Retail Customer Experience: Retailers, take back your shelves

Discussion
Mar 05, 2010
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Commentary by Jeff Weidauer, Vice President of Marketing for
Vestcom International Inc.

Through a special arrangement, presented
here for discussion is a summary of a current article from Retail Customer
Experience
, a daily news portal devoted to helping retailers differentiate
the shopping experience.

Over the past generation, stores lost their individuality, becoming
homogenous and undifferentiated in their product assortment, price, and promotional
offers. Virtually nothing was left to define one retailer from its competitor
across the street; it was said that you could drop a customer into virtually
any major supermarket and she wouldn’t be able to tell which one she was
in.

A major factor in this lack of personality came when stores
began selling space for advertising. It didn’t take long before there were
identical ads on the shelves, carts, floors, you name it, across competing
stores nationally as major CPGs saw a more efficient method to advertise.

The minimal differentiation between stores was eliminated by
the ever-increasing blight of signs, banners, posters and giant television
screens in every available space. But the hook was set: retailers were making
millions of dollars from advertising, and they were now dependent on this
revenue as sales through the front door declined.

One day we woke up to find ourselves overstored and making all
our money through the wrong door. Restaurants were taking people away from
home to eat, superstores owned price, and grocers watched as both their market
share and share of wallet fell. Then the economy imploded.

The good news is, much like spring, change is on the way. Retailers
are taking back their stores, and their shelves, and learning to sell again.
Shoppers are returning, wanting to learn how to shop as well as how to cook;
wanting more from their stores. “Neighborhood, local, and relevant” are the
new watchwords. Shoppers are looking for authenticity, not just in the products,
but in the seller of those products. Differentiation is coming back, with
better branding, and a growing commitment to the shopper above all.

Taking back shelves for retailers need not be expensive, and
any loss in “wrong door revenue” can be overcome. Retailers should consider
these aspects as they begin to take back their shelves:

  • Be relevant: beyond offering price,
    retailers should offer information or guidance to build trust with shoppers.
  • Be consistent: the shelf edge
    can let the shopper know a retailer supports what she sees there. For
    example, one way food retailers can differentiate and engage shoppers and
    foster longer-lasting consumer relationships is by offering nutritional information
    at the shelf, based on the retailer’s health and wellness strategy.
  • Be accessible: messages should
    be put where the customer is looking, such as the shelf edge.

Discussion Questions: To
what degree is co-op advertising responsible for any sameness seen across
supermarkets? Are you seeing supermarkets pursuing more differentiation?
What’s the best way for a food retailer to differentiate and achieve
individuality at stores where co-op advertising is fairly common?

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20 Comments on "Retail Customer Experience: Retailers, take back your shelves"


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Dr. Stephen Needel
Guest
11 years 2 months ago

I wouldn’t put the blame on co-op advertising. I think it’s more a problem of stores trying to be everything to everybody rather than accepting that some shoppers are not going to be interested in their offering, be it low price, high service, big variety, heavy on specialty products, etc.

Max Goldberg
Guest
11 years 2 months ago

I don’t know of any major grocer that is not striving to be relevant, consistent and accessible, and yet, with few exceptions, the stores still look and feel the same.

This is from the growth of national brands and brand consolidation; from retailers’ decisions to charge slotting fees that keep local, different products off the shelves and out of prime shelf space; from endless brand extensions, rather than true innovation; and from a decision to sacrifice great customer service for lower prices.

Differentiation is occurring in the non-majors like Trader Joe’s and Whole Foods, where the stores and their personnel have a different feel and way of interacting with consumers. These are stores where national brands do not dominate and where the employees really seem to care about customers.

The majors are going to need to be more than relevant, consistent and accessible to win back customers.

Paula Rosenblum
Guest
11 years 2 months ago

This problem is not restricted to supermarkets. As we’ve said for several years (and were recently quoted without attribution by a major department store CEO), most retail stores have become a ‘sea of sameness.’

While there appears to be a proliferation of products with many declaring a need for SKU rationalization, in fact, there are too many products that look (and taste) too much alike. That’s why, with a very few exceptions, retailers are now driven to differentiate on customer service, rather than product uniqueness.

It’s just more obvious in supermarkets because they’re so large. Having private label peas is the same as having branded peas. They’re still peas.

What catches my attention is helpful employees, value-added services (how I wish another chain would follow Roche Bros.’ lead and actually place products ON the belt for me at the check-out stand), and consistent pricing.

