woman shopping for accessories in boutique

Differentiation wins in retail

As the 2023 holiday season takes shape, John Keaveney of WPP’s BAV says that retail brands have to find points of differentiation if they are to win in the marketplace

Classically, differentiation is what enables retail brands to catch consumers’ attention. Being a successful retail brand is all about points of difference that scream “buy me” and convert browsing into sales. During the holiday season – when consumers are seeking a fun shopping experience and to enjoy the glow of gifting – differentiation makes a huge difference to retail brands’ bottom lines.

But the harsh reality – according to WPP’s BAV – is that 64% of retail brands globally have lost strength since Covid (by this we mean the period from 2019 to 2023). This is what we found when we analysed BAV’s consumer data for Australia, Brazil, China, Germany, India, the UK and the US across this time period.

Of those declining retailers, 86% of them lost differentiation. What do we really mean by differentiation? “Well, to us it is far more than just simply being seen as a bit different or distinctive. We’ve empirically observed that the most differentiated brands in culture tend to have a disruptive energy surrounding them, as well as a clear and guiding raison d'être that consumers can understand,” says Keaveney.

“When the BAV team collects consumer opinion, we don’t ask them about brands in the context of narrow category confines that can blur and mis-portray reality, but instead we gather more holistic associations that are related to a brand in a category agnostic way. This enables us to not only understand a purer reflection of any given brand’s health and positioning, but also allows us to observe general branding principles that are as true today as they were 30 years ago.”

‘Highly differentiated’ is the clincher for retail brands today. But, in our sample of brands across these seven countries, only 6% of retail brands can be classed as highly differentiated (that is within the top 10% of all brands, regardless of category or sector).

What does differentiation give you?

Within the retailscape and across the seven countries explored, the benefits of having high differentiation (versus peers) are:

  • 43% higher preference
  • 34% higher usage
  • 25% pricing power
  • 24% more love

Keaveney explains: “Retail brands with high differentiation enjoy perceptual dominance in the marketplace. They are more strongly associated with such attributes as ‘progressive’, ‘visionary’, ‘daring’, and ‘creative’. Meanwhile, the additional byproducts that stem from having high differentiation are superior scores on measures such as being seen as the ‘best brand in its category’, ‘gaining in popularity’ and ‘worth paying more for’ (the latter being particularly important in these inflationary times).”

Pathways to differentiation

From conducting an analysis of the global retailscape, we found there are six main pathways for building differentiation for retailers around the world. “By a pathway, we at WPP’s BAV mean six dimensional strategies that best explain the observed (global) variation of differentiation levels within this sector,” says Keaveney.

These pathways are:

  • Superior quality – high quality, worth more, prestigious, upper class
  • Trendiness – trendy, cool, fun
  • Inventiveness – dynamic, intelligent, progressive, innovative
  • Distance – arrogant, unapproachable (usually not a good thing to be strong on)
  • Disruption – different, unique, daring
  • Genuine – original, authentic

“What should stand out for retailers is that a pathway of ‘value’ (being seen as ‘good value’ and of a low price) does not appear as one of the pathways. In fact, ‘good value’ negatively correlates with differentiation within the retailscape,” he says.

“Additionally, the top 10% of retailers on value tend to be less differentiated than 63% of other brands in culture. So, while we know over 80% of global consumers identify as being a ‘value shopper’, retailers should always try to find a way of expressing value in a way that does not erode their brand (we call these value+ strategies).”

Understanding a brand’s pathway for building differentiation is important. After all, some pathways drive more differentiation than others. For example, the ‘distance’ and ‘genuine’ pathways drive just 4% differentiation, and ‘superior quality’ drives 5% differentiation. But ‘trendiness’ (17%), ‘inventiveness’ (30%) and ‘disruption’ (41%) really move the dial.

“What this tells us is that retail brands that are prepared to do something truly different this holiday season will distinguish themselves, catch the attention of the holiday shopper and enjoy the dividends of being a disrupter,” says Keaveney.

John Keaveney


published on

15 November 2023



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