FMI 2010: Shopper Marketing Comes of Age in Grocery Channel
By Ron Margulis, Managing Director, RAM Communications
One of the clear themes
at the Food Marketing Institute’s (FMI) Show last week in Las Vegas was that
shopper marketing is a trend that’s here to stay. While the precise definition
of shopper marketing may be cause for debate, the central tenets are not. They
include, but are not limited to:
- Improving the overall shopping experience, from pre-store through in-store
to post-store;.
- Creating store layouts that align with shopper need states, purchase drivers
and navigational patterns;
- Optimizing SKU rationalization by aligning assortment with shopper-need
states;
- Developing shopper-centric planograms that better drive a path to purchase;
- Create in-store marketing triggers focused on driving impulsivity and incremental
purchases.Â
The technology track at the conference was full of sessions that focused on
the use of new solutions to address the consumer of today and tomorrow, who
is at once time-starved, aging, digitally-enabled, less loyal and wants to
be in control. The solutions focus on the use of mobile/smart phones for pre-store
offers; in-store customer relationship management and loyalty messaging; personalized
self-checkout; and tailored marketing and active loyalty.
The message delivered
by the vendors, manufacturers and consultants presenting at FMI this year is
that retailers need to eliminate shopping hassles or stores will see shoppers
leave. They need to manage national brands and private labels lines so both
can win profitable business by avoiding out-of-stocks, particularly on promoted
items. And they need to optimize pricing and promotions to prevent shopper
disappointment. In general, retailers need to think from the consumer’s view,
which is perhaps the best definition of shopper marketing.
Discussion Questions: How important will shopper insights be for successful
retailing in the next five to 10 years? What specific shopper marketing tactics
do you view as being most crucial for retailers to drive customer engagement
and, ultimately, top line sales?
Shopper insights are critical. That said, the immediate need is for more science in the form of hard, quantifiable shopper information (preferably accompanied by ethnographic insights) on the one hand and a renaissance of the art of visual merchandising on the other.
Since retailers who understand their shoppers have always done well (ok–almost always), then it’s a good guess that understanding your shopper will remain important over the next 5-10 years.
Today’s question contains the untested assumption that improving customer engagement will improve top line sales. Grocery retailers who focus on this will be heading in the wrong direction. Your customers don’t NEED to be engaged. They NEED the products they want in a store that is convenient and is easy to navigate through and gets them out quickly. Those retailers who satisfy the shoppers’ NEEDS will be the winners.
This doesn’t mean ambiance and all the little extras should be ignored – –it means that a focus on shopper marketing tricks is likely to take your eye off the big issue of giving shoppers what they need in a store and giving them a reason to come back.
At RSR, we’ve just finished the analysis and have started writing our annual benchmark on customer programs. From what we’ve seen, the economic environment only hardened retailers’ resolve with regard to customer centricity–there was a huge increase in the number of respondents who regard such initiatives as “strategic” over last year. And even while the survey respondents believe that product movement data yields better insights than customer data, they say they are firmly committed to more targeted and personalized communications with shoppers across all channels.
I think grocers have a bigger challenge than most in bringing insights into the store, though. Not because they don’t have the data–our grocery survey respondents tend to have more individual customer data from over a longer period of time than their peers in other verticals. But other verticals have a much more mature online and overall digital presence, and they are using the insights from those channels, as well as what they’ve learned about what it takes to collect good behavioral data and how to turn that into insights, to address the black hole of behavioral data that is the store. Grocers have long turned to customer intercepts, and videos of shoppers, etc., but I think they are increasingly at a disadvantage compared to other verticals because of the online gap.
I had an opportunity to walk the FMI show floor last week and was impressed with several solutions that should improve the shopping experience and drive top line sales for the retailers.
Two solutions that stuck out (disclosure, I have no affiliation with either company). Why, because they help shoppers save time and money. These are major themes in today’s busy and turbulent world.
