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Insights

M&S Little Shop: Pint-sized prizes that convert on a huge scale

While it’s had its fair share of negative headlines, the Little Shop offered by Marks & Spencer has a keen focus on the bottom line, basic human psychology and the brand itself – and delivers countless benefits at a crucial time.

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M&S Little Shop: Pint-sized prizes that convert on a huge scale

In the UK, it’s estimated that one in three people collects something. The jury’s out as to why so many do it, but theories range from loyalty and personal attachment right through to obsession and existential anxiety.

Whatever the reason collecting exists, it’s something that’s innately and solely human: it’s not limited by age or gender, and it’s driven by the satisfaction of completing a “set”. Seizing on this idea for the summer is Marks & Spencer, which is running a masterclass in simplicity: one that will certainly drive sales at a time when M&S needs them more than ever.

M&S’ “Little Shop” is a collection of 25 miniature plastic versions of its most popular products. These tiny items are given away to shoppers every time they spend £20 or more in store, and they’re blind wrapped, meaning customers don’t know which mini product they’ll get until they tear open the packet.

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Offering collectable freebies with products is far from a new idea. We’ve had our cereal box toys for decades, while Happy Meals are still built around plastic freebies. But in the 90s, British-specific giveaways were at their peak.

Walkers offered Tazos – limited-edition Pog-like discs with notches around the edges – which were all the rage in playgrounds, and capitalised on the popularity of both Looney Tunes and Star Wars with 50-piece sets. Around the same time, Sainsbury’s immortalised the Euro 96 England team in coin form, which were inescapable collector’s items at the time (but are now pretty worthless).

However, in the UK, giveaway items like these have never had anything to do with the companies selling them. M&S’ range is superbly brand centric: the well-made and finely detailed products are predominantly M&S-specific products, such as the iconic Colin the Caterpillar cake and a bag of Percy Pig sweets. These headliners are complemented by basics like milk and pizza, as well as a range of superbly middle-class items, like Cornish Cove mature cheddar, cauliflower popcorn and Peruvian coffee beans.

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M&S isn’t the inventor of this idea; it follows an initiative pioneered by Australian supermarket Coles, which rolled out its own Little Shop in 2018 and followed it up with a “second season” in July. However, it’s probably the best brand in the UK to do it, as its food range is both iconic and highly thought of.

To give the idea the biggest impact possible, M&S has partnered with Instinct to launch the concept “with an integrated communications campaign, spanning celebrity endorsement, influencer partnerships, press office and a VIP, family-friendly launch event to generate hype”. Alongside countless well-loved YouTube and Instagram accounts, Louie Spence has fronted a video for Little Shop. As one viewer noted: “You can’t buy what he’s on at M&S, sadly.”

The benefits of the initiative – which, like Coles, is all but guaranteed to have a second run next year – are vast.

Just a little bit more

M&S’ food venture is famously known by many as a place where people go to shop for “their bits”: a main shop will usually happen at a lower-priced supermarket that offers a much wider selection of products. M&S is still a high-end brand in the eyes of most: somewhere for treats, the £10 meal deal, or fancy extras that can’t be found anywhere else.

Here lies a problem for the company: people often spend regularly, but in small amounts. By luring people into this fun initiative that centres on iconic products, the benefits are threefold.

  • Firstly, the £20 minimum spend will regularly push people to add a few more things to their basket to qualify for the unknown prize;
  • Secondly, it makes the 25-strong range of products even more desirable: Little Shop’s inclusion of strawberries may convince people to get their fruit in store, or even their milk;
  • Finally, M&S is stopping other, similar brands from taking its share of the luxury foods market. Waitrose, which Marksies regularly goes toe-to-toe with, could surely lose some market share this summer, while high-ticket products at regular supermarkets (e.g. the Sainsbury’s Taste the Difference range) could also be affected by Little Shop.

