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18 August 2016

The Death of Shopping

Written by: Justin Westcott, General Manager at Edelman

Consumer Trends & Insight, Innovation, Technology

FMCG product communications, to my mind, is facing a looming fight with technology. Are we and they prepared?

Over the last few years a new technology, the “Dash button” using RFID technology from Amazon has started to show a brave new world for FMCG brands and their interaction with the consumer (directly) than ever before. Running low? Press the button next to the product on your shelf and it will automatically to be reordered. And with moves by manufacturers to integrate these buttons directly into the appliance, perhaps there will be no need to even press a button.

When you twin this technology with other consumer shifts including the broad adoption of subscription services (Dollar Shaving Club), and near real-time delivery (Amazon same-day), the industry is facing a zero-sum game.

What do I mean? Well once a customer has been won, the opportunity to infiltrate this cycle of subscription or of a button press to reorder will become near impossible to break by traditional communications methods. Moving consumers’ brand loyalty was always hard, but this is now further hampered by the additional commitment enforced with these technologies. Why would a customer want to change this relationship once any initial commitment to the product had been made – currently in the form of either a financial agreement or a hardware one (Dash buttons in the house)?

These relationships with products will only harden as technology further develops. In the age of IoT, packaging on most products within five years will have a low-power chip connecting them to the Internet – in essence the Dash button could be integrated into the box. Getting low on cereal, no problem, just press the button on the box and the cereal will be delivered to you tomorrow.

Play that out, and once again the opportunity to market “in-store” will further decline – the serendipity of new products or brand swaps achieved through promotion will disappear. Influence will increasingly be played out at the brand-marketing level, at a significant cost to be able to break through these closed loops that will develop, attracting customers to order directly from the brand. Your brand will be your store; why would a customer need to visit a supermarket ever again? And why would the brand want to give away the customer relationship (they won’t) in this world?

Our core FMCG brands we relate with will be like our relationships with other subscription services – think Sky, gym memberships or others. Tide’s recent announcement shows the way – brands will fight for our membership but once in they’ll have us for life. We won’t go to the product, the product will flow to us.

Product marketing will need to focus largely on “the new” and I can see a big swing towards brand marketing in “protect mode” which would be geared towards reinforcing the sense of membership (closed loops) a customer would have for being part of the “club”.

Brand relationships will have an increasingly monopolistic role over the lifetime of a customer. So the upside to those that win in this world is tremendous, but there will be lots of losers in this new reality. I predict the next five years will be like an episode of Game of Thrones, as brands fight for dominance and to win these hardening closed direct to customer loops.

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