Mywebgrocer.com – A solution that allows a shopper to place an order online and then pick it up at the store during a timeframe you select. The store personnel load the groceries in your car when you pull up to special parking out front. I understand ShopRite is using the solution and it is going extremely well.
Shoptext.com – a solution that allows a consumers to request coupons or rebates without ever having to visit a web site. As a retailer it helps understand what advertising is working and ties back into your loyalty data.
These are just two of the many solutions available to help shoppers improve their overall shopping experience and at the same time drive retailer’s loyalty and top-line sales.
It’s hard to believe that anyone would focus on shopper marketing without paying attention to the shopper. But it happens.
Retailers who take the time and use available expertise to understand the purchase decision process, the needs and wants of consumers are way ahead of the competition. The next step is to use the insight to develop marketing tools and in-store strategies that leverage the knowledge.
It may very well be that consumers are getting smarter at a faster pace than the retailer. The options available for all product categories, e.g. food, apparel, music, books, are vast and shoppers know they don’t have to depend on one channel to make their optimum purchase. So watchagunnado retailer? Wider aisles alone are not the answer. Pricing isn’t the magic wand in all categories.
I suggest that retailers focus on making the shopping experience understandable, fast and easy at the point of sale, the shelf or display. Walk in the shoes of your consumer, aka shoppalong’s, and see what happens from their eyes (use eye tracking) and listen to their point of view (in-depth interviewing). Remember, knowledge regarding marketing mistakes float to the surface of the research and don’t leave until the path of least resistance appears and shoppers can do exactly what they came to do…BUY.
Shopper Marketing has clearly arrived as a concept, but it is in danger of being overused by everyone offering a marketing solution that impacts the point of sale.
The foundation of Shopper Marketing is the use of insights to develop solutions that enhance the shopper experience and increase sales and loyalty for the stakeholders.
The emphasize must be placed on developing real insights that provide meaningful value to the process.
Shopper marketing has been discussed for many years. The recession brought the topic to the forefront for many more retailers. This is an important area, needs to be pursued, will have an impact on the shoppers’ experience in the store, and will improve the collaborative discussion between retailers and their partners.
Those principles of Shopper Marketing are not debatable. What is difficult, and debatable, is how to turn them into action. Take “creating store layouts that align with shopper need states, purchase drivers and navigational patterns.” Sure, that sounds right, but what does it mean I go do? How wide are the aisles? Should I have a separate section at the front of store to make convenience purchases easier? What should the signage look like? Etc.
Certainly understanding the shopper need states in great detail is the required starting point. But that only gets me to hypotheses? Boiling down these hypotheses to a few key ideas to test, then testing to understand how real shoppers behave, gets retailers to the actions that truly live up to these principles.
Shopper Marketing can’t be criticized as a concept. Most retailers today are re-focusing their merchandising efforts from a customer-centric viewpoint.
The danger of the definition shared from the FMI show is that grocers seem to be encouraged to be all things to all people, i.e. to solve all challenges in a single swoop.
The article stated that customers are at once “time-starved, aging, digitally-enabled, less loyal and wants to be in control.” That description appears to paint the picture of multiple segments of customers with distinct and prioritized needs. The aging population is less time starved and might be engaged through in-store samples and promotions. This same group may or may not be digitally enabled.
Grocers should be encouraged to install greater discipline in data collection at POS (don’t let the cashier or the person behind you in line swipe your customer club fob for your transaction) and in turn should use this data to drive more personalized offers and promotions.
That approach drives real value for customers and will create the loyalty the grocers are seeking to establish.
