We know that the retail industry never slows down. Every year consumers’ expectations for fresh products, offers and content grows – and retailers must provide these faster and more frequently than ever.

Agile is the goal. However, a traditional stumbling block on the path to “agile” is the reliance retailers – particularly those with a national or global presence – place on external agencies. Timing is everything in retail marketing, and any log jam at a partner agency can prevent campaigns landing at the optimal time.

This is why numerous retailers, such as UK giants Boots in September 2021, have taken it upon themselves to cut out the middleman. By launching their own in-house marketing agencies, they are looking to accelerate output, enhance efficiencies and present a stronger proposition to their supplier brands.

Here, we will explain why retailers worldwide are now taking this massive step, and outline the pros and cons of this full-on approach.

In-house marketing agencies – why now?

There are several factors – some very recent, others that have bubbled under the surface for years – that have compelled some of the world’s biggest retailers to take this previously absurd concept of becoming their own marketing agency:

Higher demand, tighter budgets

Shoppers expectations’ are higher than ever before. They expect consistent, personal engagement with their preferred retailers, whether it’s a unique special offer in their inbox to active content across social media.

But, as the demand for content only continues to grow, marketing budgets are shrinking. Many retailers were hit hard by COVID-19, and have had to tighten their belts in a number of key areas, marketing included. This includes the amount they have to spend on external agencies – compelling retailers to find ways to produce more in-house.

Overdependence on external agencies

Alongside the pressing need for retailers to reallocate their marketing budgets, there are also the longstanding concerns that many in-house marketing teams encountered when working alongside a third-party agency:

• Longer turnaround times due to competing priorities
• Brand inconsistencies caused by a lack of understanding
• Lengthy back-and-forth over amends and updates
• Costs associated with comparatively simple jobs

Many retailers, such as M&S, Verizon and Procter & Gamble, have already committed to taking more of their marketing in-house in response to the current landscape. By going even further in establishing their own fully-functioning agencies, others are aiming to take their production levels and support for suppliers to a whole new level.

The importance of omnichannel

The ways that retailers can interact with customers – both physically and digitally – are constantly increasing and evolving. Being ever-present across these platforms requires a multi-skilled team with experience in many areas of marketing: design, paid advertising, social media, print, email marketing, etc.

The introduction of an in-house agency puts all of these experts under one roof, and with their sole focus on you, the retailer, and your suppliers.

The death of third-party cookies

It probably hasn’t escaped your attention that Google is set to depreciate 3rd party cookies by 2023. This has unnerved numerous brands who are often reliant on this data, as their customer base does not typically purchase their products directly from their websites.

The first-hand information gathered by in-house retailer agencies, based directly on their customers’ behaviour, could therefore help supplier brands gain a deeper insight into their target audiences, and use this agency to produce better-targeted campaigns.

Great news for the suppliers, and a great selling point for the retailers that can provide this capability… 

Competition to secure suppliers

Even the biggest retailers need to present a compelling case to potential suppliers. You want to make sure they feature in your stores over a competitor, and forge strong, long-term relationships.

Giving suppliers access to an in-house agency, capable of creating marketing assets for their purposes in-store and beyond, helps retailers foster these lasting bonds, and offer an incentive that most retailers globally can’t deliver (yet).

4 retailers that have established their own agencies

Boots

The catalyst for this article, Boots introduced Boots Media Group (BMG) in September 2021, with the aim of helping third-party brands deliver personalised campaigns out to their customers.

As well as enhancing their own internal advertising, the BMG agency will be capable of treating each of Boots’ suppliers individually, with unique channel mixes, marketing strategies and schedules to suit their requirements.

Plus, Boots will give suppliers access to the rich first-party data it holds across its 17+ million loyalty member cards, and tools measuring cost-per-sale, click-throughs, conversion rates and more. This means they will be perfectly placed to supply their partners with a deep insight into how customers are behaving straight from source, to structure future campaigns.

Walmart

In August 2021, Walmart announced that they had selected Publicis Groupe to support the development of their own in-house media agency. This is with the aim of deepening their connections to their diverse customer landscape through a wide range of omnichannel solutions.

The establishment of the Walmart Media Group is based around providing an end-to-end, seamless service to the retailer’s customers, and making their journey’s as robust and engaging as possible.

