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Posts Tagged ‘Retail Solutions’

Five Ways Retailers Can Activate Their Customers and Categories

Tuesday, April 7th, 2015

Let’s face it – competition in the retail space continues to get more fierce. Whether it is a battle over pricing and promotion, online versus offline strategies, or the increasingly complicated shopper journey, major retailers wrestle every day with how to stay a few steps ahead of their competitors while serving up an unmatched customer experience.

Here are the five ways to ensure that retailers can not only compete more effectively but also win – with their customers, their partners and the marketplace.

  1. Know Your Customers – Before you can achieve true customer insights, you must have a category and customer strategy. And that starts with really knowing your customers. Why do they shop your stores? What brings them in? What keeps them there? Who is your most loyal and valuable customer? What motivates their purchase behavior? What types of products are they purchasing?
  2. Go Beyond Sales Data – Many retailers use their sales data to make decisions. Unfortunately it only provides one lens, causing you to have a limited view and potentially miss out on several opportunities. POS data is a good benchmark but should not be used alone to make product or customer targeting decisions. What if you could bring together supply chain information with basket-level data and segmentation data? It’s not only possible, some retailers are already doing it successfully.
  3. Become a Strong Partner to Manufacturers – Let’s face it – none of us can go it alone. When retailers have a strategic plan for exactly how they will collaborate with specific manufacturers, everyone wins. You speak the same language, you share data, and you have what we call “one version of the truth.” Joint business planning becomes second nature and win/win for everyone.
  4. Be Excellent in Execution – It’s certainly easier to create a plan than it is to execute it. Execution excellence means delivering the right product to the right customer at the right time. As the shopper journey continues to evolve and get more complex (as described in our recent report on Channel Migration), you will need to execute flawlessly in order to tap into the right insights along the way. You want to meet customers exactly where they are in their path to purchase, whether they are online at home still in the research phase, discussing similar products on social media, or staring at your store shelf.
  5. Create Relevant and Targeted Engagements – As digital becomes more relevant to CPG shopping, retailers have an incredible opportunity to reach customers through more one-to-one, customized communications. Some large retailers have launched great initiatives around this already, whether it is developing apps that automatically create shopping lists for customers based on their previous purchases, allowing customers to purchase certain products via social media, or offering customers more loyalty points for engaging in certain types of behaviors. With access to granular-level data, integration and analysis, retailers can build an offer a completely personalized experience for customers across all touch points and in real time.  This type of tailored engagement that helps make customers lives easier is exactly what it takes to be a retailer of the future.

There are obviously several challenges that retailers need to overcome in order to win in the marketplace. When it comes down to it, you need to be able to derive real value from your data for better insights, and you want to have one version of the truth for better collaboration with your manufacturers.

Drop me a note at Brad.Shelton@IRIworldwide.com if you want to learn more about how to take your insights and collaboration to a whole new level for measurable AND sustainable results.

How to Excite High-Value Health and Beauty Shoppers

Monday, February 2nd, 2015

The vast majority of shoppers make lists before they go shopping to maximize their time and make sure they get what they truly need. Even more compelling is that a quarter of shoppers actually make the extra effort to include specific brands on their lists. Improving shopper targeting is critical for health and beauty manufacturers hoping to make it onto these lists and maximize their marketing spend. But with shoppers already inundated with marketing stimuli, from traditional advertising to mobile and in-store, how can retailers and manufacturers best reach their desired consumers?

  1. Shopper Targeting – Understanding and anticipating shoppers’ habits – whether planned or spontaneous – is vital. Without this, manufacturers and retailers can miss key facts, such as Millennial spending being on par with the U.S. population but purchasing 20% more products than the general market. While deal-focused, Millennials also enjoy the experience of shopping at retailers that use experiential marketing tactics, such as ULTA, Lush and Sephora. Affluent shoppers have similar behavior, and a few key aging Boomer groups are spending disproportionately to maintain a youthful look and image. Knowing which consumers are buying which types of products gives both manufacturers and retailers the insights they need for successful decision-making.
  2. Digital Tools – More than one in three people now use digital tools to learn about health and beauty products (the highest of any online product category). Experiential marketing, demonstrations and bloggers like Miss Maven, Maskcara and Cult of Pretty have created a large following of consumers eager to hear about the latest beauty trends. Before making any digital decisions, companies should know and understand their target demographic so that they can choose the specific mediums that will be most effective.
  3. Thoughtful Promotions – Manufacturers must “right time” their promotions but avoid being seen as an always on sale product. It can weaken a brand’s image and encourage consumers to wait to buy because they know the product will be cheaper during another shopping trip. With brick and mortar, in-store promotions provide huge opportunities. More than a third of consumers change their first choice when another equally valued brand is on sale, and many shoppers can even be swayed during the final moments of their shopping trip.