It is high time to learn how the shopper behaves in response to every merchandising and marketing execution–not just via shopalongs but through a systematic approach to tracking trips throughout the entire store, across formats, every day. Tracking determines if the shopper was engaged AND if she got what she needed. But that is actually the easy part. The hard part is asking the right questions of retailers and manufacturers to whittle down their most critical issues and then using the data to tell a story with insights, not a pile of useless PPT slides. Ad Age did an admirable job of outlining some ways to do this in its recent Shopper Marketing white paper. (Full disclosure – my company In-Store Insights is featured in the paper.) The more case studies that are out there, the more the industry will see the benefit of integrating these insights into their every day planning processes.
The most important way to significantly increase sales (in our programs–20% to 100% sales lift) is interesting, informative Reasons to Buy messages where and when shoppers make their actual buying decisions while concurrently insuring 90%-100% of messages are installed. This alone doubles sales lift.
I’d like to offer a bit of perspective on what I will call Shopper Marketing I and Shopper Marketing II.
Shopper Marketing I is all about “here is a collection of shoppers, and here is a collection of merchandise. How do we match the shoppers with the merchandise?” This conception of shopper marketing leads to all manner of segmentation of the shoppers–there must be hundreds of schemes to date–and an attempt to match suites of merchandise to each segment, or at least the major ones targeted by the given merchandiser.
Shopper Marketing II is all about “given the final facts revealed at the checkout–this is exactly what has been sold–what is the exact behavior in the store, by the shoppers, that led to these purchases.” This conception of shopper marketing is less about matching merchandise to shoppers than understanding the PROCESS by which shoppers themselves react to all elements of the store–structure of store and displays, interaction with staff and other shoppers, function and interaction with visual cues, merchandise, etc.
In my 40 years of shopper marketing work, the first 30 were devoted to Shopper Marketing I, and given the hundreds of millions that have been invested by hordes of “students” of this type, around the world, I consider myself to have a modest, at best, understanding of the nuances of Shopper Marketing I.
Ten years ago I stumbled into the world of Shopper Marketing II and found largely a barren wasteland, with Paco Underhill being the lone voice crying in the wilderness. Since then I have found a VERY FEW others (including Siemon Scammel-Katz) who do major, holistic research in stores–all of the store, all of the shoppers and everything they are doing IN THE STORE. Instead, the vast majority of “shopper marketing” is just a repackaging and extension of the Shopper Marketing I. This is a consequence of the fact that studying Shopper Marketing II is often inconvenient and that the vast majority of the funding comes from the brands, who continue to have an obsessive focus on THESE products, and the relation of THESE shoppers to these products–Shopper Marketing I.
The reality is that Shopper Marketing I has had such massive investment and effort that there is NO low hanging fruit there. But the industry simply keeps recycling the same tired ideas–and lots of misinformation. On the other hand, Shopper Marketing II is ever fresh, with lots of low-hanging fruit that opens the door to LARGE sales and margin increases.
This reminds me of a story an associate told me years ago about working on a turkey ranch as a young man. One of his jobs was to release the turkeys from their holding area into a large field, during the day, where they could run about and scratch in the dirt for grubs, or whatever suited them. One week the farmer harvested a fresh field of alfalfa right next to the field where the turkeys had been allowed to run. My associate reasoned that that new field would be VERY attractive to the turkeys, since the old one was so run over and scratched to dirt that there couldn’t be much left there for the turkeys. However, the new, freshly harvested field, was teeming with bugs and other turkey goodies.
So the next day, he opened the gate to the new field, so that as the turkeys came by they could go in there instead of the old field, further down the lane. But the turkeys ignored the new field and raced right down to the old field. So the next day he stood in the middle of the lane and waved his arms to shoo the turkeys into the wide open gate of the new field. The turkeys ignored his arm waving and shouting and went around, under and over him in the mad rush to their old field. Not until he actually got a couple of old gates and blocked access down the lane, forcing the turkeys into the new field, would they go there, and gradually adjust to their new, far more commodious environment.
Will someone please shut the damn gate to Shopper Marketing I? 🙂
It’s impossible to think of retailers going forward without insights now, it’s just too important to know your customer and where they’re going.