Target

Now we go all the way back to 2019 to Target, another heavyweight U.S. retailer, establishing Roundel as their own in-house media network.

This offers content creation and other advertising services for brands lining their stores’ shelves, such as Disney and Unilever, as well as a number of premium partners that don’t feature in their stores, including Mastercard.

Expedia

Expedia Group Media Solutions is the advertising arm of Expedia Group, one of America’s most prominent online travel shopping organisations.

Through this in-house agency, they provide brands with digital marketing solutions that reach and engage the millions of people that travel with them every year, giving these brands a powerful means to connect with audiences around the world.

What are the benefits of this approach?

Attractive proposition to suppliers

With retailers in competition not only for customers, but also suppliers, the promise of a dedicated in-house agency, and access to invaluable first-hand data from shoppers, will be a big incentive for suppliers to get on board.

Faster turnaround times

By creating a dedicated space where all content and strategies are crafted in-house, there is no enforced gap between formulating a campaign and getting it to customers. No third party. No added layers. No barriers. 

Extended capabilities in-house

While an in-house marketing team will typically be spinning a lot of plates among each other, an agency will ensure that a retailer has access to professionals from throughout the marketing spectrum. These specialists will have a strong understanding of how to get the absolute most out of each campaign.

Real-time behaviour

Again, when speed is of the essence, having insight into the first-hand, real-time shopping habits of your customer base will enable an agency to create highly targeted campaigns based on these behaviours. Marketing is more effective, allowing you to forge watertight relationships with your audience.

Locked-down consistency

One of the ongoing concerns with using external agencies is the risk of brands being misinterpreted or poorly applied. As the agency works specifically for the retailer, there is much less risk of brand consistency going awry.

What are the risks?

Of course, while there is plenty of reasons as to why retailers are launching their own marketing agencies, it is not an approach that is free of risk:

Coordinating global campaigns

If your organisation has locations spread across the globe, it is possible for differences in culture and language to impede the effectiveness of your content. Plus, if all work is coming from a single space to be disseminated to teams worldwide, it is possible for streams to become crossed, and the wrong asset ending up in the wrong place.

With this in mind, it is useful to have tools in place to coordinate your international marketing:

• A Digital Asset Manager (DAM) to store all approved assets in one globally accessible space, and share these with the relevant teams worldwide
• A campaign planner that makes it easy to see all past, present and future campaigns at once, with information on when particular assets will be required
• Language and localisation features in your content creation suite, ensuring that all content produced for a particular market is appropriate for that audience
• A central brand portal housing brand guidelines and cultural considerations for any member of your marketing team to review at any time

All of this and more becomes possible when you use a solution like BAM by Papirfly™.

Convincing sceptical suppliers

As we’ve outlined above, there is a lot for suppliers to be excited about when it comes to retailers establishing in-house agencies. However, like any upcoming innovation, it has naysayers.

First, the supplier must place a great deal of trust in the retailer to put their marketing in the agency’s hands, and achieve results through this. If there is a long-term relationship already in place, this is less of a problem – for a new supplier, there could be some initial hesitation.

Secondly, there might also be some scepticism over what will take priority – the retailer’s own products and branding, or their suppliers’. So, if you intend to take this approach in your organisation, be prepared to do some convincing for several suppliers.

Costs of in-house marketing

Finally, there is the all-important consideration of cost. There is a very good reason why so many retailers over the years have outsourced work to external agencies – it was typically far less expensive than hiring an in-house marketing team, let alone your own full-blown agency.

With this in mind, and the fact that budgets are more restrictive than ever, having the tools in place to streamline marketing production and make it more accessible to everyone is vital to countering the expense of establishing and maintaining an agency.

Therefore, a solution like BAM by Papirfly™ is absolutely critical. Easy-to-use, preset templates empower anyone, regardless of design experience, to produce high-quality, perfectly branded assets in a matter of minutes. Times-to-market are shortened significantly, and you are enabled to create more digital and print assets than ever before – at no extra cost.

How BAM lets you do more in-house

We hope that you have enjoyed this introduction to the phenomenon of marketing agencies emerging from established retailers. While it may not be something you’re thinking about in the immediate future, I would watch this space – this is just the start of a trend that could change the way retail marketing is approached long term.