Raymond D. Jones
Guest
Raymond D. Jones
11 years 2 months ago

I agree with Stephen. While co-op advertising can certainly clutter the store, the lack of differentiation is driven more by the desire to serve the needs of a broad range of customers and carry every imaginable kind of product. It is this lack of focus that results in an environment of mediocrity.

In order to really improve the customer experience, stores have to focus on either a segment of customers or specialize in a range of products. Naturally, this focus will force retailers to sacrifice some customers or product lines. Those that are unwilling to make this choice will be left with an undifferentiated position in the market and a mediocre customer experience.

Ben Ball
Guest
11 years 2 months ago

Any major retailer who allowed co-op advertising to reduce differentiation in their stores was asleep at the switch. Vendor marketing departments have struggled for years with the demand for differentiation — at least from top accounts. Whether it be as simple as staggered timing or, more often, some nod toward customization of the event to the retailer.

Granted, there are some in-store vehicles (shelf coupon dispensers for example) where manufacturers buy a “run of press” and retailers get whatever is in the program. And smaller independent retailers face the challenge of being too small to command customization. But the big guys don’t have to accept it these days.

Gene Hoffman
Guest
Gene Hoffman
11 years 2 months ago

When retailers operate out of fear that competition will offer something better than his/her store, they go with the flow, which is a conventional phenomena. But co-op advertising is only one of the factors involved. Is going with the flow good merchandising/marketing/retailing? No!

With so many SKUs and so many incentive pressures from suppliers for a retailer to deal with, there isn’t enough time for the conventional thinking retailer to become a Trader Joe’s are an “Ollie’s Odyssey.” And, without innovation, sales tend to trend toward price operators such Walmart and toward unique retailers such as Trader Joe’s, co-op advertising not withstanding.

That raises a question for retailers and suppliers: “Who is the culprit in co-op advertising?”

John Rand
Guest
John Rand
11 years 2 months ago

In most chains (certainly not all, just most):
Stores are traditionally built for efficiency, not effectiveness.
Personnel are hired for compliance, not creativity.
Selection is determined by finance, not shopper need or relevance.
Decor is bland and chosen because it is easily reproducible.
Messaging is repeated till it disappears into the background noise.

Why single out co-op advertising?

I am thoroughly excited by the recent trends to break away from this and re-establish something more interesting in the shopper environment. But there are tens of thousands of very bland stores that will need to be addressed before we really have accomplished the change.

Carol Spieckerman
Guest
11 years 2 months ago

I wouldn’t blame the sea of sameness on co-op. To me, retailers have been focused on sanitizing the store environment and correcting errors at the expense of creating exciting and differentiated store environments that more closely mirror shoppers’ outside world. The result is that an “ideal” store ends up being a buzz kill. (I posted a blog entry on this last September).

Ian Percy
Guest
11 years 2 months ago
There are three levels on which we can operate. Ideally a chain has all three mastered but most get stuck in the first one. The first is a “Mechanistic” level where the store is simply the usual collection of ‘parts’. All these stores that look the same have the same collection of parts. This is the world of the “Imitators” who spend their time trying to replicate the “best practices” of others because they have no creative ideas of their own. 93% of all businesses are stuck here. Walking into them makes us yawn. The second is “Visionary” where they see a greater purpose to why they exist. These folks work hard to integrate and align all the parts toward that higher purpose. This is where “Innovators” live — those who are always thinking differently. This is also the source of most best practices. 6% of organizations are truly vision-driven. Walking into them stirs our imagination. I used to think being “visionary” was as good as it gets. But organizations can go much higher to… Read more »
David Zahn
Guest
11 years 2 months ago

Dare we attack the sacred cow? The sameness and homogeneous feel is in part due to the “success” of Category Management where too many retailers (and their manufacturer partners) managed from spreadsheets and data and not from the strength of being true merchants or advocates of their store (or brands). The pendulum swung too far towards the science and math of analysis and is now returning to include the art and social studies side of analysis (quantitative vs. qualitative).

The process was co-opted and somewhat bastardized by those without imagination and flair and replaced by robotic “follow the leader” actions–hence the same look, feel, tone, and tenor to all (or nearly all) stores. The model was supposed to reduce this, but the execution by those less skilled actually exacerbated it.

george dellon
Guest
11 years 2 months ago

WHAT MAX SAID! It’s the rebates! National brands, and their consolidation, and their ensuing power and prowess and business acumen has led to this. Look at the snack aisle!

