Manufacturers and the New Retail Experience

Optimizing performance with data-driven innovation

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Manufacturers and retailers have always had a mutual dependency. Manufacturers need retailers to sell their products, and retailers need manufacturers to stock their shelves. In the old days, the burden of brand experience, product positioning and sales performance primarily fell on retailers’ shoulders.

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Most manufacturers did not control their own destiny. They kept their fingers crossed and accepted how things were being done as long as they hit their revenue targets.

Fast forward to today: A revolution in consumer behavior is the real story behind the headlines about the so-called retail apocalypse. A new retail model has emerged. Consumers are increasingly choosing digital commerce—whether marketplaces like Amazon or retailers like Walmart, Target, Best Buy and Nordstrom, or even click-and-collect grocers like Kroger—to research and purchase products.1 This is disrupting traditional channel dynamics. Digital shelves have become the place to tell brand stories and distribute, promote and sell products. This shift puts new pressure on the manufacturer-retailer relationship.

1. Accenture Interactive, “Unleash Your Marketplaces Superpower,” September 2019https://www.accenture.com/us-en/insights/digital/unleash-your-marketplace-superpower

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Digital commerce spectrum The varying degrees of control

Marketplaces e-Retailers

Content Syndication

Merchandising

Ratings & Reviews

Brand Experience

Advertising

PricingFulfillment

Full Partial Minimal

Minimal ControlFull Control

Direct-to-Consumer Click & Collect

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By partnering on digital experiences, some major brands have seen 5x or greater return on their investment in strategic retail partners globally.

5x

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Limited control Little transparency Lost opportunityManufacturers have some insights into how their brands and products should be presented on digital shelves. But they don’t directly control the shopping experience. Retailers do.

Yet retailers are struggling to manage the needs of so many brands with limited resources and bandwidth. Most do not do enough testing at the brand level to make informed decisions about optimizing experiences. As a result, brand stories are lost on product pages that all look the same, and products and brands are not differentiated enough across the consumer journey.

With digital performance so critical to revenue generation and growth, standing on the sidelines is not an option for manufacturers. They need to know that their brand, products, content, messaging, advertising, UX—the whole digital marketplace experience—is resonating with consumers. They need to take back some control. Doing this means experimenting together with retailers. It’s a win-win.

Brand stories are lost on product pages that all look the same, and products and brands are not differentiated enough across the consumer journey.

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2. Ron Kohavi and Stefan Thomke, “The Surprising Power of Online Experiments,” September-October 2017 https://hbr.org/2017/09/the-surprising-power-of-online-experiments

Experiment... but in a whole new wayExperimentation gives companies the competitive edge in the digital world.2 Winners like Amazon, Google and Netflix have experimentation in their genetic code, and they use agile, data-driven approaches to continuously adapt consumer experiences.

Experimenting to optimize experiences is not new when it comes to digital.

But manufacturers experimenting on retailers’ digital experiences—whether on their own sites or on digital marketplaces—is new. Revolutionary, even. Because the landscape is a juggernaut. The scale is immense. The complexity is overwhelming. And the consumer expectations are a moving target.

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To cut through these challenges, manufacturers need to do more than rear-view mirror evaluations that come long after major investments are made. The experimentation must be rapid, upfront and continuous. The key is to treat every product page like its own P&L and hypothesize and test solutions based on consumer insights, trends and historical data.

But rather than optimizing with simply the hope that success will happen, manufacturers can set up experiments to rapidly determine what will drive optimal performance at scale. It is a quicker, more intelligent and more cost-effective path to profitability. One that is built on a foundation of facts, not opinions.

In a world where retailers typically don’t provide detailed reporting to brands because of resource limitations—or for fear of how they will react to the data—experimenting together may seem like wishful thinking. But it is an olive branch from manufacturer to retailer. What brands and their retail partners learn through experience optimization can be applied across the site, ultimately growing the overall marketplace.

“ Our success is a function of how many experiments we do per year, per month, per week, per day.”

Jeff BezosAmazon

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How can this happen? Consider a global apparel brand’s initiative for retail partner optimization. The company needed a strategic approach to ensure resources were used wisely and that the brand and products got the right exposure across retail partners. The brand optimized its distribution network and invested in strategic relationships around the globe to drive marketplace growth.