The market position of every health and beauty manufacturer and retailer is different, so their shopper targeting strategies should be as well. Developing these strategies begins with a detailed, comprehensive and nuanced understanding of high-value shoppers, including their preferences, their definition of “value,” and how they make decisions at home, online, on the go and in the store. Marketers that understand and excite their shoppers will win in today’s hypercompetitive market; those that don’t will end up like last year’s lipstick.

The Consumer Quest for Affordable CPG Products

Monday, January 26th, 2015

IRI just released its latest Times & Trends report on Private Label & National Brands and the results are enlightening for CPG manufacturers and retailers alike. Even with the recovering economy, four in ten people remain financially challenged and are still seeking value, including affordability, when they shop for products. However, what people consider affordable can vary considerably by channel, category, brand and even need state. Deciphering the changing definitions of affordable in different situations can be confusing for private labels and national brands trying to compete in this increasingly fragmented and diverse marketplace.

While the report shows that one-third of consumers specifically seek out private label products to save money, national brands have been seeing some unit share momentum in some channels and categories. For example, national brands captured 0.2 dollar share points in the drug channel during the past year. In grocery, national brands are protecting or growing share across a majority of departments, and in the dollar channel they have actually taken some share away from private label. Health and beauty continue to be strong for national brands, likely because of their focus on innovation in these areas.

In response to the intense competition in packaged goods, some retailers have been looking at “opening price point” (OPP) private label solutions – essentially no-frills products that would appeal to the most cost-conscious consumers. But private label suppliers are concerned that this approach may negatively impact the perception of quality of their private label products – something they have worked hard to achieve.

One quarter of people said they are buying brands that are on sale over their preferred brands, and 23 percent are choosing products based on loyalty card discounts. They are also doing a lot of pre-planning, limiting purchases and making other adjustments to stay on budget. More than two-thirds (70 percent) of consumers said that store brands are a good option when their preferred brand isn’t on sale and they don’t have a coupon.

While IRI’s Shopper Sentiment Index for Q3 2014 shows increasing optimism, it’s clear that customers are still closely watching their purse strings. This means that, in order to grow, manufacturers and retailers need to develop programs that focus on value and affordability. This can take a variety of forms, from price reductions and buy-one-get-one to assortment stratification and co-marketing. At the same time, manufacturers and retailers need to understand their brands’ and products’ complete competitive frame—the products they are truly competing against, rather than the products they think they are competing against.

For manufacturers and retailers to win, every effort must begin with a very clear understanding of channel- and retailer-specific strategies and be developed collaboratively with partners to ensure overall category success. It may be a delicate balance, but it can be achieved without sacrificing brand image and margin goals. 

Want to know more? Join us for a complimentary webinar, Private Label & National Brands: Dialing in on Core Shoppers.

The Aerosol Opportunity

Tuesday, January 6th, 2015

Every good marketer knows that packaging is one of the key ingredients of a successful product. It’s at the point of consideration, when a consumer is staring at two similar products in the store and trying to make a decision between them, that packaging can help make or break the sale.

Aerosols are one packaging option that have slowly but surely been increasing in popularity. Used for more than fifty years now, aerosols offer several product benefits, such as a pre-measured flow and an airtight on/off valve so that the product stays fresh, and they are tamper resistant.

