CPGmatters: Welch’s Focuses on Shoppers to Increase Category, Brand Sales

Discussion
May 26, 2009
John Karolefski

By John Karolefski

Through
a special arrangement, presented here for discussion is an excerpt of a
current article from the monthly e-zine, CPGmatters.

Welch’s is leveraging
shopper insights to drive category revenue for retail partners for its
assortment of jams and jellies. For example, Welch’s can help the retailer
convert existing shoppers who shop the category in other chains. In addition,
it can increase the “buy rate” of existing category buyers in
the retailer’s stores.

To facilitate the process
and obtain insights, Welch’s relies on a program from IRI called Shopper
Insight Explorer. 

“The Shopper Insight
Explorer program is an easy way to look at the leakage,”
said David Moore, business development manager at Welch’s, in a presentation
at a CPG summit hosted by Information Resources, Inc. (IRI) recently in Las
Vegas.
“For each category you look at, to what degree is my retailer attracting
a shopper in the category, and where are they missing opportunities?  Where
are they attracting the shopper, but the shopper is buying the category elsewhere?”

According to the program,
the retailer in the example captures about 8 percent of U.S. households.
About seven of ten households buy jams and jellies somewhere in the marketplace,
not necessarily at the retailer.

“That’s a pretty
broad household penetration,” said Mr. Moore. “But the question
is: Are they doing well with this shopper? Most retailers can tell you
about what their shopper does when they’re in the store. They don’t really
know what happens when they go outside those walls, and what potential
opportunities [exist] if they were to convert some of those shoppers to
their store.”

According to the analysis,
the retailer was only capturing 13 percent of the total potential shoppers
who buy jams and jellies; in other words, 87 percent of their shoppers
who buy jams and jellies bought them outside of the account.

“I want to know
why,” said Mr. Moore. “That’s a big shopper opportunity. It’s
a great jumping off point, a leakage tree. Well, this retailer and I decided
we’re going to focus on getting new shoppers into the store to buy this
category.”

When looking at the attributes
that this shopper prefers, Moore found that this retailer had only one
of the key package types – jars. They didn’t carry any of the squeezable
packages.

“We looked at the
demographics of the squeeze shopper versus the demographics of the jar
shopper,” he said. “We discovered that the squeeze shopper is
a unique shopper. It is more affluent and from a slightly younger and smaller
household, which is exactly the target this account wanted to attract.”

In the 26 weeks prior
Welch’s bringing in new product, the category was about $3 million in sales
and was flat in terms of growth. Welch’s was able to achieve category growth
of 29 percent. The non-Welch’s products grew 22 percent.  

“This was going
to be incremental to the category growth and it was,” he said.
“It brought in new shoppers and grew category usage. Overall, it’s a
win-win for the shopper, for us, and for the retailer.”

Discussion Question:
What does shopper analysis tell you about why customers aren’t shopping
a store for a certain category? What doesn’t it reveal? What are the
overall challenges in analyzing and understanding why a customer shops
competitors for certain categories?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

11 Comments on "CPGmatters: Welch’s Focuses on Shoppers to Increase Category, Brand Sales"


Sort by:   newest | oldest | most voted
Dr. Stephen Needel
Guest
11 years 11 months ago

Let’s start by being skeptical about 29% category growth, especially attributable to new buyers. That would mean that (a) squeeze bottles are a huge segment of the category and (b) all of a sudden people noticed they were there–people who weren’t buying this category in these stores before.

That said, the syndicated suppliers have been using this data this way ever since the widespread availability of scanner data, comparing chains in a market on brand and product development. This is not a new insight or a particularly new tool, although IRI may have made the navigation of the data simpler. We used to have a different tool–it was called client service.