Or as Intel, as the story goes, said to Dell, (not a direct quote) “Do you know how much we gave you in rebates last year?”

Take that to your MM!

jack flanagan
Guest
11 years 2 months ago

It is (and always has been) the job of a good merchant to have a distinct ‘point of view’.

That ‘point of view’ can be expressed in many different ways–assortment, price, store size, locations, policies, service levels (not to be confused with staffing), ‘business model’, etc.

Today’s crop of great retailers (e.g. COSTCO, Trader Joe’s, Wegman’s) clearly have a distinct ‘point of view’ that their customers embrace.

Doron Levy
Guest
Doron Levy
11 years 2 months ago

I can’t say that I wholly agree with this article. Many chains have taken huge strides at differentiating themselves. Private label, prepared foods, and upmarket produce is what sets grocers apart. And this has been happening way before the ‘recession’ started. The battle between restaurants caused this upheaval in the grocery industry.

I say forget about co-op advertising (well not literally) and focus on shelves.

W. Frank Dell II
Guest
11 years 2 months ago
The real driver was not co-op advertising money but the Category Manager/Buyer incentive system. How many Buyers sold the Category Leader slot and then wondered why their store looked the same as competition? I once proposed to a chain president that they should set up groups of stores to test the flood of new products. Since few buyers are real merchants, this way by running a test, they could have the consumer decide. I was told this was a typical MBA solution. Their solution was to take in the new product paying the greatest slotting allowance and then discontinue ASAP so they could repeat the process with another vendor’s item. The standard is 50% of co-op money makes it to the bottom line. When buyers have a dollar amount needed to get a bonus, the results are straight forward. You take in the item that gets you your bonus. This was a big CPG company game and advantage. But as always, selling shelf space is not consumer focused.
Dave Wendland
Guest
11 years 2 months ago

I agree with many of the other comments that co-op advertising alone should not be singled out as the culprit. Retail grocers (and many other formats) have fallen victim to the “sameness syndrome” by a culmination of many factors: 1) desire to please too broad a shopping base; 2) product proliferation that has decreased relevance within some categories — SKU rationalization is normalizing a portion of this; 3) lack of innovative approaches to merchandising and shelf navigation; and 4) trade marketing funds and related advertising dollars.

Like many, I am pleased with recent efforts by many operators to improve the overall shopping experience within their retail stores. The evolution has begun and I am eagerly awaiting the emergence of THE innovation that breaks away from the crowd.

Sandy Miller
Guest
Sandy Miller
11 years 2 months ago

Retailers must step back and first understand what shopper-focused, RELEVANT-Reasons-to-Buy information for products they want to sell. And that includes co-op products.

Jeff Weidauer
Guest
Jeff Weidauer
11 years 2 months ago

To clarify, after reading the comments: I agree that co-op advertising is not wholly to blame for the homogeneity seen in many stores today. But it’s been one of the major reasons for the “sameness.”

On the other hand, the incoming revenue share has made it very difficult for retailers who would like to differentiate to do so because there’s no immediate replacement for those co-op dollars.

Christopher P. Ramey
Guest
11 years 2 months ago

Co-op usurping the store brand is a dereliction of that manager’s responsibility. It’s one of the dozen mixed concoctions that executives are offered every day. Used in moderation, it drives traffic; used in excess it undermines the reason for your existence.

Mark Johnson
Guest
Mark Johnson
11 years 1 month ago

Co-op was a steady revenue stream that retailers depended on. Slotting fees, etc, were what was considered the make-or-break revenue items to sustain profitability. Now it is actionable data, behavioral insight.

Ed Dennis
Guest
Ed Dennis
11 years 1 month ago
It is amazing how many independents can run a profitable store without slotting fees, co-op advertising, or other forms of supplier blackmail. I used to have a great independent in my area (he retired and the landlord raised the rent so high that no one could fill the spot (spot still empty–ha, ha). What I experienced in the independent was a clean store, respectful employees, and virtually no out-of-stocks. On the other hand, I have two chains in my area, one of which is famous for implementing every gimmick that comes down the pike. What I see there is a dirty store, employees who spend all their time playing with each other (are there customers in the store? What are customers?) and out-of-stocks everywhere. The other chain does a much better job in all these areas and if their pricing was better they could be one of the better chains in the nation. I fear what would happen if the chains controlled all their shelf space. The only shelves that are properly managed are the… Read more »
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