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Driving footfall through in-store exclusivity

Unlike nearly every major supermarket in the UK, M&S is yet to sell its produce online for home delivery – though it’s not far off, having brokered a deal with Ocado. With this initiative, people are given yet another reason to go into store, at a time when M&S has announced the closure of 110 stores during 2019 (85 full stores and 25 Simply Foods). Many M&S food courts reside inside full stores – higher footfall will also be driven through its clothing and accessories business, too.

The company may be behind on the experiential shopping that’s needed to cater to the customer of the future, but it’s a step in the right direction. In fact, the Little Shop initiative has a further experience-led idea built into it.

Building a community

While there’s been a lack of any real change in Simply Food’s decor, layout and approach over the last few years, M&S is adapting its store network to Little Shop, if only for the short term, by building a customer-first, physical store-led community initiative into the giveaway’s launch. Parents and kids alike are being encouraged to take part in its swap shops, taking place in M&S locations around the country throughout August.

It makes an experiential event out of the whole thing, guaranteeing local convenience, as well as near certainty that people can get what they want. And, of course, it’s a perfect opportunity to sell one more time.

Introducing the brand to the customer of tomorrow

The family-friendly element of Little Shop is perhaps the greatest weapon in its arsenal. Not only is it an idea that makes parents excited, but kids are introduced to the M&S brand, and its wares, through toys.

In the same way that Tazos and Euro 96 coins are treasured by their collectors even now, these mini products will undoubtedly be kept hold of by thousands of people who put the time, effort and money (an absolute minimum spend of £500 to get all 25). They’ll also act as the purest form of nostalgia: old products, in old packaging, which may still be in production by M&S 20 or 30 years in the future.

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Little Shop, big impact

M&S’ Little Shop will certainly adapt in time – critics have attacked its egregious use of plastic at a time when recycling and climate change is at the forefront of society’s collective mind – but minor changes, in time, will be all that’s needed to silence these negative voices.

For great ideas, simplicity is key. Little Shop has a simple goal: to get people into stores, at a time M&S can’t compete online and needs the footfall more than ever. With a keen focus on the bottom line, the brand and basic human psychology, the high-street staple has the opportunity to create more Little Shops – whether annual or seasonal – and really bond with its customers.

However, everything must come to an end, and whether it does or doesn’t run the Little Shop again, there’s still so much to gain. If the final results of this campaign prove that offering additional value encourages more regular shoppers and at a higher basket size, M&S can look at new, sustainable ways to provide desired incentives in a way that could potentially stifle, or even reverse, its current fortunes.

Insights

High street banking is dying. What can retailers learn from Santander’s clever Work Café?

Banks are withdrawing from the high street at a drastic rate, driven by ever-lower demand for in-branch services. Will Santander's Work Café make physical banking relevant to a new, technologically empowered generation?

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High street banking is dying. What can retailers learn from Santander’s clever Work Café?

Retail closures continue to make headlines, but another industry is withdrawing from high streets at an alarming rate – and its disappearance is getting a lot less coverage.

Banks – former cornerstones of town and city centres up and down the country – are gradually closing their doors for good. According to the most recent figures from the Office for National Statistics, there are now half the number of banks in the UK compared to 1986, and there’s been a 17% drop in branches over the last six years alone. It means that nationally, just 1.7 banks serve every 10,000 people.

The worst-hit areas for closures are often the most deprived. According to a recent study by Pockit, banks are closing branches in poorer areas of England four times faster than in wealthy communities. That’s not to say better-off regions aren’t suffering; small, affluent communities like Canford Cliffs and Spilsby are the latest on a long list of areas campaigning to keep their one remaining bank.

This phenomenon is largely due to the internet – a factor that’s crushed countless retailers over the last decade. Online banking has resulted in many financial institutions surrendering often-large, prime-location real estate to match dwindling demand for walk-in services.

Of course, there are plenty of other issues at play. The UK continues its steady transition into a more cashless society; customers are better clued-up about banking than ever before, often setting up accounts online using comparison sites; some banks, like Monzo and Starling, are entirely digital.

