The first quarter of 2018 felt particularly bleak for retailers. Job cuts, store closures, restructures and administrations have created a telling story about a sector buckling under the pressures of a ‘challenging trading environment’. Here, Peter Stefou, client & operation director, Data2Decisions tells RetailTechNews that retail’s prospects largely rely on a reassessment of the way it currently operates, particularly as the needs and demands of the consumer are constantly changing.

These days, it’s no longer enough to forge ahead with old strategies, or to simply mirror the movements of the market leader; instead companies will benefit from figuring out what customers need from the brand and adapt to fulfill new demands.

The same can also be said of the way retailers market themselves and engage with customers. Historically, advertising was based on the premise of creating entertaining and memorable content and getting that content in front of large audiences. Fast-forward a few decades and the landscape has shifted dramatically. Marketing strategies have become much more complex, advanced and intricate - thanks to increasing sophistication in tech and the proliferation of new brand touchpoints.

Working at a global marketing effectiveness consultancy, we harness data, advanced analytics and technology to help our clients understand how their marketing strategies are working and how to deploy these more effectively to improve returns and drive growth. Over the years we’ve seen too many retailers; forging ahead with an inaccurate view of what actually drives sales and tangible business results in the long-term. Consumer’s shopping habits have changed alongside a shifting media landscape, making it more difficult to understand how best to engage them and ensure sustainable profitability.

When we start client engagements, the marketers we work with have a good understanding of how to drive sales in the short term, but the long term perspective is less clear. All too often this results in an over-investment by retailers in ineffective media that doesn’t generate business growth.

In some respects, it’s unsurprising to see digital and social media platforms claiming larger chunks of retailers’ ad spend, particularly given that they promise precise targeting. Marketers are also enticed by the prospect of having campaign performance data off the back of these campaigns. But as the industry is beginning to learn, relying too much on digital advertising is not always the most effective way of generating sales and business growth; in our experience successful retailers balance brand and direct advertising to support short term business needs and long-term brand health. Likewise, ad fraud can lead to a murkiness in performance data and measurement metrics are a contentious issue; potentially leading to a large amount of ineffective campaigning and millions in wasted spend – unless the right measurement system is in place.

Another trend we’ve seen among retailers is an over-investment in online media focusing on promotional activity, which can cause significant damage to brand value over time. Promotions run the risk of training consumers to become increasingly focused on price over product differentiation, and more inclined to chase the lowest price at the expense of brand loyalty. Traditional media remains highly effective at communicating differentiation and building a ‘brand’ that consumers buy into above cost and convenience alone. Any shift in marketing investments towards more brand building activities needs to make sure short term bottom-line needs are still covered. However, a rebalancing of investment in these channels could see surprising improvements in revenue in the same way Tesco have recently reported.

In retail’s current situation considering the real effectiveness of marketing strategies will be crucial to many brands’ survival; the likes of Tesco have woken up to this reality and others should follow suit. As it stands, there is a lot of spend being wasted on media that is unlikely to drive enduring business growth - a re-assessment of marketing effectiveness will be key to long-term survival.