Private Label Buyer
Focus on Digital

What Digital Looks Like Overseas

June 30, 2014

Everyone wants to know “what’s next.” When it comes to private label, you can usually look overseas for answers. This is particularly true for social and digital marketing, as retailers in Europe and elsewhere have begun to create new and innovative digital experiences for their shoppers.

Drive stores. First and foremost is the rapid expansion of what are called “drive stores”—where customers can order online and pick-up at a specialized drive-through location. While “pick-up at the store” has been started in the United States by many chains, the European model eliminates the store altogether. The idea is not entirely unique, but how it is being approached by Tesco, Sainsbury and others in the United Kingdom and France changes the whole concept of a “store.” Called “dark stores,” Tesco has now opened seven Internet-only distribution centers that service remote pick-up locations. These large facilities have miles of conveyors and are optimized for the selection of individual shopper orders. There are no shoppers in these stores – just a technology backbone that enables online orders to be ready for pick-up in locations scattered throughout the country. Tesco, for example, now operates seven of these dark stores, which can process more than 4,000 orders a day and carry up to 50 percent more items than the average store. Combined with small-footprint pick-up locations—where you simply drive through and a clerk places your order in the car—it is rapidly becoming a more-efficient and, in many ways, more-popular, approach to shopping.

Taking the concept one step further, Tesco recently announced they are now developing a virtual reality experience that replicates visiting a real store. Customers “walk the aisles” and shop wearing a special virtual-reality headset. It enables Tesco to make real-time changes to shelf arrangements, shopping patterns and signage, all with a few mouse clicks.

Internet-only retailers. Ocado in the United Kingdom is a rapidly growing Internet-only grocery chain, now the largest in the world. With an opportunity to learn both shopper buying history and their browsing preferences, Ocado can make the online experience more customer-friendly and is able to anticipate individual customer interest among the tens of thousands of products that may be available for sale. For private brands, this is an enormous advantage, since the retailer controls what the shopper sees on the screen, creating unlimited opportunities for private brand interaction.

Leveraging social media. What’s the most-popular retailer Facebook site in Europe? With the largest fan base, the most interactions and most customer responses, the winner is Germany’s Lidl, with over 10 million “Likes” on Facebook. Lidl is expected to enter the U.S. market sometime in the next few years. What is most interesting about Lidl is they are almost 100 percent private label. Besides sometimes employing a little humor and a cheeky attitude, Lidl very effectively engages its customers in product-development projects, polls and other interaction-driven social media engagement. Also underscoring the importance of private label and social media is ALDI, who has the most-loyal Facebook fans among all retailers in the U.S. (per a LoudDoor brand satisfaction poll).

The French retailer Carrefour (who ranks second to Lidl in Facebook “fans”), recently created an online karaoke contest for its followers as a tie-in to its sponsorship of the French equivalent of “American Idol.” An important point of social engagement is that you never begin by trying to sell something, but by first engaging the customer with something they find fun, interesting or worthwhile.

Mobile apps. In its China stores, the Carrefour mobile app can guide you right to the shelf for items, provide discounts while shopping and enable you to share recipes, interesting products and more via social media. Albert Heijn in the Netherlands enables its shoppers to create shopping lists directly from recipes and check in-stock availability at their local store, and scan barcodes at home to put items on a digital shopping list. In the United Kingdom, Sainsbury’s is experimenting with a “Scan and Go” feature enabling shoppers to skip the checkout lane entirely. They also teamed with Google to create a “Food Rescue” app that identifies recipes for using leftovers in an effort to reduce food waste.

Taking QR codes to a new level. At one time, many observers thought QR codes would be a flash-in-the-pan technology, replaced by NFC (near field communications), new Bluetooth applications and other technologies that required a little less “work” than QR codes. However, many private label marketers in Europe now are using QR codes as means of differentiating their brands. The German retailer Edeka, for example, incorporates QR codes on packages and elsewhere to provide information on everything from product tracing and sustainability to accessing seasonal product catalogues. In Korea, E-Mart has installed more than 40 “Sunny Sale” three-dimensional QR codes around Seoul to drive lunchtime interaction on their website. These QR codes only work for about one hour each day when the sun is in the right position to create a “shadow” QR code that takes shoppers to special deals only available while the code is active.

 New ideas and applications for social and digital media engagement with private brands are occurring around the world on a daily basis. Although many of the technologies may have been first developed in the United States, exciting ways to use them are coming from everywhere. It pays to look around.