Joan Treistman
Guest
11 years 11 months ago
The results of the analysis by IRI and Welch’s had a grain of luck in it. Welch’s was not producing the variety (of package type) that some consumers were looking for. It seems to be a clear-cut case of if you don’t have what consumers want, they’ll go somewhere else. But uncovering the missing product to increase sales is not always the solution. The client may have all the SKUs. And so the manufacturer must be ready to dig deeper into consumer behavior, not just in terms of transactions but how the decisions are made in the store. It’s a matter of better understanding how the consumer thinks about the category before going into the store and then observing and examining (eye tracking) shopper behavior in the store. It’s another approach to shopper insights. This is grunt work for some in that you have to roll up your sleeves and be willing to go along with the consumer to grasp their feelings about she experiences to understand how it influences their decisions in that retail… Read more »
Ben Sprecher
Guest
Ben Sprecher
11 years 11 months ago
To truly understand your unrealized sales opportunities, you need data at both the macro and the micro level. At a macro level, market data and analysis from IRI, Nielsen, or any number of consulting firms can help you understand the level of sales you should expect from a particular category given the specific attributes of your chain. And, as described in this example from Welch’s, if there’s an obvious assortment problem, this can help you find and fix it. The far bigger opportunity, however, can be found at the micro level–specifically, in the frequent shopper data. Today, virtually everyone shops multiple retailers, so there will be category voids for most of your shoppers, including many of your best customers. If you can find the shoppers whose overall purchases suggest they should be buying from category X, but whose actual purchases in that category are less than expected, then you can selectively market to those shoppers to try to broaden their baskets. Or, you can use the same analysis to find a set of shoppers to… Read more »
Steve Montgomery
Guest
11 years 11 months ago
I agree with Mr. Needel – a 29% increase? How? Did they add to the total number of SKUs within the category? If so, how many? Did they increase the overall space devoted to these products and thereby change the customers’ perception of the category within the retailer’s stores? How much of the increase was due to the addition of the squeeze bottle SKUs? The implication is it is from new customers entering the store. If so, what happened to total sales? Scan data from an individual chain tells you what customers bought, but not what they might have purchased had the items been carried. Comparing data from different retailers in a market does allow you to gain insight on what they purchased elsewhere, but should not be interpreted to mean that they would have necessarily purchased those items in the same quantities from you. Customer profiles and preferences vary and while this article focuses on specific items it does nothing to address why a customer picked one retailer over another.
Kevin Sterneckert
Guest
11 years 11 months ago
This type of growth may seem incredible, if not impossible to replicate. My research shows that when retailers put the consumer at the center of every decision, they will realize similar results. I’ve led studies that examine SKU duplication and the possibilities associated with elimination of duplication…for example, the typical category can shed 15% of the SKUs (as in actual SKU count) and realize improved sales and profitability. Image what you can do if you take it to the next level with assortment optimization by store. True category localization will deliver sales and profitability that retailers have yet to experience. There is a challenge with this concept. Just exactly is meant when you hear “localized assortments”? To what degree of granularity is associated with a localized assortment? How are the associated processes built in a way that delivers localization but does not require an extreme amount of increased workload on the merchandising staff? These are the questions I am researching and uncovering. It is clear that there is an area that retailers must be careful… Read more »
Jonathan Marek
Guest
11 years 11 months ago

This type of consumer insight analysis is fine, but it misses the critical question: what can I do that truly changes what the consumer buys? Too often, the analysis ends at the point of identifying a fact (affluent shoppers buy more squeeze bottle jams and this particular retailer is targeting that segment). That’s a great start, but so what? What are you going to do about it? I could think of a hundred ideas. Which of those hundred ideas work, for Welch’s and the retailer? Which just shift demand within the category with no benefit to the retailer? Which shift demand between retailers with no real benefit to Welch’s? Which just push margin dollar into the consumer’s pocket without any incremental spend? These are the tough questions.

Gene Hoffman
Guest
Gene Hoffman
11 years 11 months ago

Welch’s doesn’t welsh on facts. But certain facts can have more value to some implementers than others. If the Shopper Insight Explorer process is as effective as projected above, and I have no reason to refute their projections, it will probably become widely used. But if all major CPG companies use it and all major retailers participate, will a win-win sales panacea happen for everyone with sales increasing to new levels? Or will some other condition arise?

Lee Peterson
Guest
11 years 11 months ago

I have a friend in retail who keeps saying, “what’s wrong with retail today is that we’ve got too many scientists involved.” And I agree with him. The IRI research sounds pretty strong, but the caution would be that it replaces actually getting the Welch’s brand managers out there THEMSELVES to listen to and watch customers and associates. There is no substitute for that experience.

Eduardo Castro-Wright, Walmart exec., has a nice interview in the New York Times Business Section this past Sunday, where he talks about the best strategies being derived from talking to customers yourself. I agree with him in that at times, we all try to make retail much harder than it really is. I hope Welch’s is thinking like a customer and not like a scientist. After all, we are all customers, just put that hat on!

Ralph Jacobson
Guest
11 years 11 months ago
Today’s marketplace has become extremely complex, with consumer products companies struggling to gain insight into consumer and customer needs, and to execute their business practices with precision and agility. Increasingly, companies are turning to data analytics as a tool to drive deeper, “right-time” insights, enabling them to quickly and intelligently respond to changing market demands. However, the way many companies are conducting analytics and developing insights today is often inconsistent in quality or is limited to only certain parts of the organization. This may be the case here with Welch’s. The issues companies face begin at the very source with data. With an explosion of available data in the marketplace, consumer products companies are faced with an array of data formats and new data integration and management requirements. However, even as the amount of data available expands, consumer products companies continue to struggle with gaining access to retailer data, which provides a level of granularity not found elsewhere. Historically, consumer products companies have relied primarily on syndicated data sources, providing data in standardized formats, to… Read more »
Michael L. Howatt
Guest
Michael L. Howatt
11 years 11 months ago

I agree with my colleagues that the increase seems implausible, but my question would be, how does this increase in assortment affect related categories such as peanut butter, crackers, etc? Does this change increase overall basket size? Does it increase customer satisfaction? What about the purchase cycle? If the squeezable bottle lasts longer than the jars are they really increasing share of wallet? If the price point is higher than jars are they not purchasing other products in the store to compensate? These are the real questions retailers care about.

Mark Lilien
Guest
11 years 11 months ago

If Shopper Insight Explorer had never been invented, would anyone at Welch’s have noticed that there were no squeeze packages on the grocer’s shelves?

wpDiscuz

Take Our Instant Poll

With today’s technologies, are retailers gaining a good understanding as to why a customer shops competitors for certain categories?

View Results

Loading ... Loading ...