The market

These are probably just a few reasons why aerosol product sales and the number of aerosol units have been increasing. Aerosol sales have grown 1.1% over the past year to $3.3 billion1, representing a quarter of all category sales, while the average number of aerosol units per store has grown from 220 to 258 over the past five years (a 12% increase).2

The power of aerosols becomes much more obvious when they are in a consumer’s basket. When aerosol categories are purchased, basket value is nearly twice as high ($74.60)3 as when they are not purchased ($38.23)4. This is even more pronounced when looking at food categories with an aerosol presence (basket value is $88.20 versus $40.30)5. This is something manufacturers should pay attention to when working with retailers to manage promotions and drive trips as well as innovation teams as they strive to offer consumers more efficient alternatives in their busy lives.

While consumers have moved away from certain types of aerosols (spray deodorants, air fresheners and furniture polish, in particular), food products have significantly ramped up their use of aerosols as a delivery agent, driving nearly a quarter of total aerosol sales.

The search for value

The increase in aerosol products and sales has been happening at the same time our mindsets around shopping have been changing. Over the last six years, most of us have become more value conscious, no matter what our household income level. Even high-income consumers are focused on value, according to IRI research.

With this seemingly unending search for value, consumers are shifting shopping channels more than ever (see our recent report on Channel Migration). In some cases, they’re moving away from grocery stores to more affordable channels like club, dollar, Walmart and mass merchandisers.

So, the idea of value is something manufacturers can and should be using to drive their innovation agenda.

Recommendations for growth

In addition to leveraging the growth of value channels like dollar (which grew 2.1% year-on-year6), manufacturers should consider the aerosol category overall. Do they already have products that could be innovated to work in aerosol form? Is there an opportunity to get onto the aerosol growth curve?

If a manufacturer already has aerosols, could they re-engineer the can to include a pre-measured metered spray of food or a cleaning product? This could be one useful way to extend the idea of value to consumers.

Non-food manufacturers should think about whether similar aerosol innovation opportunities exist for products like air care and sun care products, where recent product development has found success in other forms.

The 3% year-on-year growth of food aerosols7, despite the flatness of the food category, could be a viable point of entry for food brands considering new forms of their product. The impact of adding a trip or two to the aerosol food categories could be huge for both manufacturers and retailers.

What do you think? Write to me at Larry.Levin@iriworldwide.com.

1 IRI Infoscan; Total US MULO & Convenience, 2014 L52 Wks ending November 2, 2014
2 ibid
3 ibid
4 ibid
5 ibid
6 IRI Worldwide, “Channel Migration: The Road to Growth Has Many Lanes”, October 20, 2014
7 IRI Infoscan; Total US MULO & Convenience, 2014 L52 Wks ending November 2, 2014

Optimizing Your Product Assortment: Design for Growth

Tuesday, December 16th, 2014

Trends in the marketplace – busier-than-ever shoppers, localized competition, and the impact of digital – are making the retail environment more complex. Deciding which products to have in-store and online continues to be a universal challenge for both manufacturers and retailers. Manufacturers know that product availability is the key to product selection, while retailers are trying to hone their offerings to maximize baskets and sales. Both are motivated to understand what shoppers want and to make it available in the right locations.

There has been a significant shift in how companies view product assortment. The push strategy that moved a set of products into all stores is no longer viable – “one size fits all” is dead. Effective assortment optimization is now driven by a pull strategy, which identifies the items that consumers value so that assortment can be designed to drive category sales.

While it’s not easy to get product assortment right, there’s no doubt it’s vital for manufacturer and retailer success. For example, almost half (46%) of all CPG sales are in urban markets, paving the way for small format stores in those areas. But this means less shelf space for manufacturers and retailers to work with and more competition for that space.

With shopper demand varying significantly across channels, regions and neighborhoods, CPG companies need assortment optimization analysis that take the guesswork out of what to put on shelf by leveraging information that evaluates how people are actually purchasing in-store for specific retailers. The location of the store can give you some idea of the demographics of the neighborhood but it doesn’t tell you anything about who’s actually in the store and what they’re buying.

Instead, advanced algorithms should leverage sales data to identify key product attributes (flavor, pack size, brand name, etc.) and quantify relative importance to shopper decisions. By assessing the true contribution of each product in a category, manufacturers and retailers can take a fresh look at the impact of the items on shelf, physical or virtual. This includes understanding which brands or products drive the highest incremental sales for the category and how products interact, via demand transfer, to understand today’s portfolio and pull in the right products to create future growth. Companies can also use these insights to anticipate where new products may have their best impact.

