Editors note: In the first part of this two-article series, the authors discussed how the pandemic has changed the average consumer’s home from just a place to come to after work to a 24-7-365 multi-use space that comprises home, gym, workplace, cooking and eating headquarters, party space, and in some instances school. Companies that have historically siloed themselves into a narrow household goods category have been handed the opportunity to transform themselves into lifestyle companies that reach beyond the four walls of home. Here we’ll consider how they can do it.
Household companies have the opportunity to thrive by redefining themselves as integrated lifestyle companies that provide holistic solutions for our new relationship with living space. Doing so will require companies to rethink how they operate.
A few operational imperatives stand out: Reexamine product design; rethink brand building; blur lines between products and services; and build new capabilities.
• Differentiate brands by design: Distinctive product design is essential to any lifestyle-integration marketing strategy. Basic functionality is merely table stakes; the real game here is the development of designs that are distinctive, pleasing and readily integrated with the necessary range of offerings.
When it comes to design, the expectations of the market have changed profoundly in recent years, thanks in no small part to online mainstays like Instagram and Pinterest, which have changed the way consumers discover design, inviting them to curate content based on likes and interests. Another trend is at work here: High-quality design, once seen as synonymous with high cost, has become democratized as retailers such as Target have introduced the handiworks of big-name designers. As a result, a level of design sophistication that would have previously been regarded as a premium-price signifier is now little more than table stakes for market entry.
In this affinity-driven consumer market, inconsistent and uninspired design add friction by compelling the consumer to keep looking elsewhere. Companies that win in this market will insist on elevating product design for seamless integration into the consumer’s aesthetic. They will strive to ensure that their brands are highly recognizable, with clearly defined value propositions that consumers can trust. This transforms a friction-filled shopping journey into a subconscious, natural lifestyle choice.
While design is a crucial element in brand differentiation, it’s hardly the only one. Companies seeking to build a brand strong enough to serve as a lifestyle platform will need to be intentional about doing so; it’s not for the faint of heart.
One brand-building lesson that may be especially hard for legacy household companies to absorb is there’s no longer any point in trying to be all things to all consumers. For a sector that was virtually defined by the mass media marketing of the network television era, this can seem counterintuitive.
But it’s true: The key to building a viable lifestyle brand is community building. Instead of trying to solve everyone’s problems, smart companies will focus on a specific group of consumers and watch them influence the others. Instead of becoming a middle-tier brand that excites no one, take bold branding risks that identify you clearly to potential enthusiasts and detractors alike. Become mega-traditional or ultra-modern — even radically 1980s. Some consumers will hate it, but there will be a group who will feel they’ve found their sweet honey in the rock.
Meeting your market will entail thinking a bit differently about how to reach it. Don’t over-rely on outdated data points. Seek to understand how your target consumers think, feel, dream and shop in order to occupy as much mindspace as possible.
• Blur the line between products and services: Companies should seek to offer services that enhance product offerings and simplify routines around the home. One player that gets this (and much else) right is Ikea, which manages to create a unique experience for consumers, in which products and services blend into an integrated shopping experience within the store. However, Ikea took it to the next level by acquiring Task Rabbit to better compete with delivery and installation services that its competitors provided.
But any company can get started on profitably smudging the distinctions between products and services. Service offerings can come in many shapes and sizes, and can offer a natural extension from an existing product portfolio.
The way to start is by selecting a product that most often requires consumers to work with a third-party service, and then building a digital space to provide handy recommendations — such as by putting a QR code on the box of a new TV set; when scanned, the code would open a video that shows how to mount the TV on a wall. You could slowly introduce an in-person solution locally, building it up at larger scale if it shows promise.
• Consider unexpected partnerships: Don’t overlook the power of partnerships, even with seemingly strange bedfellows. The right partnerships can be indispensable to creating holistic integrated lifestyle offerings. Companies should be looking for how to team up across the value chain, blending capabilities and offerings to create new levels of value for the consumer.
Think about partnering with a digital firm to develop services for your product; reach out to a company in an adjacent category that shares your consumer base; pair one retailer with another for mutual benefit.
To take just one example, Gap and Walmart recently announced a multiyear partnership to introduce Gap Home, a new brand of modern home essentials available exclusively at Walmart. It would be hard to think of two major brands with profiles more different from one another than these two, yet this pairing underscores a basic truth: If you consider yourself a household company, you need to start getting imaginative about how to reconsider yourself and your market offerings. If Saint Laurent can team up with Bang & Olufsen, retailers further down the food chain have seemingly endless prospects for collaboration.
• Build new capabilities: Above all, invest in your enterprise to develop the capabilities needed to enable integrated, frictionless lifestyle solutions. This will require building a culture that rewards nimbleness, responsiveness and innovation. Embed a dynamic resource-allocation model that allows capital and talent to change with strategic priorities. Redesign performance standards to reward consumer outcomes, not workplace activities.
To remain relevant and competitive, companies in this sector will need to place a premium on acquiring — and retaining — a talented, diverse workforce. As brands continue to consolidate, seize opportunities to acquire the best emerging talent in the market.
The transformations we’ve outlined in this article may take some brands to unexpected places. But in this market, the riskiest move of all is standing still. The most successful companies in this new era will be those that break out of the expected and historical, and see themselves for what they have truly become — lifestyle brands for consumers whose sense of “home” will never be the same again.
Timothy Derr is a partner, Wade Bjubrey and Steven Cunix are principals, and Ben Lowden is a manager in the Consumer practice of Kearney, a global strategy and management consulting firm. They can be reached, respectively, at [email protected], [email protected], [email protected] and [email protected].