Resilient retailers in the U.K. have been striving to offset economic uncertainty, rising costs, and online competition.
How have they succeeded, and what lessons are there for retailers around the world?
The Differentiation Dividend, a new white paper from Google and Kantar, set out to ask those questions and comes to a crucial conclusion: brand differentiation is the most important driver of long-term sales success, accounting for 57% of future growth.1
Differentiation drives higher prices
“Brand differentiation” is defined as a brand’s ability to set trends. According to Kantar’s research, this factor is the leading driver of pricing power2, the ability to command higher prices based on consumer perceptions.
But British consumers are becoming more price-conscious and less brand-loyal.
- Nearly three-quarters (69%) of U.K. shoppers in our study said they now prioritise price over brand names — 4% more than their global counterparts.3
- Only 28% agree that it’s best to buy well-known brands for quality.4
- Brand switching is commonplace, with 50% of shoppers now trialling a new retailer.5
To win these customers, many retailers have slashed prices. But competing on price is a tactic with its own costs.
- In the past two years, 62% of U.K. retailers have failed to add distinguishing factors while, for 38%, differentiation actually diminished.6
- Total brand value of the U.K.’s top 10 retailers declined by 20% in one year alone, due partly to discounting.7
Homogeneity hurts retail brands — but that trend is not inevitable.
3 priorities for retail growth
Our white paper highlights three ways unlocking the differentiation dividend can reverse brand decline.
1. Align price with value perception
Differentiation starts with understanding your true value. One-third of U.K. retailers are currently misaligned with their pricing, either charging too much or not enough for what they offer.8
That’s why brands need to analyse pricing relative to competitors and customer perception. The aim is to establish — or often re-establish — a clear value proposition that justifies your price point and distinguishes your brand.
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It’s not all about cost, however. Malcolm Pinkerton, global head of retail insights at Kantar explains: “Value-seeking goes past price and promotions. Consumers want lifetime value through convenience, experiences, a sense of purpose, and alignment to their personal values.”
Once you’ve aligned on your value proposition, communicate it to engage customers across all relevant touchpoints, both offline and online.
2. Win the short term with salience
The most important driver of short-term sales? Not price, but salience. Our research found that being prominent, noticeable, and relevant to shoppers’ concerns accounts for most short-term growth, 48%,9 while salience can also build brand equity for the long term.
“Value-seeking goes past price and promotions.”
— Malcolm Pinkerton, global head of retail insights at Kantar
Capture consumer attention by being discoverable and accessible on digital platforms, where 71% of U.K. shoppers conduct extensive online research before purchasing.10
With consumer demand unpredictable, and paths to purchase more complex than ever, AI-optimised advertising can dial ad exposure up or down to meet predicted customer demand, while first-party customer data can help a retailer reconnect with high-value customers.
3. Stand out from the crowd
There is a clear link between brand strength and pricing power, with strong brands consistently commanding prices up to twice those of weaker brands.11
Our study examined best practices from leading U.K. brands, identifying the five components of differentiation:
- Be distinct: Form an identity with a differentiated look and feel, whether in ads, products, or services.
- Be unique: Offer something truly different — perhaps a specialised niche or exclusivity.
- Be advanced: Use technology and data to enhance the customer experience.
- Be disruptive: Challenge the status quo by offering new methods and models.
- Be purposeful: Stand for something bigger than profit.
Evaluate what sets your brand apart using these five lenses. “Remaining relevant requires harmonising every touchpoint to instantly convert demand created at any point along the path to purchase,” says Kantar’s Malcolm Pinkerton.
Win staying power in 2025
Just when retailers most need to show up and stand out, they risk being pulled into a murky middle ground of sameness, undermining long-term brand equity.
However, our research, coupled with tentative signs of economic stabilisation, offers grounds for optimism.
Rapid advancements in technology are equipping marketers to meet these challenges head-on in 2025 and set themselves apart from the competition. While consumer journeys have become more complex, new AI tools are now available to ensure retailers are visible during key moments of discovery and decision-making.
When these are combined with human ingenuity, retailers can win the short term while building distinctive brands with real staying power.