Working together, manufacturers and retailers can make very specific product assortment decisions to bring the right product/s into the store, which will engage customers and drive profits. Finding opportunities to regularly enhance their assortment helps companies continuously optimize their product mix, select products more objectively and efficiently, and track business impact.

Want to know how your product assortment could be improved to deliver more growth to your business? Contact me at John.Porter@iriworldwide.com.

PepsiCo, Walmart and McKinsey Discuss Innovation in Retail and Consumer Shopping Habits, and Big Data Analytics

Friday, December 12th, 2014

While innovation is crucial for any company that wants long-term growth, it’s become increasingly difficult to anticipate and meet shopper needs through new product introductions. A massive 80 to 90 percent of new product introductions fail to meet their goals. This means that marketers must constantly update their understanding of what customers want and need in order to be part of the sliver of new products that do well.

Steven Williams, PepsiCo’s Senior Vice President and General Manager, Global Walmart Team, invited me to moderate a panel of senior thought leaders from PepsiCo, Walmart and McKinsey on this very subject during the recent 2014 Enactus Partner Summit. The panel discussed some recent innovations in retail and consumer shopping habits as well as Big Data analytics. Here are some of my top takeaways for achieving product success, whether you are a CPG manufacturer or a retailer:

Consider micro-marketing – Chris Turner, Partner at McKinsey & Company, noted that successful marketers are increasingly planning at the very micro level, such as focusing on their top 100 cities instead of the mass market. Micro-marketing can take this even further with campaigns that have a highly personalized view of individuals based on their previous direct interactions with a brand, such as through social media, email and other digital engagement. Focusing on this type of granular growth can help companies make the right choices about where to compete.

Big Data offers bigger challenges…and bigger opportunities – Walmart’s Senior Vice President of Global Customer Insights Matt Kistler discussed his company’s Big Data challenges – specifically the depth of data they have been able to acquire. Walmart has access to almost 30 petabytes of customer data (one petabyte has 15 zeros!) so just imagine the extensive data mining required to find relevant data and then map it to meaningful consumer insights. But Walmart is doing it – they’ve moved beyond just capturing traditional point-of-sale data into social media, analytical applications and weather patterns, and they use that data to optimize local store assortment, tailor promotions and more. With Walmart’s latest efforts to apply Big Data to marketing as well as its mobile strategies, the company is continuing its trajectory of using Big Data to drive retail innovation.

Effective data analytics can uncover gaps in the market – Simon Lowden, Senior Vice President and Chief Marketing Officer for PepsiCo Beverages, outlined how his team created a plan that leveraged behavioral science and demand spaces (aka market gaps) to better understand consumers’ decision making process and set growth strategies for the future. This included a landmark study that explored the true drivers of consumption for the company’s brands so that PepsiCo could map shoppers’ path to purchase. One key insight was to encourage consumers to pair PepsiCo products when eating and drinking during the day, hence the company’s recent Better Together marketing approach.

Innovation starts at the store level – understanding the real drivers of purchase behavior – so marketers must know how to meet the needs of retail’s specific customers. (Millennials, for example, like to be communicated with differently, and they want more transparency and choices.) Also, with the vast amounts of customer data now available, there are huge opportunities for companies to focus on personalization and one-to-one marketing, even at the store level.

Marketers still spend a lot of time and effort on traditional insights instead of looking at and leveraging data analytics for key decisions and foresight. Finding and understanding these hidden insights can set up brands for a successful future, more than just focusing on what’s happening today.

The Golden Rules of Measuring CPG Advertising Performance

Thursday, January 23rd, 2014

Advertising budgets remain under scrutiny like never before.  CPG manufacturers and retailers are still recovering from the last recession and are faced with volatile commodity and operating costs. Consumers continue to reassess what they buy and where they shop.  Senior managements are demanding improved methods for analyzing traditional and digital advertising costs to return on ad spend (ROAS). With these various obstacles, CPG manufacturers and retailers must be determined to grasp the emerging tools and platforms to measure multiple return objectives.

