Armed with new definitions of convenience and value, today’s consumers are increasingly brand agnostic and no longer have the same loyalty for heritage brands that previous generations did. New and emerging brands are taking advantage of this trend because the barriers to entry aren’t as high. Look at what’s happening across per- sonal care with cosmetics brands or men’s shav- ing brands that show up online without any retail
presence and gain a following on social media. Suddenly,
retailers are chasing them to get them on their shelves.
This type of disruption is happening to traditional brands
across all consumer and retail sectors—not just grocery.
Instead of buying customer loyalty, emerging brands
focus on innovating to meet customer expectations in
terms of value, price, experience and convenience—and
disrupting antiquated business models along the way.
Consequently, the market is more fragmented between
growth at the high end, the narrow focus of specialty
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retailers able to deliver high value to niche segments, and
the explosive growth at the low end with hard discounters
and dollar. Everyone left in the middle is trying to figure
out how to redefine themselves to stay competitive.
There’s no one factor shifting the market on its own.
We’re seeing the cumulative effect of seven key trends
reshaping the retail landscape:
1. Consumers are redefining convenience. Convenience historically meant everything under one roof, but
that’s changing significantly in a fragmented market that
operates across digital and physical channels. Consumers
like edited, curated and personalized offerings, as well as
retail experiences they can get in and out of much faster.
2. Consumers either expect a high-value experience
or a low-cost alternative. You see very specialized players (e.g., Whole Foods, Eataly) and also low-cost discounters (e.g., Aldi, Amazon) winning market share. Those in
the middle are caught between a rock and a hard place.
3. The consumer is always connected. They expect
a seamless experience across all channels, regardless of
how they chose to engage. Grocery has been the slowest
to adapt, but every category is making the shift online.
4. Personalization. As consumers engage with brands
digitally and through mobile devices, they expect a
curated and personalized experience.
5. Health and wellness. Most of the growth in consumer products is happening in new, small, often health
and wellness-oriented brands, as opposed to the big traditional brands. The large consumer product companies
are looking to acquisitions of emerging brands in order to
strengthen their innovation pipelines.
6. Lack of brand loyalty. Historically, consumers would
buy and remain loyal to a few brands. Today, consumers
look for new things. They like finding niche, new-to-market brands and being early adopters.
7. Education and influencers. Historically, brands
controlled what people knew. Today, we learn through
social media, YouTube, celebrities and other influencers. Consumer knowledge is no longer controlled by the
marketing spend of major consumer products companies
or retailers. In many cases, they have lost control over the
narrative surrounding their own brands.
Last summer’s Amazon/Whole Foods deal found every
other retailer’s three-year strategy tossed out the window.
And Lidl’s U.S. entry pushed Aldi to increase its invest-
Steve Caine is a partner in
Bain & Co.’s Chicago office.
Partners Can Thrive
The best companies will control their own destiny to
sustain their performance. By Steve Caine
Expert views on retail strategy, talent management and leadership development