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[23 comments]

Useful consumer insights, anybody?

March 24, 2014

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine

Are vendor's "insights" too biased to serve much use for retailers?

Says one major retailer: "There are two sides to every story, but I feel like we aren't getting much in the way of useful consumer information from vendors. There's no added value. Vendors of course are trying to sell cases, and so are we. But you often get such slanted presentations that it's not helpful. I'm not saying they're lying necessarily, but if we want to get a feel for category performance trends, we'll get presentations from three or four vendors."

"We figure if we listen to three or four versions of 'the truth,' the real truth is more likely to come out. Vendors should be a good steward of the retailer's time and effort, and make solid recommendations backed up with real numbers. Sometimes it takes a lot to follow their stories, and you feel like, 'Come on, now. We're just talking about one category, and one line. It shouldn't be all that complicated.'"

The lack of useful consumer insights is one of the most consistent criticisms retailers have about their vendor partners. Piles of data on consumer demographics and buying habits rarely seem to add up to a credible plan for action, they say.

"Vendors seem to think it's necessary to recite a pile of BS to us, and then when our eyes glaze over, they slip out the order blank," said another frustrated buyer. "They don't research our stores or our strategies to come up with meaningful tactics.

Well, I've been hearing this for many years.

For their part, vendors tell me that retailers expect them to be psychic, and remove all risk by giving them winning plays that are guaranteed to score. Both sides agree that "figures can lie, and liars can figure."

The most common complaint? Bar charts that are out of alignment, skewing results in the manufacturer's favor. So allow me to recommend "How to Lie with Statistics," by Darrell Huff.

A couple of buyers told me the best-selling book has helped them detect what I call "nonsense boiled in vegetable oil" in some vendors' presentations. When I checked, you could get it for under $3 on Amazon.

Discussion Questions:

Are retailers expecting too much around vendor insights? Is there a way both sides can work toward coming up with objective insights?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Who is more at fault for lack of credibility in vendor presentations?

Comments:

The dream of category management was that everyone would go merrily skipping down the CM path to greater sales and profits. Instead, CM turned into vendors doing the retailer's work, often with little benefit. I once asked, at an ESOMAR conference, how many people had ever calculated the ROI on category management. Two (out of the hundred or so vendors there) had, and it wasn't pretty. So the retailer might want to spend their own money to improve their own business.

That said, vendors bringing in non-insights could choose to not waste everyone's time. Those vendors who do bring real insights to the game should stand out and the retailer should reward them for doing so.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

If retailers are so focused on getting the numbers right so they can increase sales, why don't they look at their own data and crunch their own numbers? Wait, that costs money, money that they can't get manufacturers to reimburse. Most retailers, particularly large ones, have mountains of data at their disposal, yet few spend the time or money necessary to extract good conclusions. Can you really blame manufacturers for using the numbers that will put their products on top? This is one instance where if you really want something done right, do it yourself.

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Max Goldberg, President, Max Goldberg & Associates

This article suggests one or two scenarios are playing out among those quotes: either the retailer isn't offering or providing detailed data about supplier product movement and/or the supplier lacks the "right" analytics foundation. Is it an indictment of the way most suppliers analyze their sales today using proxy insight from syndicated data providers? Sounds like it. There should be some agreement before these meetings as to mutual goals, as specific as possible. It seems cliche to say retailer/supplier collaboration is based on who can get the upper hand, but that seems to rule the day now as much as ever.

Another dimension here with respect to the analytics foundation is that suppliers have a chance to understand shopper behavior using more than just sales data. There are direct connections enabled via digital channels that can yield very detailed, individual and geographically aligned profiles that support store-specific analysis and actions. When done at scale, this level of action-oriented insight isn't ambiguous or confusing.

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Gib Bassett, Global Program Director for Consumer Goods, Teradata Corp.

One reason why retailers don't trust vendors is because vendors don't trust retailers. This has always been an acrimonious relationship. Retailers never want to share valued insights with their vendors. Vendors want to feature and move their specific item(s) where the retailer simply wants to move stuff. All this is maneuvering, while the retailer wants to extract unallocated and unaccounted marketing dollars from their vendors - asking the vendors to "trust" them with their marketing funds. The vendors know that a significant portion of their funds are dropping directly to the bottom line of the retailer's profits.