After a recent #IRIWebinar, “The Golden Rules of Measuring CPG Advertising Performance,” that I hosted with Marc Ryan, co-chief executive officer at InsightExpress, we polled attendees and found some striking results.

Only 9 percent of webinar attendees rated their organization’s digital measurement as highly sophisticated, while a mere 34 percent consider it average. Furthermore, webinar attendees consider “overall sales lift,” “identifying the best performing campaign tactics,” and “sales drives” as the top three most pressing questions with their measurement of digital media.

With CPG manufacturer and retailer concerns in mind, the webinar provided a long-term view of how consumer attitudes and behaviors intersect and offered insights into new, unique methods to solve persistent challenges in brand measurement. This includes the eight golden rules of measuring CPG advertising performance:

Golden Rule #1 – Frequency is Crabgrass – Frequency is less important than reach. It’s better to contact three consumers one time than to reach one consumer three times. Finding new, unexposed viewers is more beneficial than having the same audience view your ad over and over.

Golden Rule #2 – Measure the Multiple Return Objectives- Advertising is multi-dimensional and every ad performs differently. Furthermore, digital channels have disrupted consumer behavior and the traditional path to purchase. Instead of simply going to the store and purchasing an item, consumers are recommending products via Facebook and Twitter or engaging in other forms of specialized advertising and media.

Golden Rule #3 – Choose the Right Measuring Stick – Single source and modeled measurement each have their pros and cons, and advertisers must determine which measurement to use on a case-by-case basis. For example, modeling is appropriate for determining overall sales lift while single source helps them understand consumer drivers such as new buyer penetration and increased spend per household.

Golden Rule #4 – Creative and Media Go Hand in Hand – Creative is the most important aspect of the media plan but often the least understood.  Always measure both creative and media to fully understand campaign impact.

In terms of creative, keep it simple. A cluttered ad results in poor brand performance, and logo size and presence is important as well as ad size. Additionally, human faces draw attention—ads with human faces perform better because faces make them more relatable.

Golden Rule #5 – Choose the Right Metrics- For large brands, too many metrics can lead to saturation. Some metrics are more useful than others; pick the metrics that matter depending on the size of the brand.

Golden Rule #6 – Don’t Forget the Purchase Cycle – Different categories and brands are purchased with varying frequency (obviously) and sales continue to occur after campaigns end. Be smart about when you measure sales during and after your campaign.

Golden Rule #7 – Social is Not Always Social – Social media is rarely purely social these days; it’s another broadcast medium and works in concert with your other media and marketing activities.  Understand the appropriate metrics to gauge the earning potential of your media activities.

Golden Rule #8 – Native Advertising is King- Native sounds new, but it really isn’t. Native advertising is more impactful than typical creative.  Explore emerging native platforms to scale media efforts with fewer overheads.

These golden rules will help CPG manufacturers and retailers utilize emerging advertising tools and platforms and better measure their results. Check out the IRI webinar replay on our website to learn more.  Also, don’t forget to register for the 2014 IRI Summit taking place on March 10-12, where Marc Ryan and I will be presenting a Growth Session on this topic!  Visit www.cpgsummit.com for more information.

Not Winning with Assortment?…You Won’t Unless You Can Architect Your Category!

Wednesday, October 2nd, 2013

Does your assortment approach only allow you to add, remove or replace SKUs? If so, you are most likely missing the benefits of considering how price and facings can impact consumer choice and sales. Be happy if your current approach considers price and facings, but know that you are most likely still unable to evaluate innovation opportunities and how to place these innovations on the shelf.  More importantly, you probably can’t be confident that your assortment plans really address the way consumers shop.

In fact, if you care to note each of the elements we just described—price, facings, innovation launches and shopper behavior—you will find that what we are considering is not so much how to optimize assortment, but, rather, how to architect a category for maximum sales and incrementality. It is the latent, pervasive but often unmet need to architect categories that makes current assortment solutions fall short of delivering true value.

