Shopper Insights: Increasingly a ‘Joint Responsibility’
Retailers and manufacturers may not be getting ready to join hands in a circle
and sing "Kumbaya," but a RetailWire poll finds that both
parties understand the need to work together to translate shopper insights
into greater sales and profits.
Top line results of the survey of 593 industry professionals (Sept. 29 – Oct.
6, 2010) were discussed in a RetailWire webinar, "Shopper Insights:
Actionable or Academic?" on Tuesday. (Click here to download a free Executive
Summary of the study results.)
According to the research, 38.7 percent of retailers regularly use shopper
insights in their positions while 29.8 percent sometimes do. For manufacturers,
49.7 percent regularly use shopper insights and 28.5 percent report using them
sometimes.
"Shopper insights can and should drive an enormous amount of retail activities
in merchandising, buying, aisle and category management," said Roy White,
business development executive with RetailWire and lead author of a
white paper on the study.
Noting how closely aligned retailers and manufacturers were on the value of
using shopper insights to improve a variety of retail activities, Mr. White
said, "They’re really on the same page. That’s something that bodes real
well for collaboration. And it’s a statement that collaboration is an actual
fact."
Nadine Hernandez, director, shopper insights worldwide industry marketing,
DemandTec, who co-presented the research findings on the webinar, said the
study results and her own in the field observations show retailers and manufacturers
are putting their money where their mouths are.
"More and more trading partners agree that this (funding shopper insights)
is a joint responsibility. In fact, the topic of trade dollars, which has always
been sort of a taboo topic, is back on the table," she said. "I think
that is largely in part to the tremendous amount of success we’ve seen with
those trading partners that have done a great job in leveraging shopper insights
to drive true ROI — in many cases, much higher ROI than another me-too, ineffective
in-store promotion that was planned without any type of shopper insights."
Discussion Questions
Discussion Questions: How important is collaboration between retailers and manufacturers to achieve maximum returns on shopper insight investments? Is collaboration between retailers and suppliers for real?
Shopper insights are indeed a joint responsibility between retailers and manufacturers but for this to work both sides have to contribute what each side knows best. The retailer should know its own consumer and its own metrics while the manufacturer should completely understand its own brand and the category in which it competes, as well as who is the consumer and what drives the consumer to the retail store to make the purchase. This conversation between the retailer and the manufacturer needs to be fact driven but also energetic, creative, and futuristic. All too often that’s not the case.
The hard truth is that retail growth today is coming primarily through growth in market share–you grow by taking it out of your competitor’s pocket. Against this backdrop, the question of sharing information becomes almost rhetorical. Anything that can increase understanding of the customer’s preferences will (assuming these insights are acted upon) be rewarded with improved revenues and profits. Competitively, this is a no-brainer.
In a world where so many competing products have roughly the same value proposition and efficacy and where multiple supply channels are available at the click of a mouse, customers may have, in a very critical sense, moved past both retailers and manufacturers.
They are no longer tied–as they historically were–to a restricted number of options and this explosion of options has left retailers and manufacturers both with little option but to collaboratively attempt to build a better mousetrap.
Information is the key to effectiveness, not data alone, but actual insights.
Shopper insights is an area where, to paraphrase Patrick Henry, if manufacturers and retailers don’t learn how to hang together they will surely learn the pain of hanging separately.
Collaboration is relevant ONLY if you want to be in business ten years from now and have higher profitability than you’ve ever imagined. Apart from that it’s every man for himself, survival of the fittest and all that.
Human beings, supposedly the highest level of intelligence in the universe, are the only living organisms who don’t understand the core value of collaboration. Even ants with their tiny ant brains build their whole life around collaboration!
We’re featuring the idea of manufacturers and retails actually working in collaboration. (Duh) Now think of what could happen if an entire city did that! Believe it or not that is exactly what is beginning to happen. It’s not an easy process but the potential for wide-spread abundance and fulfillment is breath-taking.
