organization's cultural cognizance
A. Build your knowledge bank
In global retail today, knowledge trumps physical footprint as a market advantage. For example, the knowledge of differing expectations of privacy for cosmetics shoppers in Asian versus European countries influences the placement and visibility of beauty services and impacts visits, shopping time and conversion. For a consumer electronics brand, knowledge of regional electrical codes, import duties, material availability, local manufacturing expertise and logistics infrastructure is accelerating speed to market and decreasing total cost. With a cosmetics brand, we documented store conditions across 30,000 locations and now feed that information into all design, engineering and manufacturing activities. This knowledge is improving the accuracy of fixture kits shipped to stores, driving down inventory levels, reducing mis-shipments, and minimizing waste. With large and complex global retail portfolios, knowledge is king and documenting it is imperative.
B. Establish an organizational social network
Organizational silos are counter-productive. They cost time and money. And they are a particular bane as companies tack on regional teams in the unwieldy process of global expansion. For years we have been de facto liaison in global-to-region and region-to-region communications, responsible for finding middle ground between compliance and adaptability. But there is an effort afoot with many of our clients to solve the problem internally and bring their people together. This is taking the forms of increased (forced) team interactions in order to appreciate cultural differences as well as new methods of streamlining communications (think Facebook for companies). We are asked increasingly to facilitate intra- and inter-regional workshops. The benefits are immediate and include “Aha” moments about why regional adaptations are needed and a greater sense of global team unity. For a toy brand with whom we work we helped them document vastly different regional expectations among shoppers for the level of in-store play, differing consumer expectations for quality, and differing realities among operational stakeholders for real estate life expectancy and cost-return analysis. Like any human-devised entity, build respect and understanding among your people and you’ll move faster and more efficiently.
3. Measure with new global metrics
A. Sales: from store to market metrics
Per-store sales are an increasingly challenging metric to measure in an omni-channel world. We are seeing more clients measure sales, share and loyalty at the market level. With a sporting goods client, we are orchestrating the optimal mix of touch-point experiences in a single market with the goal of obtaining the right synergy for each particular market ecosystem.
B. Costs: from regional to global metrics
Bottom-line cost measurement is also evolving. The scale and complexity of physical retail portfolios is increasing for most marketers – they are more global and more diverse. With multiple regional supply chains the opportunity for global inefficiency escalates. We are working with our clients to gain visibility of total global costs and to weed out inefficiencies across all cost buckets. Working with a cosmetics client over several years, together we have been able to strip out $12 million in fixture costs and $6 million in labor costs by creating global processes associated with re-engineering of component parts, right-sizing the global manufacturing supply base, volume buying of raw materials, and improving the accuracy of local ordering, fulfillment and installation. Total global inventories were reduced by $17million and full-time employee costs were lessened by $1.4 million. We are finding that, with better upfront planning of needs globally, there are more economies of scale across regions than meet the eye and a wealth of opportunities to eliminate redundancies and extract barriers that curtail speed to market.
Consumers across the globe are hungry for new and dynamic types of physical experiences that respect their cultural norms. That’s an opportunity for marketers, but it has to be managed with diligence to assure maximum payback…which then funds the continuous cycle of evolution and global expansion.