All this brings us to the question, “what does a solution have to look like to enable category architectures?” Well, for one it has to reflect the way consumers shop: whether the solution leverages an existing Consumer Decision Tree (CDT) or Market Structure or has to generate one internally, the solution has to map out the consumers’ decision process. It must also account for the corresponding consumer utility:  how does preference change in the face of changing alternatives? And then, the solution needs to have the wide breadth of coverage that is only possible to attain with point-of-sale (POS) data. Although other data sources are acceptable, the reality of the matter is that POS data has a level of coverage and accuracy that is unmatched by other types.

But, let us take a close look at the other elements that are necessary in solutions that enable category architectures:

  • Comprehensive item coverage – It goes without saying that a robust solution must account for slow moving items or items with low category share. These may be your items, or they may be the items that have the most incrementality. Failing to account for all items is bound to result in an incomplete view of how consumers shop the category and may leave money on the table.
  • Flexible category definition – A solution should represent your categories the way you see them: if you see your cookies interacting with crackers, or if coffee interacts with energy drinks, the approach should be able to gauge and account for these interactions. This aspect is particularly important if you plan on launching innovations that will be in the outskirts of your category definition (we’ll cover this in detail in an upcoming post).
  • Address innovation launches – A robust solution should assist in deciding which innovations to launch, forecast their incrementality and transferrable demand and also make a strong and clear case for why a retailer should allocate them shelf space.
  • Price and Facings – These two elements can change the decision process: preference for private label can be circumvented by pricing brands low enough to make them attractive by comparison. Brands with great share of shelf tend to attract the most sales (all else being equal) and these subtle changes to the consumer decision process need to be considered to fully address consumer needs and maximize sales.

All in all, what we see is that manufacturers and retailers have much deeper needs than simple assortment recommendations. They need to be able to architect categories, which is only accomplished with solutions that account for far more factors than just adding, removing or replacing items on a shelf.

Harvesting the Pearls of New Products: Lessons Learned

Thursday, March 21st, 2013

Even during the very best of times, launching a successful CPG product is a challenge.  Despite the challenges and perilously low new product success rates, manufacturers and retailers continue to enhance their new product development initiatives…and for good reason.  After all, new products create buzz and excitement, help consumers with their daily lives and build and strengthen brand loyalty.   In today’s world, the success of new products is dictated heavily by the shopper’s pursuit for value and innovation, so it’s more important than ever for CPG and retail decision makers to devote massive resources to product development, marketing, merchandising and promotion to communicate these product attributes.

At the upcoming SymphonyIRI Summit, my colleague, Larry Levin, executive general manager of Consumer Insights, and I will address this issue and offer insights into common attributes of the most successful new products. We will also discuss the best new CPG products of 2012 and how they managed to breathe life into the industry.

Do you have best practices you’d like to share?  What was your favorite new CPG product launch of 2012? You can join @Symphiri on Twitter for a conversation about new CPG products by using #sigsummit.

The 2013 SymphonyIRI Group Summit will take place at the Wynn Las Vegas from April 15-17, 2013. You can find out more information on the agenda, speakers and breakout sessions as well as sign up to attend here: www.cpgsummit.com.

The Virtual Crystal Ball: A Glimpse at Shoppers’ Minds

Monday, March 11th, 2013

With the millions of options available to consumers today, how can you ensure that they will be motivated to select your product at the shelf at that moment of truth?   Many factors contribute to a buyer’s choice, some more obvious than others. These factors can range from brand loyalty to “pre-store” path and purchase activities to everything they see once in the store, including product packaging, pricing, shelf placement and in-store communications.

At the upcoming 2013 SymphonyIRI Group Summit, I will co-present a case study with Daniel Jenski, associate director of analytics for Mondelez. We will provide insights on how companies can elevate sales with in-store marketing activities to stimulate shopper engagement and win a sale.  Attendees will walk away from the session with knowledge on how to effectively utilize virtual shopping and post-shopping surveys to increase the effectiveness of their marketing strategies.  Our session will take place on Tuesday, April 16 at 3:15 p.m. in LaTour 5.

You can join @Symphiri on Twitter for a conversation on shoppers’ minds, choices and motivations by using #sigsummit.

The 2013 SymphonyIRI Group Summit will take place at the Wynn Las Vegas from April 15-17, 2013. You may find out more information about the agenda, speakers and breakout sessions as well as sign up to attend here: www.cpgsummit.com.