BrainTrust Query: How do we break the retailer/manufacturer impasse on effective In-Store Marketing?
By Ben Ball, Vice President, Dechert-Hampe
The importance of reaching consumers at the point of sale has grown dramatically in today’s era of fragmented media messages, disappearing channel differentiation and seemingly endless consumer choice. With consumers able to buy bread in Walgreen’s just as readily as in Wegmans, grabbing the consumer’s attention whenever and wherever they shop is critical.
The industry is addressing this emerging issue in numerous forums, one of them being this week’s “Shopper Insights in Action” conference in Chicago, where the focus will be on how to generate and implement better shopper learning. Most parties seem to agree that improved in-store execution and generating more actionable consumer insights are critical for success.
But a recent survey probing the state of In-Store Marketing for the industry reveals that major barriers to successful implementation remain. This nationwide survey of retailers, manufacturers and third party service providers, conducted by Dechert-Hampe & Co., found significant disagreements between retailers and manufacturers as to what is holding the industry back in this area.
Specifically, manufacturers feel that retailers’ tight control of the in-store environment is limiting and that sparse data for measurement of effectiveness impedes their ability to build enthusiasm for these efforts internally. Retailers say manufacturers don’t have many new insights into how to turn consumers on – particularly in THEIR stores – and have few innovative ideas as a result.
Discussion Question: What needs to be done to break the seeming industry impasse on more effective In-Store Marketing? Does the answer lie in more data?
To learn about and participate in the 2006 In-Store Leadership Survey, conducted by Dechert-Hampe & Co. and Grocery Headquarters magazine, go to www.instoreleadership.com
How much data? Which data? Who is responsible for turning the data into information? Competition is difficult. Differentiating yourself is a real challenge in a competitive market. The most important factor is knowing your consumers – which comes back to the questions listed above. Everyone is responsible. Stores need to turn scanner data into information for their store. Chains need to turn scanner data from individual stores into identifiable patterns. Manufacturers need to merge scanner data from their partners with additional marketing research data collected by or commissioned by their company. Marketing research firms needs to identify trends that emerge within the general population. In addition, scanner and survey data provides specific information about consumers but doesn’t provide the whole picture. More and more companies are investigating in ethnographic research to determine how consumers use products and how they shop. Is this expensive? Yes. Is it time consuming? Yes. Is there a shortcut? No.
Here’s radical – stop bombarding the poor customers. Too much information overload. Way too much space, too many products, too much advertising and promotion, too much noise. People have so come to expect a certain atmosphere when shopping that they just turn off sight and sound. Give the folks a break. Let them think and browse and take in what they see. Slow down.
Good Heavens Folks! Has anyone here actually been in a Retail outlet, like a grocery store, or mass merchandiser? Anecdotal experiences, second hand from wives do not count.
This is way too esoteric to be effective. The deltas between Manufacturers and Retailers on promotional effectiveness exist because we have altered the original intent. Promotion, once viewed as a way of attracting customers, is a revenue generator for Retailers. Manufacturers use promotion to force product or line extensions that the public doesn’t want.
A previous contributor suggested, “Knowing what people do isn’t as important as understanding why they do it.” Will we ever know why shoppers do what they do? We’re human. We’re irrational. We’re complex. And, fortunately we’re constantly learning, experimenting, and adapting.
Building strategy around the illusion of knowing why shoppers do what they do may be good fodder for consultants and authors, but not necessarily the basis for building a sustainable business. Likewise, building strategy around a customer database of shopper history provides limited insight if the customer’s needs are masked by constant manipulations of promotional gimmickry every week. Following the trail of POS data takes us straight to Pareto’s Principle. No passing Go. No collecting $200. No need for a 100,000 square foot store. No need for many banners.
What needs to be done? Honor the shopper, cut the clutter, and a little less push and a lot more pull. Interactivity has always been an essential ingredient in effective marketing. Ideally, human interactivity of the old-fashioned kind; vendors, owners and staff taking a sincere interest in what a customer is looking for or thinking about and assisting them when needed. If old-fashioned human interactivity is too expensive to execute, interactive digital technology can assist. Interactive technology, used intelligently, placed strategically, and designed to help customers find the solutions they are looking for, can open a door to understanding the complexity behind effective in-store marketing.
Of course retailers want effective one-to-one marketing interaction with their in-store shoppers. But their self-service oriented stores present so many barriers that major re-engineering will be needed.