As I’ve said many times, until we realize that the caged chicken approach to life that we’ve all been conditioned into is destroying us we’ll not see true revitalization of our lives or our businesses. Collaboration is the ideal response to a key energetic principle about life: “It’s all ONE thing!”
The need for such collaboration is more apparent than current activities to enhance collaboration. While there will always be battles over channel profits, everything does begin and end with the customer.
I am currently engaged in developing a collaboration model between foodservice distributors and manufacturers. As part of the study, I interviewed leaders in both the distribution and manufacturing sides of the business and developed the following conclusions:
Perceived lack of trust by all channel members.
This lack of trust emanates from a lack of understanding.
This lack of understanding emanates from a lack of real engagement and transparency.
Collaboration can only succeed with real engagement and transparency. Sharing shopper insights is a necessary part of the process.
In the past, research has been stigmatized by too much useless info like how many left-handed soccer moms with red hair bought chewing gum on Tuesdays. This universal complaint has been duly noted in the industry, and the best of the bunch have done something about it. Now, it’s abundantly clear that the bleeding edge has turned into the leading edge, as partners use genuinely practical info on consumer insights that rings the register and produces good ROI. Research is still very expensive, so only the big guns are able to go far with this, which will strengthen their positions and help lead to further industry consolidation of both manufacturers and retailers.
Retailer-manufacturer collaboration is vital to achieve maximum profitability for both parties. Especially with continuing advances in technologies that automate numerous collaborative activities, there is no excuse for any retailer or manufacturer to avoid high-level supply chain collaboration. In 2005 I helped coin the term Extended Retail Industry, or “ERI,” to describe the emerging 21st century retail industry where every player from source to shelf was an integrated partner in accurately delivering goods on time at a price that made everyone profit without bilking the consumer. The ERI has continued emerging in the past five years.
Important enough that “understands the category shopper in MY stores” and “able to effectively translate shopper insights into programming that drives sales” ranked in the top five attributes most valued by retailers in a recently completed client project.
As for joint funding…a number of terms come to mind, but “evolving” seems the most appropriate.
We have been talking about collaboration since before ECR. In ECR it was to take out the ineffective practices and waste out of the supply chain. This was all born out of the worst period in trade relations anyone can remember.
There is and always will be a difference in perspective between the manufacturer and the retailer. Manufacturers have always had the best research and understanding of who and why consumers shop for a product. Most retailer research is still sitting in the bottom drawer in someone’s desk. Collaboration on consumer/customer insights can only benefit both parties, but this does not mean they will always agree. The Great Recession, 300 channels of television and the internet have changed the game. While food sales have increased an average of 10% for alternative retailers and only 4% for food retailers it is time to re-think and revise.
I think Ian’s got it dead-on. Until we pull down our own barriers in business and professionally, we’ll continue to bump our heads with nothing but pain.
I think Mr. Percy has it right. However, they both have entirely different motivations and objectives. Or do they? Or, do they just think they do?
If the product ends up in a satisfied consumers hands, isn’t that one and the same?
All too often the discussion never starts with the consumer and works backwards from there. In the end, isn’t that both their objectives? Then again, maybe not. The satisfied consumer is the only way they do that. Then again, maybe they don’t think so. Odd, but possibly lost in the banter between the two.
There is a huge amount of territory to cover here. One goal of retailers is to amass “collective intelligence,” a complete view of how customers view them in the store, online, via social media, etc. Collaborating with the manufacturers of their products should yield valuable insights.
Let’s see, we’ve been talking collaboration at least since I was a supermarket manager in the early ’80’s. Oh, and by the way, this collaboration is not limited to retailers and manufacturers. The entire ecosystem of distributors, raw materials suppliers, etc. should participate. Also, because of the numerous failed attempts to make this happen in the past, manufacturers are going direct-to-consumer like never before. At last week’s NRF show, I spoke with three dozen CPGers who are more interested in consumer insights and analytics than most anything else.
Bottom line, there are some great case studies of retailer/manufacturer collaboration out there.