Stand out or fade away
Building deeper mental connections with consumers matters. According to Kantar BrandZ data, brands perceived as different from others achieve exactly this and as a result, capture choices from other brands.The ties between differentiation and long-term growth are strong. Our research has surfaced that brands that stand out in the crowded marketplace are not only chosen more often but also command higher prices, as clearly shown in the graph: the more differentiated a retailer is perceived as differentiated (an impressive correlation coefficient of 0.79 across all included markets), the higher will be its Pricing Power – which is is a key driver of profitability and growth.
More differentiated retailers are poised to grow in the long-term
The fabulous six (differentiation factors)
After scouring nine European markets, Google and Kantar found a surprising trend—only one in four retailers stands out. To crack the code, we identified the FABUOUS SIX. Six game-changing differentiation factors, that if leveraged by brands, can unlock growth:
1. Chic: Be a trendsetter, offer exclusive collections and update the range regularly.
2. Unique: Provide personalized shopping experiences and personalized recommendations.
3. Community: Promote customer interaction and exchange, for example by relying on influencer partnerships and peer-to-peer recommendations.
4. Responsible: Communicate transparently about fair working conditions and sustainable production methods.
5. Techy: Technological innovations that enrich the shopping experience and improve interaction with products – including apps, AR applications or smart search functions.
6. Fulfillment: Reliable and flexible order processing and delivery including various choices in terms of quality, sizes and prices.
The fabulous six differentiating factors at a glance
Graham Staplehurst, Thought Leadership Director at Kantar BrandZ commented: "When considering the six factors that can help increase a brand's perceived differentiation, marketers should also bear in mind the absolute need for brands to be ruthlessly consistent. With a strategy in mind everything - the product, the retail environment, brand communications and the consumer experience - must consistently deliver the strategy, over the long term."
Above all, be chic. But don’t be just that
Our evidence points to ‘chic’ as the greatest springboard for differentiation. If people perceive you as a trend setter, as a fashion retailer who refreshes their product range, and offers special collections, then they are likely to perceive you as more different to your competitors.
In contrast, being responsible, techy and offering fulfilment appear to give less of a differentiation edge not because they are less important, but because most retailers got them. For instance, being techy, i.e. offering the latest technology that enhances people’s shopping experience is somewhat commonplace and a hygiene factor. You can’t survive without it, but you won’t necessarily shine with it.
Well done for being chic. What else can you be?
Remember this: considering and addressing each one of the six differentiation factors keeps your fashion retail brand fit, vibrant and benefits your sales. However, to be ranked as different, to be separated – in people’s minds – from other fashion retailers, you’ve got to relentlessly pursue a leading strategy that fits your brand’s proposition and DNA. Most fashion retailers differentiate on chic, but very few double down on their own unique code to get personal with consumers.
Most fashion retailers thrive on staying on trend, but only a few on creating a sense of exclusivity
Let’s look at some striking examples:
• Retailers like Zara and Max Mara have successfully differentiated themselves by consistently delivering fresh, on-trend products and are perceived more chic than others.
• Brands like Max Mara and Mavi have excelled in creating a sense of exclusivity and personal connection with their customers and have the unique code.
• Brands like SHEIN and Adidas have effectively built strong communities by leveraging social media and influencer partnerships.
• Brands like C&A and Fjällräven have successfully differentiated themselves as responsible by promoting fair labor practices and sustainable initiatives.
• Retailers like Amazon and SHEIN have (re)set the tech standard by continuously innovating and integrating new features into their platforms.
• Brands like Wehkamp and Debenhams have distinguished themselves by providing exceptional fulfilment services.
Their secret of success? These retailers have embraced a solid data setup and got under the skin of their consumers. AI works as their trojan horse here; it speeds up how they come up with solutions and makes everything run smoother. Data and AI are at the heart of their differentiation strategy.
How can I turn it on for my brand?
As you reshuffle your priorities for 2025 with differentiation up there in the top slot, here are the steps to follow for success:
1. Identify Your Differentiation Pathway: Begin by exploring the six key differentiation factors. Assess which of these factors align with your brand identity and where you currently perform well or need improvement.
2. Activate and Bring Differentiation to Life: Once you have selected the differentiation factors that make sense for your brand, think about how to activate them. Leverage CRM data, enhance shopper experiences, and implement loyalty programs to ensure your customers feel and experience your unique offerings.
3. Communicate and Market Your Differentiation: Don't just do good—talk about it! Effective communication and marketing are critical elements of any differentiation strategy. Establish and build the right brand perception in the shopper's mind to grow your retail brand in the long term.
4. Focus on Excellence: You cannot win every battle. Differentiation requires focus—it's better to do a few things exceptionally well rather than many things just adequately. Stand for something specific and meaningful to your customers.
Putting differentiation front and centre
At the top of every fashion retailer’s wish list is the ability to smoothly navigate market complexities and seamlessly emerge as trailblazers.
By zeroing in on key differentiation factors, retailers can build strong, differentiated brands that drive repeat purchasing, command premium pricing, and achieve long-term profitable growth. The Google and Kantar report offers a treasure trove of insights on how to identify YOUR differentiation factors, those that align with your brand’s identity.
Claudia Denzel, Director Retail, Google Deutschland commented: "Our research clearly demonstrates that direct-to-consumer business models achieve greater differentiation within the fashion market compared to other business models. In particular, multi-brand and multi-category retailers should view this as a catalyst to strengthen their brand identity and communication."
Never before has the data been more compelling: as we move into 2025 and beyond, the mantra for fashion retailers is ‘stand out or fade away’.
