Are supermarkets digitally disconnected from retailing reality?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
It’s hard to find a CEO who isn’t apologizing to Wall Street for training shoppers to buy only on deal and spending trade money foolishly. But what improvements do they have in mind? Like our presidential candidates, they’re short on details.
I asked a friend who just retired from a major chain about this. He said, “First, larger companies want to really ‘partner’ with the retailer and build promotion programs that the retailer commits to. This was an effort I was involved with at (Retailer X) since 2009. Each year it got better and the larger companies really made an effort to build programs that were around strategies that were important to us. There were mixed results but everyone thought that this was worth the effort.
“Second, for the last five years manufacturers of all sizes have been trying to figure out how to tap into social media to promote their products. The technology is changing much faster than the typical ‘annual planning’ that companies are tied to. There are many efforts to understand the ‘cost per impression,’ more efforts to understand the ‘cost to act,’ and these are driving major reallocations for manufacturers away from traditional promotional spends such as FSIs.”
My gut tells me that the sexiness (and opaqueness) of digital is making it the untouchable darling of many companies.
Food Marketing Institute’s “Financial and Strategic Initiatives in Food Retailing” study from earlier this year showed 59 percent of retailers plan to increase their spending in “omni-channel strategy and technology” in 2016 and 2017. That’s higher than “expansion of top-line growth” (53 percent) and “data security and privacy” (50 percent).
But now let’s look at what retailers said about their top three strategies for driving top-line growth in 2016 and 2017. Making the list of the top three were, in order: “store/product innovation” (65 percent); “pricing and promotion strategies” (50 percent); and “new merchandising strategies” (41 percent). To me, that’s a bit of a disconnect.
Hey, I recognize that digital is going to become a bigger part of everyone’s strategy. But, as the saying goes, “Be careful out there.”
DISCUSSION QUESTIONS: Are grocers in danger of losing focus of what’s most important to consumers as they push their digital agendas? Do you think chains are investing too little or too much when it comes to digital marketing versus traditional methods such as FSI’s, in-store signage, etc.?