Start with identifying the customer when (or before) they arrive at the store. Point of sale messages are far too late to influence the in-store experience. Email appointments would work for most shoppers. But retailers usually don’t provide email accounts to their employees. Speaking of employees, what incentive do they have capture customer information and adapt to messaging?
Shopper-facing kiosks are a good idea if they are stocked with enough relevant coupons and offers. At some Container Stores, shoppers are issued a hand held scanner that they use while in the store. Instant messaging applications would be great in some formats.
Key pieces of infrastructure are required behind these customer-facing technologies. Start with a customer database with shopper history; align your web-store with the in-store messaging; share customer aggregate information with your vendors in a vendor portal; gain insights into customer response with a business intelligence system.
Without infrastructure and store re-engineering, one to one messaging will never work on a consistent basis.
From my experience, both the retailers and the manufacturers have valid points. They are both falling down in specific areas. What’s perplexing is why it’s so hard for them to come together to find solutions based on the only thing that matters — the shopper.
Better customer insights, open communications and true data sharing are key to the success of Marketing at Retail. As previous topics have discussed, so is the integration of Merchandising and Marketing best practices. However, nothing is more important than what we DO with the data and consumer-facing activities. Who cares what’s behind the executional aspects of these activities if it’s not making an experiential difference to the consumer?
I agree with Mark…it all comes from the top. The middle management of all involved at Marketing at Retail will “fall in” when they are given expectations that will are accountable to. Otherwise, infighting and politics are likely be the norm. Regardless, a wonderful opportunity exists for a leader brand to set the bar.
No, the problem isn’t the amount of data, it’s the quality of the data. We have too much of the wrong stuff. We keep measuring the forced choice of a declining consumer cohort (i.e. people who shop in supermarkets) and confusing the results with the cohort of “All Consumers.” What we really need is an ethnographic omnibus study of shopper behavior. Why ethnographic? Because knowing what people do isn’t as important as understanding why they do it. Why omnibus? Because we need to understand consumer behavior as it actually plays out, not through the artificial lens of channel filters. Will we do it? I doubt it. We’re happier operating without the answers than we would be changing in response to the truth. One more thing — we aren’t looking for “actionable consumer insights.” Actionable means capable of being litigated, nothing more or less.
Partnerships work best when each partner can pull its own weight. It isn’t a partnership when one partner can’t be relied upon. Page 4 of the GHQ/DHC summary clearly shows that retailers and manufacturers agree: the #1 “Major Barrier” is in-store execution. Page 3 shows the in-store marketing leaders. No one is likely to be surprised at the results: the best-managed chains are the best leaders.
Breaking the industry impasse in In-Store Marketing is very important to retailers, manufactures and the third party service providers. In today’s world, consumers are inundated with advertising and marketing messages. In prior years, when there were only three major television networks and considerably fewer newspapers, manufactures were able to target their marketing dollars directly at the consumers they wanted to reach. However, today we have over 500 television networks and multiple newspapers even in the smallest communities. This is compounded by manufacturers that are developing new products much faster than retailers can find the shelf space to display them, and consumers are overwhelmed with making informed purchasing decisions.
What consumers need is better and more focused information and the use of In-Store Digital Marketing Networks can greatly assist in delivering these messages, whether on specific products, or corporate brands. However the dilemma is, who’s in control of the messaging and how it’s delivered, along with who’s paying for it and how is it implemented and managed, thus making all parties involved happy?
In order to do this, there needs to be better education as to the tools and devices available to deliver these messages, along with messaging that is developed specifically for these In-Store Digital Marketing networks. In addition, retailers, manufacturers and the third party service providers have to communicate, and to develop standards, along with agreement on expected results. Many of the systems retailers currently have installed can provide the data necessary to measure the success of the In-Store Marketing systems; however the cooperation necessary to collect this data and to turn it into useful information isn’t always available.
To move forward and solve these problems, third party service providers must take control of bringing the retailers and manufacturers together, and to educate them as to the anticipated results and benefits for both the manufactures and retailers. Standards, constructive communication, cooperation and mutually agreed upon results and benefits are required to make In-Store Networks successful for all, especially the consumer.
We don’t need any more data other than to prove in-store marketing works more effectively than other forms of marketing. What we really need is better execution of the in-store marketing programs already in place. Retailers love to talk about their ability to execute programs at retail, yet rarely does an in-store marketing program ever come off in every store. The reasons for poor execution are endless and that’s where everyone needs to focus their attention. If we could merely get every store to execute every in-store marketing program at their fullest the incremental sales would be significant. Long-term, this would improve the ROI of in-store marketing programs even more which in turn would open the door for the development and execution of even better in-store programs.