Nevertheless, it is never too early to give yourself the foundation to take marketing in-house and take your budgets further. Get in touch to learn more about BAM by Papirfly™, or get hands-on with it by arranging your personal demo.

We’ve heard talk about the “death of the high street” for years. The rising popularity and frequency of online shopping and an ever-growing list of shops that have disappeared – trends accelerated by the COVID-19 pandemic – have led many to question whether physical stores still have a place today.

• Total online retail sales grew 36% year-on-year in 2020 – the highest annual growth since 2007 (IMRG Capgemini)
• Almost 40% of all retail sales in the UK in May 2021 were conducted online (BRC)
• Online shopping is expected to reach nearly a third of all retail sales by 2024 (Osome)

The relevance of the “flagship store” has come under particular scrutiny. Once considered the most important and impressive store in an organisation’s fleet, the impact of the pandemic and the overall shift towards digital experiences has changed some people’s attitudes towards these environments.

In recent times we’ve seen numerous brands, including Debenhams, Abercrombie & Fitch, Zara and Topshop, close down flagship stores worldwide.

But, not all retailers are singing the same tune – Burberry opened a new flagship store in London as recently as July 2021. Stone Island, L’Estrange, VASHI, UGG and Hermès are among the many retailers to establish flagship stores in major markets since the COVID-19 outbreak.

With this in mind, in this article we will look at the continued importance of the flagship store in the current landscape, and what the future looks like for these locations.

Flagship stores: a brief history

The legacy of the flagship store stretches back to the late 19th century, with the grand Steinway Hall in New York one of the earliest examples. These concepts set the tone for what flagship store would be – the most luxurious and spectacular example of a retail brand’s identity.

By the 1980s and 90s, many premium and midmarket brands had established their own flagships in the world’s biggest cities, with Niketown in Oxford Street one of the most notable examples.

Selfridges in London. Galeries Lafayette in Paris. Nike’s House of Innovation on Fifth Avenue. These and other iconic flagship stores have held a magnetic appeal with consumers for decades, acting as so much more than just supersized stores. They were tourist destinations. They were attractions. They were the epitome of what a brand stood for.

What is the appeal of the flagship store?

Many aspects make flagship stores unique from other shops within an organisation:

Their size and scale

Flagship stores are traditionally the largest and most aesthetically impressive location in a brand’s armada of shops. They use this size to showcase not only the latest products and developments from the brand, but its history, innovation and personality.

Their size and scale helps to demonstrate the power of the brand, with the aim of leaving visitors wowed. It is more than just a means of containing more products and collateral – it is an indication to potential customers that yours is a brand that matters.

Their location

The majority of flagship stores are based in standout global cities – London, New York City, Beijing, Tokyo, Paris – cities that receive significant footfall and are prominent tourist destinations.

Because shopping is a popular tourist pastime, these flagship stores act as a great introduction to shoppers worldwide, compelling them to frequent their local sites in future. Some of the best flagship stores even become go-to destinations in their own right.

Their customer service

While retailers strive to maintain a strong standard of customer service in all locations, it is usually taken to another level in their flagship stores. Experiences are often more personal and unique in these environments.

This is often because flagship stores are where people “experience” a brand. They engage the senses and encourage interaction between customers and employees to a greater level than most local stores.

Their purpose

While there is a significant commercial component to a flagship store – like any other brick-and-mortar shop it needs to generate sales – the purpose of a flagship store extends much further.

Flagship stores are the “homes” of retail brands. They promote a brand, making it accessible and tactile for consumers. Almost everything inside is designed to emphasise a brand’s products, legacy and identity. This brand presence, beyond the revenue these locations generate, is why these stores hold such a revered place in retail.

Why are flagship stores still relevant today?

This all sounds incredible, but there is a key question to address: “If flagship stores are so crucial to showcasing a retail brand, why are many shutting down?”

Undoubtedly the pandemic has had a major role in this – numerous retailers were hit hard, forcing them to shut down locations either as a means to survive, or because they went out of business altogether.

However, some were questioning the relevance of the flagship store before we ever heard of COVID-19. In an industry that is rapidly transitioning to online and local commerce, is there still a place for costly, gigantic megastores?