Having said that, CI should never take the place of solid first hand knowledge–as in seeing for yourself. Armed with good insights, the best retail executive will use them to enhance what they’re actually seeing in stores and hearing from associates in the field. The combo makes for better decision making and better intuition for the meeting room.
In other words, don’t let science get in the way of the art of retail.
Several wise comments above–especially Nikki’s “black hole” remark and Jonathan’s call for turning insights to action.
It’s evident that Shopper Marketing is achieving a kind of critical mass among Food/Drug/Mass practitioners and that our ability to plan is advancing rapidly.
But the sheer intricacy that this introduces to store-level implementation remains a towering obstacle to sustained, measurable performance.
Plans are easy, but results are hard. The rise of Shopper Marketing must trigger a new era of industry initiative that goes beyond insights and actions to embrace performance management.
In sum, I beg to differ with the headline of this discussion: Shopper Marketing will remain in its adolescence until we learn to harness its genius to deliver measurable, relevant results.
In thinking about “shopper marketing,” the retailer should carefully think about who the shopper is going to be in the next 5 or 10 years.
As the article describes, “the consumer of today and tomorrow…is at once time-starved, aging, digitally-enabled, less loyal and wants to be in control.”
“Time Starved” – This will only continue as the world presents more alternatives for business, leisure and social time. The physical act of shopping will continue to slide on the list of alternative activities to fit into one’s life.
“Aging” – Take care on this definition. While the retirement population will continue to boom, the demographic sweet spot for retailers will be the 30- and 40-somethings. Forget about looking boomer preferences, look at the 20- and 30-somethings’ behavior today.
“Digitally-enabled” – See the previous paragraph. Boomers are digitally enabled. The retailer’s primary demographic in the future is digitally and personally wired. It is part of their DNA.
“Less loyal” – If we measure regularity of visits of tomorrow’s primary demographic, would we find any brick and mortar retailer beating AMAZON?
“Wants to be in control” – Who is in control? The woman who uses ZAPPOS or the woman who goes to a retail outlet?
And, what is most crucial for retailers to drive customer engagement? There is only one place to look. It is online. Even lower tier social sites are more engaging than a retailer. And while many retailers will say they have an online strategy and consultants will say they have to have an online strategy to drive shoppers into the store and engage them, Why, oh why would a retailer who could engage a potential customer online, not want to close the sale right then and right there?
The winners in the ‘Shopper Marketing’ platform will be like their counterparts involved in other Advertising and Marketing programs. They see the platform holistically. The consumer is not driven to the purchase with one single event–they are smart, and discerning. Each of the in-store points have to be seen as additive to the other marketing points.
McDonald’s executes upon it on an ongoing basis. Others can as well.
It took a forum to come up with this? There is nothing new in this, as many of the other contributors have pointed out.
Until people realize that shopper marketing is part of marketing; it is a marketing discipline which requires diligence, not just in tracking and evaluating but in targeting and segmenting, then things might move forward.
The sooner people stop going to conferences looking for a one size fits all solution and recognize that, as in consumer marketing, your brand, your category, and your opportunities are different, and therefore require a different mix, then things might move forward
The sooner people stop grasping at universal untruths (70% of decisions are made at the POP; speeding up the shop increases sales) and realize they need to come up with their own insights, because their brand, their category, and their shoppers are different, then things might move forward.
The sooner people realize that the shopper is unique in any second in any store; that at that moment they are yours, but in ten seconds they are someone else’s–in the same way that I cannot look at a consumer as they drink a CSD and use that insight to market to them about rice–then marketers might start really marketing–to shoppers–and not just activating in front of them.
Then we can really talk about shopper marketing, rather than the pseudo shopper-based trade marketing which this really is.
Shopper marketing is configuring a brand to deliver changes in attitude and behavior amongst a group of targeted shoppers.
And as for rationalizing ranges…Yeah–about the same time retailers stop using slotting fees to drive profit.