Yet for all these changes in the way people manage their money, many financial institutions haven’t responded to the evolution in consumer habits, effectively orchestrating their own obsoletion. Small branches often only consist of cashiers, machines and leaflet racks; larger banks may add to this by offering advisors and business services. Save for the quality of technology in these locations, little has changed since banking’s mid-80s heyday.

Santander has decided to change that. Here in Leeds, just a stone’s throw from SHIFT’s HQ, the Spanish bank closed the doors of its Park Row unit on June 28th, 2018, only to reopen them just over one year later with its imported Work Café concept, which could match the demands of future consumers.

Not only could the plan make physical banks more relevant than ever, but it also showcases a brand experience not offered by any of its rivals.

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Santander’s cut and run

Leeds is a big city, and Park Row is the centre of its physical banking. It spans from the train station to the Headrow, one of Leeds’ most famous shopping streets, and hosts the flagship branches of HSBC, NatWest and RBS.

Abbey National, then Santander, had its own prime location on the street. While it continues to operate another branch in Leeds city centre, Santander Park Row’s 17,000 customers were moved on in 2018, when the bank let the unit’s lease expire.

In its Branch Closure Impact Assessment, it cited predictable reasons for why it made its decision:

  • “95% of customers transacting at Park Row branch already use a variety of ways to complete their banking”;
  • “More and more people are banking with [Santander] by phone, online, on tablets and smartphones as well as at cash machines and Post Offices”.

The vacant unit didn’t shift; it sat empty for a few months. Every other unit was taken as soon as it became available, but Santander’s former home was ignored. It’s just as well; Santander bought it again, importing its clever “Work Café” concept for a UK debut.

What Santander’s Work Café offers

At its heart, Santander’s Work Café is a community-centric project that fits the profile of its day-to-day customers, though remains open to anyone, whoever they bank with. The idea was developed in Chile, after Santander realised how crowded banks were becoming as they provided fresh coffee to patrons. Including this UK venture, Work Café now operates in six countries worldwide – and Leeds’ branch may be the first of many.

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All visitors to Work Café can access the following:

  • Digital banking facilities, allowing people to access their accounts and information from a large tablet, with phones also available;
  • Santander employees on hand, who can answer any questions on banking or business support – plus the opportunity to book an appointment with one online;
  • A coworking space, which can be used on a first-come, first-served basis;
  • A café bar that provides “sustainably sourced barista coffee” from London’s Taylor St Coffee alongside snacks, with 30% off for Santander card-holders;
  • Three free, bookable meeting rooms, offering ClickShare display screens, conference phones and chalk boards;
  • Regular events, hosted by Google and other local businesses;
  • Free fibre-optic Wi-Fi throughout the building;
  • A “card share” wall allowing local businesses to display their business cards;
  • A digital brochure-requesting service, where users can select the information they’re interested in before having this data sent to their email account;
  • A free-to-use jukebox with a range of largely ambient music.

Above all, the focus is on engineering a great, professional experience under the Santander banner. The company’s departure from traditional banking services – and the opportunity to sell huge, cost-driven products to customers – is so great that it’s easy to assume that as a standalone venture judged solely on its takings within the Park Row unit, it’s losing money.

But even if it did, it’s a loss-leader at worst. At best, Santander’s Work Café has the potential to be the very best bank experience the UK has to offer today – and it could set the minimum accepted bar for everyone else in the industry.

Why is the Work Café’s approach so important?

The Work Café’s ultimate success can only be measured in the longer term, yet the concept showcases a carefully curated idea that’s both tailored to the customer of the future and enhances its offering as a bank.

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Building a brand for a new generation of customers

For years, and even now, banks have been perceived as dull, stuffy places: buildings you need to visit to do important things relating to money and nothing else. Younger people in particular – empowered by technology, flexible working hours and an often-greater financial knowledge – see these branches as boring and rigid, and rightly so. No amount of redecoration can change that core emotional indifference.

By providing a useful and technologically equipped space, and at a time when free, dedicated working spaces are still at a premium, Santander is giving people an opportunity to connect with the brand on their own terms, with no pressure, but in a way they’ve never seen other banks act.