Vendors want their marketing funds to be used to promote, advertise, and merchandise their products - not be dropped into the retailer's general fund. It's difficult to establish any mutual trust in this environment. That being said, while this "tug-of-war" continues, the digitally empowered shopper marches on and by the feuding parties. Retailers and vendors that can work collaboratively will both benefit in today's shopper landscape. Which relationships will rise above the fray?

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

The retailer's criticism of analyses provided by a vendor actually are often quite well-founded. After all, the vendor obviously has an agenda that is different from the retailer's. This doesn't mean that the vendor's statistics lie, it often means that these statistics are applied to answer only those questions that the vendor wishes to answer, or can answer.

One example of answering only the questions that the vendor wants answered, or can answer, arises in promotional modeling. When promotions on the vendor's brand are modeled, often huge sales uplifts for products in the brand are shown. But the retailer needs to know if the uplift comes at the expense of other items in the category. That is, is the uplift due to the promotion true incremental, or is it steal from other category items, which might translate to a reduction in retailer margin.

The quote in the article "We're just talking about one category, and one line. It shouldn't be all that complicated" is symptomatic of the problem. And that problem is, that vendors often model only one line, their own. This generally is the case because the vendor lacks that data to have visibility to the entire category. Even if the vendor wanted to report the whole picture, it lacks the data visibility to do so. Collaborative promotional tools are required to allow the vendor and retailer to work together on such modeling. Such tools must give the vendors and retailers full category visibility, while protecting sensitive data that the retailer would not want shared with each given vendor in question. Such tools are today beginning to emerge, and will soon be at the forefront of vendor-retailer collaborations.

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Dr. Paul Helman, Chief Science Officer, KSS Retail

This topic was discussed at the IRI Summit and one company in particular is doing this correctly. ConAgra, under the leadership of Bob Nolan and his category and shopper insights team, is looking at the whole category or occasion, in their latest initiative, breakfast. They spent a great deal of time and effort in truly understanding this meal occasion and how it looks different on weekdays vs. weekends.

They looked at a lot of data to truly understand consumers' need states and brought it all back to the how the retailer could benefit in a very actionable way. They did not put their own products first. Yes, of course, they wanted to sell ConAgra products, but it was more important to go to their retail partners with well thought out consumer insights that were actionable! In fact, it was stated that some of the sales people were not getting this immediately and wanted to know what they were selling. "We are not necessarily going to the retailer to "sell" them anything. They were going to work with their retailer on a plan that helps to grow the category and it would most likely include products that are Con Agra products, other manufacturers products and perhaps the retailer's private label brands.

There are many points that I am leaving out from this session that I attended, but the main point is that manufacturers have to look at bringing their retail partners well thought out insights from the mounds of data they collect and analyze that lead to action. This is not easy and takes resources to accomplish, but the manufacturers that take the time and not make it just about selling more cases, will end up selling more cases in the long term because the retailer will trust them.

When someone asked Bob what are we selling, Bob told him that we are selling trust.

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Zel Bianco, President, founder and CEO, Interactive Edge

As a vendor of retail technology and analytics I say, no! It is not too much to ask vendors to clearly state the problem/pain their solution is addressing and the solution they are proposing.

Some technology vendors come up with a cool solution and then look for a problem to solve. They literally throw it at the big retail wall and see what sticks!

However, the business of in-store customer insights and the technology providing the insights is new for the most part. This newness means that a lot of the pain points are news to the retailer. The vendor is suddenly in the position to prove the pain!

Retailers need to remember that; all retailers are customers, but not all customers are retailers. When engaging vendors who provide customer insights and solutions to customer pain points, retailers need to enter the discussion as a customer not a retailer. They will be more likely to relate to the problem and be able to understand the solution.

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Marge Laney, President, Alert Technologies, Inc.

There's a huge difference between "information" and "wisdom." It's the later we're missing.

