The Future of FMCG Retail

“While the pack design remains a crucial part of the conversation, it no longer lives passively on a shelf. Instead, we open up new opportunities throughout the customer journey…enabling customers to see brands differently, through a lens of helping them achieve their own goals better.”

Here’s a look at how design agency FITCH collaborated with KitKat in Brazil to elevate brand perception in the market, as well as find a connection with the local Gen Z market. Mark D’Costa, Managing Director; and Dominic Twyford, Business Director; FITCH India, sat down with Retail4Growth to discuss their thoughts on shopper marketing in a post-pandemic era, the importance of in-store design, why experience is the future of FMCG retail and much more, featured as the cover story in this month’s edition of the Point-of-Purchase Magazine.

Can you first take us through the KitKat project in terms of how the right design intervention helped meet the brand objectives?

For retail brands, the store is the physical representation of who they are and how they want to be considered. So, when it comes to design, it’s not only important to get the design right, but the brand right as well. In this case, the idea was to elevate the perception of the chocolate in the country, as well as find a connection with the local Gen Z market. So the brand was looking for a new retail experience to help them achieve that. Inspired by their famous ‘Have a break’ strapline, we developed ‘The KitKat Chocolatory’, an experience designed around #CreateYourBreak, bringing it to life through theatre, innovation and community.

At this store, people can print a picture of their choice on a KitKat bar, win a KitKat on the digital vending machine game, marvel at creative AR hotspots and enjoy a VR tour through the inner workings of the chocolatory - all centred around our signature break experience: the KitKat pick ‘n’ mix.

Since launch in October 2019, The KitKat Chocolatory São Paulo has welcomed 300,000 shoppers and has racked up thousands of followers and tags on Instagram, as well as 40,000 mentions via Google Search.

As a retail design and experience expert focused more on lifestyle categories, how do you find the FMCG space to work with? What kind of opportunities do you see here?

FITCH are experts in ‘experience’. We work with India’s largest retail brands, creating in-category experiences for many of India’s major FMCG players. We’ve noticed that the FMCG market is becoming more dynamic, with an increasing number of new brand entrants and brands extending to new categories. As a result, it is getting harder for brands to stand out in both modern and general trade environments.

We’ve found that too many FMCG players only rely solely packaging as a source of differentiation. At FITCH, we believe that the pack is only a part of a larger consumer experience and we are finding that our message is really landing with brand owners. By shifting the focus instead to experience, we’ve provided brand managers with the strategic reassurance to create new opportunities and the means to improve customer engagement.

Can you elaborate on the various ways in which you bring your expertise in design and experiential offerings to this segment?

A fundamental human truth is that people are naturally drawn towards brands that they instinctively believe will fulfil their needs. FITCH specialises in understanding these needs. Going beyond just having great looking designs, we create experiences that customers can relate to, through solutions that speak directly to their goals, expectations and sensibilities.

We use our proprietary Seamless Brands™ model to frame our approach when working with FMCG brands. Through the filter of our Experience Themes, we understand what customers expect from a brand and how that brand is perceived within its category versus competition. Based on this understanding informed by data, we can create strategic platforms from which we can look beyond only the packaging.

So, when we craft an FMCG experience, we consider everything - right from the physical elements of the experience through touch, smell and hear; the human gestures, rituals and service elements that are delivered by staff; to digital technologies, equipment and platforms that connect to the customer’s digital world. We then align these dynamics to shopper mind-states of dreaming, exploring,locating and achieving.

This approach changes the entire conversation with our client, while the pack design remains a crucial part of the conversation, it no longer lives passively on a shelf. Instead we open up new opportunities throughout the customer journey. And from a customer perspective, we are enabling customers to see brands differently, through a lens of helping them achieve their own goals better.

So design, whether in terms of packaging or in terms of in-store visibility, is increasingly being seen as a crucial factor by the FMCG brands right? Can you elaborate on that?

The FMCG world has a habit of playing it too safe. They have historically prioritised ATL campaigns over design, and relied on bringing these campaigns to retail environments to create interest in POS. The priority for most clients is to create some kind of disruption at the point of purchase in order to catch the consumer’s attention. Achieving this goal is dependent on doing something different. But if your position is that the brand needs to fit in to the category, differentiation can’t be achieved. FITCH’s ability to intelligently disrupt has helped set new standards for packaging with our partners.

FITCH now works with Nestle, Coca Cola Group and P&G in India, arguably the country’s biggest brand owners. Each of them is investing in design and making it a fundamental part of their marketing function. By focusing on how their brands appear in the hands of the consumer, they have each successfully narrowed the gap between themselves and the customer. An increased focus on the overall experience is extending their ability to influence the consumer at three key stages, before they enter the store, during the time spent in store and postpurchase.

How does this focus on design play out exactly in the brick and mortar FMCG retail space, comprising mainly of MT/GT outlets and supermarkets?

The prevailing belief is that that people view grocery as a chore. Therefore, most supermarkets are run on efficiency, with their instore aim to reduce “friction”. But this approach is actually eroding the strength of brands, making most players, from a customer perspective, identical and interchangeable.

This is where importance and value of experience comes in, it should be the source of your differentiation and your competitive advantage. That can be done by rethinking the super market as a food theatre that plays to all of our human senses.

Jumbo Foodmarkt in Netherlands is a favourite. It contains some of the best food service counters in modern supermarket retailing with superb merchandising, adjacencies and graphics throughout, offering a multisensorial experience everywhere you go. All this from a chain that only a few years ago was known as a mediocre, everyday low-price player with 9.6% market share. Today, Jumbo is one of the country’s largest supermarkets, rising to above 21%. Another great form of experience differentiation can be harnessing the untapped potential of your staff. Hy-Vee is a retailer in America that employs registered dietitians in every store to aid shoppers’ growing nutrition priorities.

So do you also think, especially in the post pandemic era, that there is a need for brands to strategise their narrative in a way that is reassuring and helps the consumer make an informed choice? What are your observations here?

Yes. In fact, FITCH recently carried out a study, looking at key FMCG categories in India. Using our Experience Themes methodology, we found that customers expect FMCG brands to display an ability to take them on a new and pleasurable journey. The Indian consumer expects them to present new possibilities and experiences that are relevant to their individual needs.

This is set to evolve as we believe that the legacy of Covid-19 is going to create new customer expectations as they look for brands to be more selfless, adaptive and generous.

So FMCG brands need to evaluate a new dimension that will influence the way that they look, speak and behave. The desire for new-ness will remain, but we expect a new Experience Signature to reveal itself, one that is centred around imagination and support. Customers will look to brands that help them solve problems.

Originally written for and published by Point-of-Purchase. By N. Jayalakshmi, Editor of Point-of-Purchase

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