All the clever adverts in the world can’t beat a tactile, modern experience that complements the working lifestyle in the way Work Café does: one in which aspiring businesspeople of all ages and backgrounds can connect with others and forge new relationships. Speaking to the staff, we discovered that large, hyper-local businesses have already used the meeting rooms due to a lack of space in their own buildings – including two other banks.

Leveraging a booming, and complementary, market

While there’s always a concern that the UK coffee market is becoming saturated, cafés continue to boom; in late 2018, Statista revealed that 49% of consumers bought a coffee on a daily basis; market leader Costa Coffee more than doubled its locations in the eight years to the end of 2016 (2,121 stores).

In Leeds, the independent coffee scene is huge – three overwhelmingly popular local shops are in spitting distance of Work Café, yet provide a much more informal setting. Wi-Fi may be free, but their furniture and fittings are often more fashionable than functional.

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With its well-established professional MO, Santander’s Work Café hasn’t partnered with a market leader like Costa, Caffè Nero or Starbucks; instead, it partners with a London-based supplier, occupying a unique position between the corporate Santander brand and a much-desired sole trader-style approach.

While it’s never going to be a true independent, it delivers the best of both worlds. What’s more, the sheer knowledge offered by the staff about the coffee they sold us was as deep as I’ve heard anywhere else in the city.

An additional source of income

There’s a reason why banks and restaurants are the only businesses on Park Row, save for a tiny, longstanding Caffè Nero at the far corner: the rents are huge. As such, coffee and snacks aren’t ever going to pay for the spacious, well-staffed Work Café unit. However, it’ll certainly help.

The profit margins on coffee are vast: even for high-end coffee, mark-up can be over 90% on a single cup. Providing that people will always visit and use the facilities, coffee is the perfect way to cover the running cost of the café itself. Business diversification can always deliver success, so long as it works in tandem with core services.

A loss-leading approach to banking

Without the (admittedly understated) Santander branding, Work Café wouldn’t feel like a bank at all. However, it does have digital banking points and experts on hand, alongside its ability to book appointments.

This relaxed, hassle-free and unpressured style of business may not see anything close to the number of deals being made as its standard branch around five minutes’ walk away, but in terms of developing the brand’s personality – at a time when its competitors are just so boring – it’s another feather in its cap. After a visit, it had us considering switching allegiances.

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Local expertise through local partnerships – and more

Enhancing its credentials as a bank that’s in touch with its customers on a local level, Santander is hosting events run by the city’s businesses, for the city’s businesses. It’s certainly the first time that a bank has done this with an open-door policy, under its own roof, in Leeds. As a means of developing its reputation as a company in touch with people on a regional level, it’s quite a coup.

On top of this, Work Café has also hosted representatives of Google, underlining its clout as an international bank. Events have been sparingly booked over the first three weeks, but it will most likely continue to fill its calendar over the coming months.

A future-proofed, social use for the high street

At SHIFT, we don’t believe the high street is dead, but we certainly think it needs to change if it’s going to survive. We think the high street will always remain a place that people go to hang out, socialise and, of course, shop – but the businesses that survive must adapt to this ever-more important emphasis on the blurring of retail, business and entertainment.

The future of Work Café – and the British high street

This clever use of high-street spaces is an important way to maintain the economic future of Britain’s towns and cities, and for Santander to respond to its own customer demand, as well as wider cultural changes in non-banking demographics, is incredibly clever: it’s actively encouraging people to make the most of their careers and feed into the economy in another way.

Diversification like this is key to retail and banking’s success. While this move doesn’t stray too far from Santander’s product range and business model, other companies can and should attempt to go further from theirs to test the water and see how consumers respond. Any combination of services can be successful so long as they’re useful.

Santander must stay committed to the Work Café to prove it works, otherwise future efforts across all industries could be doomed to failure. With plans to open in New York – and possibly London – the future’s bright.

So long as the internet can help people engage and spend money with businesses – whether they’re banks or retailers – physical locations must be seen as the primary means to build a brand. With this concept, Santander is way ahead of the crowd.