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Ian Percy, President, The Ian Percy Corporation

Want fair vendor insights? Fine, but retailers need to remember that insights have a cost and your go-to supplier in a category needs to be rewarded for their efforts. Bottom line, in product selection and promotion, the go-to supplier needs to win all jump ball situations, and be rewarded with a few extra promotions. Yup, that might not be perfect category management, but it is a fair reality when asking a supplier to spend its resources on your company's business.

Give the supplier faith in sales upside, and better insights will follow.

Tim Cote, VP of Marketing, Plaid Pantry

It would seem to me that the best of both worlds would be the vendor coming in with insights into how different customer groups or segments respond differently to their products and messages, and the retailers would then apply how many of each shopper segment they actually have, thus being able to do together what the two of them would not have enough information to do separately. Vendor = big picture. Retailer = specific application. Otherwise, what the retailer is saying is that the only value they bring to the equation is in the store, chiefly, turning on the lights and unlocking the door every morning.

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Nikki Baird, Managing Partner, RSR Research

Retailers are not expecting too much. Zel's point about Bob Nolan's perspective is accurate. It IS about trust. And for trust to occur, there are two sides - the one who trusts, and the other who behaves and is perceived as being "trustworthy."

If manufacturers or retailers don't behave in a trustworthy way, is it any surprise that trust is not offered? As for how to come up with objective insights - the key is to define what is in it for each party to do so. Then work on determining standards, parameters, content, etc. That is the easier part once the relationships are strengthened. What passes for relationships now is still far too transactional.

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David Zahn, Owner, ZAHN Consulting, LLC

On the one side, retailers are all too eager to take vendors' money for displays, marketing and promoters on the floor. On the other hand retailers rarely want to hear about mystery shops or other consumer surveys that provide objective insights regarding the quality of consumer experience, or lack there of in-store.

On the other side, vendors are typically desperate to make sales numbers, so they habitually pour in buckets of money to increase sales of their products. They rarely have enough time, or money to invest in objectively studying what happens to overall consumer experience in store.

The result is a clash on what moves sales ... no insight on consumer experience.

It's not as hard as many think it is ... consumers are more than willing to share their insights and experiences. (They already share a LOT on social media!)

Retailers and vendors need to agree on a systematic, ongoing JOINT process for collecting feedback from consumers, not just a token survey at quarter end.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Retailers and vendors need to have one-on-one conversations with customers and listen intensely to what they have to say.

Start with these five questions:

1. What makes __________ (your product or service) different and better?

2. What steps do you (or the customer) go through in the evaluation and buying process?

3. What should __________ (your company) do to improve their product or service?

4. What should _________ (your company) do to build a better relationship with you?

5. What have I failed to ask that you think we need to know in order to __________ (objective of the research)

These are not the only questions to ask, but they're a great place to start.

Always ask follow-up questions, and ask respondents to tell you more about a specific situation.

I find respondents typically take a few minutes to "warm" to you and tell you what's really on their minds rather than telling you what they think you want to hear.

By listening intensely, you will gather invaluable insights.

Tom Smith, Principal, Insights From Analytics

Zell's got it - the research began first with a question regarding understanding the nature of how people engage with their product - they studied the meal occasion. Most people don't know to ask the basic question, they don't live with a problem, they don't do the hard work of peeling away the layers of the onion to synthesize and deliver simple truths. It takes 100s of insights to get to the truth...and perseverance.

Vahe Katros, Consultant, Plan B

Both sides can work together, but unfortunately the time and cost is high and in many instances if either side does not like the outcome the plan is adjusted or scrapped. The retailers using their own insights have the best opportunity to make advanced category management and consumer insights work. The big national chains are working to do that. At that point we may well see vendors going directly to consumers, especially when the retailer data points to store brands as the growth opportunity. The battle will continue, but the playing field is changing!

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Retailers need to do their own homework on what items they need to cut into their sections, before vendors try to hustle their goods. I look at seasonal items on deal to push, and products that offer real value, such as bonus packs, limited edition flavors, and unique private label items as well.