The approach was very collaborative. The manufacturer and retailer identified and prioritized shared goals, problems and hypotheses that informed UX experiments on the brand’s experiences across strategic partner sites. The partners’ needs were more alike than different—80% of their goals, 60% of their problems, and 30% of their hypotheses were similar.

The art of the possible is already happening

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The team designed, implemented and measured winning experiments in key areas. They improved UX principles around calls to action and search functionality for mobile users and explored the use of shop-the-look experiences to showcase curated outfits on product pages. They also tested the impact of improved navigation, product features content, consumer reviews elevation, brand experiences and more.

This ongoing global initiative has identified dozens of significant test results across multiple international retailers. Our analysis suggests that as the program and findings are fully implemented, there will be a material return on investment for both the manufacturer and retail partners.

Brands and retail partners both benefit when they research digital experience problems and test and optimize solutions together.

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Success starts with strategy This kind of success takes a clear vision, strategic process and earned trust. It is not about experimenting haphazardly without direction, shared input or a shared sense of the desired outcomes. Getting results and making informed decisions on how to act on them requires moving through several key milestones:

2. Get smart fast.Deep dive into a discovery process to get insights into past performance and the current challenges to validate and prioritize problems.

1. Set clear goals.Ensure that manufacturers and partners agree on what they want to achieve together, and set measurable targets for the overall business as well as for each experiment.

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6. Scale what works.Maximize the impact by rolling out winners to everyone and creating a roadmap for how to plan investments, including iterations on the most successful experiments.

4. Develop hypotheses.Use all the insights gathered to develop a set of priority hypotheses to be tested. Make sure there is a strong connection to the agreed upon goals and validated problems.

5. Experiment and measure.Determine the optimal solutions by conducting statistical tests (A/B, multi-variate, etc.) on high-priority experience areas and commit to a measurement plan.

3. Know the landscape.Understand the breadth and depth of both the brand’s and the retail partner’s digital offerings and capabilities.

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The final destinationWith a foundation of trust, the relationship can progress toward the ultimate goal. This is manufacturers having continuous and direct control of their brand and product experiences across their partner ecosystems—all the way to the digital shelf.

Think of it as the digital equivalent to taking ownership over the full supply chain. Going beyond content syndication, what’s needed is to transform the relationship with retail partners. Inspired by Direct Store Delivery (DSD) with the benefit of 21st century digital experience platforms, a new model—Direct Experience Delivery (DXD)—is the final destination.

Giving manufacturers direct control to optimize their brand and product experiences within a retailer site also frees up the retailer’s resources to focus on differentiating and optimizing their digital shopping experiences, which is needed to successfully compete. Again, everyone wins from the performance improvements that come from constant testing and learning.

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Because nothing is static in digital commerceMaking the most of digital experiences takes an ongoing commitment to testing and learning. Brands need to know if the right content, messaging and advertising is resonating with consumers.

The best way to find out is by experimenting together. Beloved brands with high-demand products have the leverage and influence to get retailers on board. And progressive, digital savvy retailers are likely to be the strongest partners.

But manufacturers must be good partners too. They have to be visionary. The goal has to be more than operational excellence. It must be an aspiration to transform the dynamics of how manufacturers and retailers relate, evolving from a supplier relationship to a true partnership.

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About Accenture InteractiveAccenture Interactive is reimagining business through experience. We drive sustainable growth by creating meaningful experiences that live at the intersection of purpose and innovation. By connecting deep human and business insights with the possibilities of technology, we design, build, communicate and run experiences that make lives easier, more productive and rewarding. Accenture Interactive is ranked the world’s largest digital agency by Ad Age and has been named a Most Innovative Company by Fast Company. To learn more, follow us @AccentureACTIVE and visit www.accentureinteractive.com

ContactTo learn more about optimizing digital marketplace experiences, visit www.accenture.com/marketplaces

Or contact:

Daniel Cardamone Global Lead, Marketplace Optimization Accenture Interactive daniel.cardamone@accenture.com

Jeriad Zoghby, PhD Global Lead, Consumer Goods & Services Accenture Interactive jeriad.zoghby@accenture.com @jeriad

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