GHQ Cover Story 06/05: Shopping Around

Jun 13, 2005
George Anderson

By George Anderson

Through special arrangement with Grocery Headquarters magazine, we present these opportunities to discuss the subjects of GHQ’s monthly cover stories.

Mark Felt, aka Deep Throat, used to tell young reporters Bob Woodward and Carl Bernstein of the
Washington Post to “follow the money” as they were trying to get to the bottom of the illegal activities and abuse of power which came to be known as the Watergate scandal.

While the activity certainly isn’t clandestine, consumer packaged goods manufacturers are also following the money and the consumers who have it to spend by broadening their distribution to channels outside of traditional supermarket businesses.

Put succinctly, as Dr. David Rogers president of DSR Marketing Systems did for Grocery Headquarters, “One needs to have a much broader perspective now that the industry is much more than supermarkets. It’s clubs, supercenters, dollar stores. Manufacturers are going to have to adjust to that reality and look for new customers like Trader Joe’s. But a lot of the more successful companies, like Trader Joe’s, are building it on private label.”

Manufacturers are investing additional resources to better understand consumers’ eating and shopping behavior.

Unilever (a RetailWire sponsor) recently
published findings of its research on customer shopping trip patterns that Kimberly Senter, director, category & customer strategy for the company, said customizes the effort
to bring supplier and retailer together to develop “the most appropriate solutions center to satisfy their shoppers’ needs.”

Wendy Liebmann, president of WSL Strategic Retail, said “Brands are learning to be much more creative in the way they do business.”

“There’s a very clear recognition by manufacturers that in this new world of retailing they have to do a much more aggressive job in branding at retail to stand out,” she said. “They need to have a retail strategy beyond distribution, and they need to market and present themselves more aggressively. They can’t wait years to update their presentation, formulas and voice on the shelf.”

Trading partners also have a significant impact on what manufacturers do or don’t do and some CPGs, say experts, are looking for ways to level the perceived imbalance on the competitive playing field.

“In some cases Wal-Mart has become 30 percent of sales, and that’s not a good place to be,” said Ted Taft, a partner in Meridian Consulting. “The more strategic suppliers are saying, ‘How can we help the supermarket channel survive?'”

“Many people who work for consumer goods manufacturers are very, very concerned about the tail wagging the dog, and that tail being Wal-Mart,” said Dr. Rogers.

Moderator’s Comment: What are the most pressing factors that determine a brand’s direction in the current business climate? What challenges and opportunities
do you see for CPG manufacturers in light of current consumer behaviors and the competitive retail marketplace?

Meridian’s Taft told Grocery Headquarters, “Manufacturers need to create new consumer usages and go from just selling product categories to looking
at higher levels of needs. They need to look beyond the product categories they compete in, and it’s a whole different ballgame. For some, it may be a scary process, but for others,
it’s very exciting.”

George Anderson – Moderator

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2 Comments on "GHQ Cover Story 06/05: Shopping Around"

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M. Jericho Banks PhD
M. Jericho Banks PhD
15 years 8 months ago

CPG consumer advertising must regain its influence. Brands should not count on retailers to present their products favorably to shoppers, or depend on a “push” strategy to gain distribution and then move their products through stores with velocity. Brands must talk to consumers more compelling and convincingly than ever before. Yes, media is fractured, but sales channels are even more so.

Art Williams
Art Williams
15 years 8 months ago

Being able to favorably react to the demands of your biggest customers will go a long ways toward making your brands successful, providing you don’t cripple your ability to serve your other customers in the process. Agreeing to exclusive deals with these large customers can be a recipe for disaster. If you alienate your smaller customers, they can have very long memories when the large customer is tired of your deals and is ready to move on to the next manufacturer and brand. It is never a good business strategy to have too many eggs in one basket.


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