Is It Time for Retailers to Move to All-Digital Advertising?

As REWE, one of Germany’s largest grocers, moves to paperless advertising, is it time for other retailers to reimagine their digital footprint? In this blog, we discuss REWE’s move, the current challenges retail brands face and how to approach a digital content strategy that enables a new sustainable consumer experience. 

Why is REWE’s move to digital activation so significant?

REWE is one of the biggest grocery retailers in Germany. The 23 million paper leaflets they distributed per week influenced double-digit revenue growth in their stores. If REWE’s shift to all-digital advertising proves effective, more companies will likely follow suit, increasing pressure to adapt on the remaining retailers and paving the way for other retail segments – such as DIY, furniture retail and consumer electronics – to do the same.

What enabled REWE to be the first company to move to all-digital leaflets?

REWE has been investing in online grocery sales for a long time, so they are already in a position to meet the digital expectations of the modern buyer. Their app is an important segue between digital and physical. It’s mature and offers a convenient, value-adding experience for consumers.

What are the main benefits of moving away from leaflets to digital?

There are two key aspects to consider:

First, consumers expect today's retailers to drive marketing that is personalized, seamlessly omnichannel and thus highly effective. Shifting from one-size-fits-all discounts for hundreds of products in a paper leaflet to personalized digital promotions offers a huge opportunity to drive more value for consumers, reduce race-to-the-bottom pricing and improve margins. For example, retailers could provide a discount on a popular soft drink only to consumers who have not bought the product before to get them to start purchasing it.

Going digital also enables behavior-based promotions. For example, if a consumer buys something three times, a retailer could promote larger amounts of that item at a discount. Digital will enable more powerful, more sophisticated personalization strategies that allow retailers to drive consumers to stores with promotions for high-margin products.

Second, the emerging market of retail media service offerings is the digital equivalent — or the next evolutionary step — of trade promotions on the paper prospect. Currently, brands pay for product placement in a paper leaflet based on effectiveness. In digital advertising, product placement is just as important and has the potential to be more effective than in physical advertisements. In digital, placement can be tailored to the individual consumer, enabling retailers to give the best placement to products that the buyer is more likely to purchase. Therefore, the digital consumer experience is on par with – or even better than – physical, as the promoted products are more relevant.

How do digital promotions drive more loyalty, compared to paper leaflets?

Digital promotions provide more first-party data. More data drives better decision-making for retailers, ultimately enabling them to create superior experiences for customers. A digital direct-to-consumer ecosystem also enables personalized, A/B-tested discounts. If you have the data to create an ecosystem with added value – like personalized discounts and recipes – you will lock the consumer into your retail brand, which will increase basket size and nurture customer lifetime value.

What are the shopping expectations of today’s consumer?

Consumers want to be treated individually, easy access to products, personalized benefits and rewarding loyalty programs. And they want excellent experiences across all of their devices. Retailers must meet these demands and expectations in a way that’s fast and convenient for consumers.

With digital advertising, personalization and communication, retailers have stronger, less expensive and more sustainable tools that enable them to achieve these goals. As retailers start to adopt these tools and use them to offer consumers new and superior experiences, consumers will shift to the most convenient and beneficial place to find promotions and purchase products — the digital space.

Why is offering a shopping leaflet subscription on a messaging app not enough?

Paper advertising is still much more impactful than this type of subscription, as the usability and actionability of a leaflet on a messaging app do not currently meet consumer expectations. Through a messaging app, retailers are not owning the consumer relationship either, which is a massive missed opportunity to drive digital engagement.

How do third-party price comparison apps impact retailers' business?

The move from physical leaflets to digital presents the opportunity to establish a direct and personal relationship with the consumer through your own app and ecosystem. Third-party price comparison apps make consumers move around different retail ecosystems, instead of investing in one specific ecosystem. These apps also potentially take away a portion of a retailer’s trade promotion revenue. To overcome these challenges, a retailer’s digital ecosystem needs to provide added value – such as loyalty perks – to consumers that these apps cannot.

Most retailers recognize the importance of going digital to transform their business. Why do you think the best place to start is digitizing paper leaflets?

Paper leaflets are by far the most effective conversation tool many companies have today. But with consumer expectations and behavior as well as market conditions changing faster than ever before, it's clear that retailers now need digital tools that enable them to adapt rapidly.

For example, we saw a shift to eCommerce and one-stop grocery shopping during COVID-19, followed by a decline in eCommerce and a refocus on discount shopping due to financial crises and inflation. Global players built a digital promotion solution with EPAM that tackles this shift, making consumer engagement easier, faster, less costly and more sustainable. With a flexible solution like this, retailers can implement proven engagement strategies while unlocking revenue-generating opportunities that digital brings to retail. The digital promotion is the foundation for a full digital transformation of the consumer experience.

Some companies have stated that they will continue using paper leaflets because they have been so effective for such a long time. What are your thoughts on that?

No business will talk about ending its best-performing sales channel without certainty that there is a better solution ready to replace it. However, these days, companies must be ready to adapt to changing consumer behavior quickly, which is only possible using digital solutions. This means companies that have not made any preparations to shift from paper to digital yet will need to do so soon, or they will fall behind and lose business. On the other hand, companies that started to investigate the move to digital years ago are in a position to move faster and define future consumer touchpoints that will drive business.

There is a lot of talk about how composable technology can help retailers meet modern business flexibility and agility needs. How can composable technology enable companies to deliver engaging digital leaflets?

Companies that leverage a composable business approach will massively outpace their competitors. Composable is all about creating efficiency in your organization and a mindset that breaks down silos. This new thinking needs to be driven top down while the technology simply is an enabler: Composable offers clearly distinct packaged business capabilities – as opposed to feature-rich, all-encompassing software suites – which can be quickly combined and recombined to drive business needs.

What should be the starting point for retailers to digitize their paper leaflets?

It depends on the retailer's digital maturity, business and their typical consumer’s preferences. A good way to start would be with use cases that add convenience, budget, experience and entertainment for consumers, the industry or retailers themselves.

That said, the shopping list can help bridge the gap between digital and physical, so it is a great starting point, especially for retailers in countries like Germany where 96% of grocery sales are done in store. You can prepopulate a customer’s digital weekly shopping list in your app by scanning the last POS receipts, which will reduce the barrier of manually adding potentially hundreds of items. Once you've accomplished that, you can establish journeys that start in the digital world and converge them with the physical store via the shopping list. An example of this would be offering customers a weekly meal planner that adheres to budget limits, so they know exactly what fits their diet and budget.

But this is just a starting point. In order to truly succeed in your digital efforts, it is vital to work with a strong consulting and implementation partner that can strategically plan, design and implement a digital solution based on your organization’s maturity.