U.K. retailers are facing a significant challenge: While 98% of customers are satisfied, brand loyalty is on the decline. New research from Kantar and Google reveals troubling trends that could threaten the sector’s long-term health.
The key to future growth lies in differentiation—standing out from competitors and building strong relationships with customers.
- Price Sensitivity and Reduced Loyalty: Customers are more price-conscious and less loyal to specific brands.
- Dependence on Discounts: Retailers are offering more discounts to meet customer price expectations, but this has caused a 20% drop in brand value due to economic pressures.
- Pricing Issues: One-third of U.K. retailers are not setting the right prices, either charging too much or too little.
- Key Growth Factors:
- 48% of short-term growth comes from brand awareness (being the first brand customers think of when they’re ready to buy).
- 57% of future growth comes from standing out from competitors, but this is starting to decline.
- Declining Brand Differentiation: Many retailers are finding it hard to show what makes their brand special and different from others.
With short-term pressures impacting immediate results, it’s becoming more difficult for brands to stand out and focus on long-term growth and differentiation.
The Differentiation Dividend
The good news: reversing the current trend is possible with the right technology and strategic focus. By investing in differentiation, retailers can unlock a “differentiation dividend,” leading to:
- Increased Repeat Purchases
- Stronger Pricing Power
- Sustainable Growth
This report, based on Kantar BrandZ 2023 and 2024 data, outlines a roadmap for success. It provides practical guidance for retailers in 2025, focusing on three key priorities:
- Get the Price Right: Align pricing to customer expectations.
- Win Immediate Sales: Achieve short-term goals without sacrificing long-term growth.
- Drive Future Growth through Differentiation: Build customer loyalty by standing out from the competition.
What is Differentiation?
Differentiation is about standing out in a crowded market. Success in retail depends on being perceived as more desirable, relevant, or superior by consumers—and staying ahead as competitors catch up. The larger the perceived gap between your brand and others, the more likely customers are to choose and stay loyal to you.
Kantar measures differentiation through its BrandZ database to determine how brands stand out in their categories.
Top 3 Retailer Priorities for 2025
To succeed in 2025, retailers must focus on these three key priorities:
- Price with Purpose:
Reevaluate your pricing strategy to reflect the full value you offer to consumers. Ensure your prices align with customer expectations and highlight the benefits they get for the cost. - Win the Short-Term with Salience:
Focus on being visible, relevant, and top-of-mind for shoppers. Capture immediate sales by positioning your brand where it matters most, ensuring you’re noticeable when consumers are ready to buy. - Drive Future Growth by Standing Out:
Differentiate your brand meaningfully from competitors. Build a unique value proposition to foster long-term customer loyalty and gain stronger pricing power over time.
What Retailers Need to Focus On In 2025
To stay ahead of the curve and drive success, retailers need to focus on the right strategies.
1. Show Up When It Matters Most
- Timing is Everything: Being present at the right moments can have a significant impact on customer decisions. Stay visible during key moments in the customer journey, whether it’s during research, purchasing, or post-purchase engagement.
- Be Where Your Customers Are: Reach customers across the right channels at the right time, using data-driven insights to predict when they’re most likely to convert.
2. Show Value to Drive Conversions
- Highlight What Matters: Show customers how your products and services offer clear value. Whether it’s through competitive pricing, unique features, or added benefits, make sure customers understand why they should choose your brand.
- Tailor Your Messaging: Craft personalised messages that speak directly to customer needs and priorities. By addressing the specific pain points of your audience, you can boost the likelihood of conversion and increase brand affinity.
3. Showcase Your Uniqueness
- Differentiate from the Competition: Focus on the aspects that set your brand apart from others. Whether it’s your company’s values, product offerings, or customer service experience, highlight what makes you special.
- Build Emotional Connections: Use storytelling and branding strategies that resonate emotionally with your audience. Creating a strong connection with your customers will build long-term loyalty, even in the face of competition.
Unlocking the Differentiation Dividend
By embracing these three priorities—showing up when it matters, demonstrating value, and highlighting your uniqueness—U.K. retailers can effectively differentiate themselves in a crowded market. These strategies will not only help drive immediate sales but will also lay the foundation for stronger customer relationships and sustainable growth in the future.
To know more, download the whitepaper here: https://thedifferentiationdividend.withgoogle.com/
Need a fresh perspective? Let’s talk.
At 360 OM, we specialise in helping businesses take their marketing efforts to the next level. Our team stays on top of industry trends, uses data-informed decisions to maximise your ROI, and provides full transparency through comprehensive reports.
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