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How to Engage the Polarized Customer

Apr 18, 2023

In today's retail landscape, brands are faced with the challange of engaging a polarized audience with conflicting desires and priorities

Would you be surprized if we told you that:

  • 69% of consumers plan to cut back on non-essential spending
  • 15% are halting non-essential buys altogether

That’s according to a recent survey by PwC.

Other research tells the same story. Attest reported that 40% of consumers are buying fewer things and consuming less. And American Express found that 71% of consumers are proactively looking for sale items when shopping.

None of these behaviors are particularly surprizing to brands at a time when costs in almost every area are rising. In fact, this is exactly what you would expect to happen – for consumers to spend less.

Then you read the news that 95% of luxury brands in the UK and Europe generated positive growth in 2022 – the best performance of any retail sector – and you realize the story is not so simple.

In the same survey by PwC, 26% of respondents said they aim to spend the same amount on luxury and designer goods, and 21% said they plan to purchase more luxury goods over the next six months.

The Financial Times reported that the €353bn luxury sector is expected to grow by “at least” 3-8% in 2023, according to Bain & Co and Altagamma analysts. With consumers this polarized, how can brands engage with them?

Accept that Humans are Inconsistent

This polarization is a prime example of our inconsistent nature as humans.

For example, 57% of customers want retailers to become more sustainable, according to Nosto Solutions.

But 61% of the same customers are more concerned about cost than sustainability.

These two desires are fundamentally at odds with each other and yet both are true at the same time.

We can see this conflict throughout the retail industry. Consumers are cost-conscious but still love luxury. Pro-digital shoppers also want to visit stores. The eco-conscious are also price-conscious. Customers want speed but also slower sensory experiences.

What we want is not constrained by what we can afford. If it were, we would not aspire to own certain brands or products.

Nor is what we do driven purely by our morals, ethics, or knowledge of impact. Often, the most convenient option wins out.

It is very difficult for brands to create an offering that can cater to this constant contradiction. Starbucks is one of the most successful thanks to a diversified mix of stores and services.

Customers can pre-order and pay for products digitally and have them ready to collect when they enter the store. There are Starbucks stores that are take-away only, and there is a delivery service. But there are also larger spaces where customers can relax with a coffee, access specialist products, and enjoy experiences and classes.

And despite all this, there are still some consumers who don’t like or visit Starbucks.

Brands must accept that there is no pleasing everyone if they are to please anyone. But the most successful brands already know this. They lean into what appeals to their target audience.

Double Down on One Thing

They say it is always the middle that disappears first.

As consumers shift their spending priorities both up and down, brands are increasingly focusing on one area in particular to engage them.

On the face of it, US off-price retailer Ross Stores gets a lot of things wrong. Online reviews of its stores talk of poor service, damaged products, and general untidiness. At the same time, these customers rave about the brand because of the bargains that they discover.

For brands like Ross Stores, price is everything to its customers and these shoppers are willing to accept trade-offs in exchange for lower prices.

Meanwhile, multiple brands have invested in more luxurious experiences that encourage customers to spend time with them. This includes Ralph Lauren, Nike and Hyundai who have all opened physical spaces that are only available to members, by appointment, or by invitation.

For these brands, the focus is on creating experiences and services that consumers aspire to access.

At both ends of the spectrum, retailers are finding success by doubling down on what they do well to engage with customers. They’re not trying to reach everyone but are concentrating on the customers whose priorities best align with their brand offering.

Mix Luxury and Mainstream

At the same time, some brands are engaging polarized consumers by blurring the lines between luxury and mainstream. They recognize that consumers looking to save money may not want to let go of higher-end services. Likewise, those who aren’t everyday luxury shoppers can still be encouraged to spend a bit more in exchange for the kudos of a connection to luxury brands.

Hema, the Chinese grocery brand, offers customers a multitude of different ways to buy and enjoy food. The stores cater for traditional grocery shopping, but visitors can also order food to cook at home, order food from Hema’s chef for delivery in 30 minutes, have food cooked in-store to take home, buy food in-store and have it delivered, or buy in-store and eat it in the dining area.

Amazon’s grocery chain Whole Foods also offers a higher level of service in the form of special diet store tours that help customers discover products that meet their dietary needs. The tours are customized to the attendees needs and include refreshments and free samples.

Enhanced services and high levels of personalization are typically associated with a higher cost which makes shopping with these brands feel more premium. They are tapping into the feeling that luxury brands give but in an affordable way.

Meanwhile, luxury brands have a long history of collaborating with unusual and mainstream brands. Nike and Tiffany’s recent sneaker collaboration is just the latest example.

These collaborations typically allow consumers to dip their toe into owning a luxury brand without the superhigh price tag. They can act as an introduction to a particular luxury brand, which may then convince the customer to invest in other items in the future.

Don’t Ignore the Store

Physical retail is a powerful weapon in your arsenal when it comes to engaging a polarized audience.

This is because the retail store is both accessible and a sign of prestige. It is physically impossible for every brand to have a store because there are only a certain number of stores on high streets, in shopping centers and retail parks. What’s more, not every brand can afford the costs associated with operating a store.

Anything with a limited supply carries a certain status. It’s why every major luxury brand has at least one physical store. These spaces add to the brand’s value.

At the same time, physical retail spaces are always close to where customers are. A large part of the lower-cost retailer model is accessibility which is why these brands.

often operate large chains of stores. They want as many people as possible to be able to see their brand and shop with them.

There is no doubt that a huge part of Ross Stores’ success is its physical stores. With product constantly changing, customers keep returning to the store in the hope of discovering a gem. The company also deliberately doesn’t sell online where it would be hard to replicate the discovery experience customers love about its stores.

Meanwhile, Chanel is in the process of building ultra-VIP stores for its customers in Asia. Only the brand’s most important customers will get an invitation to these private spaces. The in-person nature of the physical store is a vital part of this elevated offering.

Ross Stores and Chanel may be very different businesses but they both have a deep understanding of their customer and what matters to them. A physical space is the perfect way to demonstrate those values to consumers and engage them – whichever end of the spectrum they sit on.

Do you feel like your business is slipping into the middle between polarized consumers? Get clarity on what to do next.