It is a tough game of picking what is right for your store, so plan ahead, and read up on the new items available from your trade magazines and online information, which helps out quite a bit.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Ironically (given the title), this article provides the readers no insights whatsoever. It merely describes a "problem" that has always existed and will still be around decades from now. It all boils down to the differing agendas of retailers and vendors.

That said, there are individual vendor/retailers relationships that do exist today that are quite good, with a relatively high level of trust and collaboration between the two parties. For both the vendor and the retailer, it all comes down to a strategic choice to collaborate toward achieving greater velocity out the front door of the store. Unfortunately, there is generally too much distrust on both sides for this practice to ever be widespread. But it can and does happen. Strategically speaking, achieving this state with a vendor or retailer requires finding those situations when and where focusing on achieving common goals accrues to the benefits of both parties. Most frequently, however, the barriers to even thinking about moving in that direction (let alone moving) come from from the retailer side (in my experience).

In short, those vendors and retailers who strategically choose to figure out how to tango can (and often do) build competitively advantaged market positions. But there simply are not enough relationships which can allow that state to be achieved.

Kevin Price, President, The Market Performance Group, Inc.

If one chooses to deal with reality, then we must take into account that there exists the probability of countless opinions relative or not about everything and anything. Truth stands directly opposite of any an all opinions, regardless of the opinion's author and his or her credentials.

As for merchandise, the truth is it is selling to accepted profit levels or it is not. The "if not, why not" arguments are a total waste of time. The need is to review the market plan against the results and determine if the sales result was due to product failure and/or communication failure and to apply any newly discovered procedural or product information quickly and as a running work in process for the development of all future product and selling process documentation. This plan will simultaneously disclose shortfalls in the management membership and corporate marketing plans with related costs supporting a recommendation of improvement or replacement whichever is least time consuming and most cost effective. Communication with regards to position or opinion only serves to add additional profit losses to the burden of a losing product or plan, and should simply be avoided.

'gjarnoldjr'

Expectations are understandable. It's the delivery that matters. Does anyone remember the word "collaboration"? Both CPG brands and retailers are looking for the same thing: MOVE MORE PRODUCT. Sure, there are some great technologies available today to help gain insights. However, actionable insights need to come from unadulterated data analyses...both retail and manufacturer data. Since there are still thousands of merchants around the country, let alone the millions around the world, collaborative data insights efforts need to be replicated as more M&A activity occurs. Data integrity is yet another issue here, however that is for another day....

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

When it comes to loyalty, vendor and retailer relationships have been slightly strained, with each pushing for more benefit from the other. Retailers want vendors to fund more product promotions, and vendors want greater access to the retailer's data banks of transaction-specific data. Loyalty programs can help to bring the two participants closer together.

This excerpted COLLOQUY article features three tips to maximize returns for BOTH retailers and vendors....

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Bryan Pearson, President and CEO, LoyaltyOne

Panelists have provided many good comments to improve the quality of insights provided, and yes it will take new efforts to bring the benefits. The level of collaboration required may be complex for some retailers - timely solid data is essential, using common metrics and an understanding on both sides of the costs involved to develop this information. Going forward, there may be a broader understanding of the value of these insights for both parties, and a mutually developed game plan to deliver them.

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Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Everyone is asking too much if they think they will get from traditionally generated "shopper insights" to profitable actions. The best they can get to is data-driven hypotheses (i.e, ideas) for action, and the best retailers will take those ideas from all directions. Then, they will test. And the best will test in partnership with vendors so that they can all learn and act together.

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Jonathan Marek, Senior Vice President, Applied Predictive Technologies

As a long-time analytics guy, I keep a copy of "How to Lie with Statistics," mentioned in the article, on my shelf. It's an amusing take on using numbers to tell a story.

And that's exactly what vendors do when they create a presentation for a retailer. No matter how objective the category management approach is meant to be, it's impossible for a vendor to be completely objective about his own categories. The most common way to spin numbers is by carefully including or excluding points of information. Not lying exactly... but not telling the whole story.

Retailers really should expect this. But so many of them rely on vendors to do their routine analysis because they don't have sufficient resources in-house. When that changes, as it has with some of the leading retailers, this dynamic will be radically different.

Scott Sanders, Director of CPG Analytics, Pivotstream

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