I don’t want to get too specific here, but I pretty much dissent from the trend of comments here. To me, it is shocking how little the “experts” really know about in-store shopping. For example, even though demonstrably 80% of a shoppers time is NOT spent evaluating and acquiring products, most of the industry largely ignores that 80% of time. One practical consequence of this fact is that the odds are, in any aisle, most of the shoppers are there simply because it was a convenient way to get from point A to point B, and had NOTHING to do with the merchandise in the aisle. This is NOT background noise as one researcher told me, this IS the shopping experience. And what is point A and point B. Point B is most often the checkout, since A SINGLE ITEM IS THE MOST COMMON PURCHASE IN ANY SUPERMARKET!!! (Averages seriously distort the totally non-normal statistical distribution.)
What is the point of massive “studies” if they don’t address actual behavior in actual stores? From my perspective, it’s just a recounting of the angels on the head of the pin. What is needed is the knowledge of millions of shopping trips, on a second by second basis (visits-shops-purchases), across dozens of stores, many channels and formats. We have that information, and it slaughters so many sacred cows that the response is often, huh? No way! OK, but in the land of the blind the one eyed man is king. (At least in his own mind. :>)
(BTW, I’m co-presenting with Tim Cano of BI-LO on in-store media at the Shopper Insights conference this week.)
Ryan and Herb are addressing two aspects of the same issue, I think, which is worth re-emphasizing here. We know far less than we like to think we know about what goes through the minds of our valued shoppers. Both in-store and out-of-store behavior can be better understood. Choices within channels and choices between channels both matter, and their interrelationships are intricate and complex.
Gaining better insights requires the concerted efforts of retailers, brand marketers, and enlightened third parties who possess the vision and know-how to divine relevant answers. Information must be systematically captured, and it must flow – to decision makers at every level of every organization, as appropriate to the role and authority of each.
Brand and account managers and retail category and operations managers don’t sit high enough in the pyramid to advance this kind of initiative. Being category expert remains necessary, but it is increasingly insufficient. The ongoing pursuit of real insight is a strategic imperative that must be recognized and required at the very highest level. It’s up to you, boss.
In our business, interactive digital signage and in-store interactive kiosks, we see the results of this melee daily. We often confuse data with information. Due to the overwhelming number of marketing choices available to retailers today, and the fluidity of today’s consumer landscape, many decisions are simply not made instead of analyzing options and choosing a direction which incorporates some flexibility. I’m not sure if we are paralyzed with fear due to world events and the economy, or if we are hoping to see where the market is heading so as not to make a costly mistake. Leading edge does not have to be bleeding edge.
Why are we forgetting today’s shoppers are not like their parents or grandparents? Has the supermarket changed any of its tactical approaches to today’s shoppers? Shall we be kind and say Grocers are price, and price ads oriented? Ain’t working with the shoppers who want high margin foods, and products with service!!!!!!
The answer is very close to NO, if not an emphatic NO, that retailers have not used marketing! Shoppers have alternatives, little time, and refuse to shop the aisles or spend a lot of time in the supermarket.
So the issue is: getting them to shop in your stores! Not what to do with them, as you assume they are regularly patronizing your supermarket.
Why is it so hard to understand shoppers are in a demanding period of knowledge and communication? Outside the four walls, retailers must present an advertising campaign that tells these generations why the supermarkets are special – not price reductions – and what is new.
As a Baby Boomers, who are willing to pay for service, the industry better note our generation is the wealthiest and largest, and better be served as desired. The X and Y’ers aren’t going to put up with waiting for service, or checking out. No wonder, these two generations spend 40% of their disposable food dollars outside of the supermarket.
Sadly, our supermarkets are still merchandising to our parents and grandparents. The need for service, engagement, and communication of why the retailer is different or has newness to offer is apparent.
Or, you all can fight for the Wal-Mart, old Food Lion, Albertsons, Safeway, and some Kroger unit shoppers who have just enough money to support their daily, if not weekly, food needs. Have fun.
We have plenty of data from consumers, mostly worthless in regards to this issue. Shoppers are not thinking much about the store, so asking them to tell us more of what they want is unlikely to be productive in regards to in-store marketing. How about putting the focus for in-store marketing back where it belongs – on the retailers and, maybe, the manufacturers. If Wegmans is losing bread sales to Walgreens (to steal the opening example), Wegmans is not doing something as right as Walgreens and it’s Wegmans’ job to figure out what else to do.