We believe so. In fact, we feel their relevance has only grown as a result of these trends. While digital shopping is becoming more sophisticated every year, many still actively prefer the in-person experience of going into a store rather than shopping online.

This could be for a number of reasons:

• Preferring to see and feel products before they decide to purchase them
• Wanting to interact with other humans face-to-face rather than through a screen
• Enjoying the activity of shopping generally
• Wanting to feel more connected to a brand by personally visiting shops

The pandemic may have actually strengthened these feelings. After many months unable to visit brick-and-mortar stores, many will feel more motivated than ever to return.

Furthermore, there is the risk that by forgoing the importance of your flagship stores, as Gap has done recently, you illustrate to customers that you don’t value these experiential, personalised brand experiences – something that many think very highly of.

As Matt Sargent, principal of Sargent Up North, in an interview with Retail Dive eloquently put it:

“It shows your customers that you’re not connected to that intimacy. You will see brands like Nike advocate for their brand in flagship stores and company stores, while for brands on the decline like Gap it’s a short-term profitability measure. It may be necessary, but it’s very problematic.”

“The beauty of a flagship store is it’s aspirational. It’s designed to pull interest, create that halo effect. People still want to engage with brands and want to make that trip meaningful versus transactional.”

Remember that while online shopping exploded during the pandemic, stores that delivered a multi-channel experience benefited the most – these retailers enjoyed a growth rate of 57% in 2020, with online-only retailers only growing 9%.

With that said, flagship stores are crucial to an effective omnichannel strategy. A place that gives visitors a tangible, experiential sense of a brand and its products, which can then encourage future online and local purchases.

The future of the flagship store

So what does the future of the flagship store look like? While nothing is ever set in stone in the world of retail, here are three key trends to follow:

#1 Elevating experiential marketing further

An important trend for the future of the flagship store will be introducing ways to help consumers experience a brand and its offerings even more closely than in years prior.

Consider Nike’s flagship in Times Square. It includes a basketball court with cameras for customers to record their shots, and treadmills with screens that mimic famous running routes across the globe. These don’t directly drive sales, but they emphasise the identity of the brand, and deliver this in a sense-driven, engaging way to customers.

In order to encourage sales either online or in local stores, the flagships must continue to provide the most complete and enthralling experiences to visitors.

#2 A greater mix of physical and digital

In a similar vein, we anticipate that flagship stores will need to deliver a more seamless transition between a brand’s physical and online presence.

Innovations like the Starbucks rewards app that allows you to order ahead before walking into a store, or the Sephora Beauty Bag account which immediately saves purchases made in-store so they can be quickly repurchased when products run out, have massively improved the way that these companies’ customers interact with their brand across all platforms.

As the standout stores for the brand, flagships have to take this to another level. With many adopting new technologies like virtual and augmented reality to support this vision, a retailer’s flagship should be at the heart of a commitment to multi-channel marketing.

#3 Reassessing flagship performance

Finally, we believe it is essential that the performance of flagships moving forward should not simply be measured by revenue generated – something that likely contributed to the closure of many of these as a result of the pandemic.

While no one is suggesting that sales shouldn’t factor into how well they are operating, it is just one part of the equation. Retailers should also incorporate KPIs that judge the flagship’s influence on the strength of their brand, such as media reach, tourists attracted, net promoter score, etc.

In fact, companies like Microsoft and Foot Locker actually attribute some of the costs of running their London flagships to their marketing budgets – a sign that they rightly consider these locations more important for increasing brand awareness than a strict sales focus.

Unlocking the potential of retail marketing

Without question, the flagship store still has a powerful part to play in strengthening the connection between brands and their customers. Until e-commerce becomes the sole avenue for consumers to purchase products – something we don’t see happening for a long, long time – these locations will remain the ultimate showcase of brand identity.

But, while flagships are the prized possession for many retail brands, it is crucial that customers enjoy a seamless experience at every marketing touchpoint. Without this consistency, it is incredibly challenging to bridge that gap between casual consumer and loyal advocate.

BAM by Papirfly™ empowers your retail teams worldwide – from your standout flagships to your most remote local stores – to lock down consistency across all marketing assets, and produce campaigns faster and more cost-effectively than ever before.

Book your personal demo today to discover the power of BAM first-hand, or get in touch to talk to a member of our team.