Archive for December 29, 2013

Training and Retaining Associates is Key for “Bricks and Mortar” Retailers

As consumers become increasingly more comfortable with ordering everything from soup to nuts on-line, the onus on bricks and mortar retailers to create a “value-added” in-store environment correspondingly increases.

cashierAs intuitive as that sounds, many retailers still regard training and employee retention as a luxury they cannot afford, as labor costs remain the “easiest” target for cost cutting.   Those that continue to view labor first and foremost as an expense, the future is bleak. Converesly, retailers who have structure and priority for training and retaining associates,  your path is paved with satisfied, loyal shoppers.

It’s all about metrics. If retailers make a point to measure training and labor in a ROI model, instead of purely looking at it as an expense, they have at least put themselves in position to accurately track the fruits of their training efforts.

“Sales per labor hour invested”, or “sales per labor dollars invested” are two measurements that can begin the process of considering store associates as “assets”, rather than expense items. Further, most HR departments can measure, at least directionally, the cost of employee turnover. Without this number in the equation, retailers are just fooling themselves when they believe that cuts to benefits, hours, and full time status save expense without have any consequence on both the top and bottom line.

In my view, the HR and Finance departments should team to own this process. Together they have the tools and the structure to affect training, compensate performance, and provide the financial impact to the P&L for training and retaining a productive team. Done correctly with sustainable commitment to associate training, bricks and mortar retailers will not only sell more soup and more nuts, they will attract the best people in the market to help them do it.

We Can’t We All Just Get Along?

Despite vehement denials to the contrary, retailers often unwittingly create silos within the corporate structure that at times foster more of a competitive rather than a cooperative environment between departments and business units. For those of us that have spent time behind the desk at a retailer, we can likely come up with a few our own examples of structural or even compensation-related situations that prevented internal cooperation. More often than not, each department has their own goals and objectives and very rarely do any of these involve partnering or sharing the limelight with another department.

corporate fighting

In my experience, Marketing and Merchandising are two internal disciplines that often find themselves in adversarial positions. It is not as if this situation has gone unnoticed. As one remedy, some retailers of sufficient size and demeanor have positioned a Chief Marketing Officer (CMO) in the C-Suite that governs both.  Quelling these inter-departmental skirmishes should be one of the key initiatives in a CMO’s annual business plan.  But more than peacemaking, coordinating the efforts of these two vital arms of the retailer is becoming a necessity to remain competitive.

Merchandising has traditionally driven the content of the weekly circular, the products and placement of products on the shelf and the all-important relationships with the CPG brands. Most merchandising departments are organized by defining the business in clusters of departments and with further granularity in categories. Within the management of these categories, the brand relationships are particularly coveted as brands still come calling each year with a pocket full of money to promote and discount their products within the retailer’s merchandising calendar.

Marketing, on the other hand, typically is charged with public relations, advertising, and shopper marketing and loyalty promotions.  Promotions typically involve accessing customer data, targeting and managing a loyalty program if one exists. Often, marketing has their own promotional budget, but is menial compared to the dollars that flow from the brands to their brethren in merchandising.   It is this area of promotions and shopper marketing that is often a major disconnect, not just for the retailer, but for the consumer as well.

The adage, “one hand does not know what the other is doing”, is hardly an overstatement when it comes to the bifurcated approach to the business that merchandising and marketing departments often practice.  The result often leads to ad hoc promotions from the marketing department that have little or nothing to do with the priority category imperatives of the merchandising department.  Merchants often dictate pricing and promotion strategies with no regard for the targeted programs and loyalty rewards that originate from the Marketing team.

CPG brands complicate the matter even further.  They are looking for customer data and post hoc analytics from the retailer, which is typically not found in the merchandising department where their trade dollars flow, but rather marketing.  If there is little or no cooperation and synergies between those the merchants and the marketers, brands can become frustrated and often take their “incremental” funds to a retailer that has figured out the process.

For those that remain mired in the traditional un-integrated approach, I offer a few suggestions as to how to begin to establish the important link between these two areas.

1. Marketing should be knowledgeable of merchandising goals and category level priorities.  Certainly understanding the “margin mix” process and the roles of categories is a first big step in aligning promotions with the priorities of the merchants.

2. Merchants should be asking for shopper level data or shopper segment information (if it exists), pertaining to their departments and categories.  Driving category level pricing and promotions in a smart targeted approach is a fabulous way to involve the marketing team as well as becoming more appealing to brand funds, that require post hoc analytics.

3. Both Merchandising and Marketing should agree to measure success with common metrics.  That implies that merchants should be knowledgeable of the shopper marketing metrics such as household spend, shopping frequency, and share of requirements.  The marketing team in turn should become fluent in understanding department and category sales and margin objectives, pricing strategies, and the role of store brands in the merchandising mix.

4. Communicate with each other via weekly schedule meetings that focus on plans, promotions, and optimizing brand funds.

5. Having a common analytic team to insure that all parties are getting the same version of the data can further develop integration between Marketing and Merchandising.  Surprisingly, this is often not the case among retailers with multiple databases.

As with any discussion topic, there are retailers that excel in integrating their merchandising and marketing efforts, however there are others that are still structured to promote unintended internal competition.  Fixing silos within the organization will pay big dividends for the retailer, their shoppers and their brand partners.  




Cracking the Code for In-store Media

Digital signs, video screens, mobile applications, electronic shelf tags, coupon machines,  banners, danglers, self tags, and floor graphics scream at shoppers each and every trip into today’s retailer supermarket.  The business model of each one is predicated on gaining the attention of the thousands of shoppers that move through a large retailer store each week.

time in store

Percent of Time Shoppers Spend In-store ….*2012 Video Mining Mega Study

But what many of the proponents and pundits of in-store media fail to recognize is the mind set of their target audience, the in-store shopper.  These mission-driven individuals are NOT in the store long enough (13 minute average trip length for average supermarket trip*),  to absorb and interact with the plethora of messages, signs, shelf tags, kiosks, and sampling stations that frequently populate the aisles of many stores.  In fact, only 18% of those thirteen minutes are spent in the supermarket’s center store.   Shoppers are there to shop, period.

With that in mind, to have any chance of engaging a shopper, media must be intrusive, concise, and help the shopper make a purchase decision.  Simply stated, the media and the content must be convey the name and benefits of the product, the price the shopper pays and the amount the shopper is saving, if discounted.

Key to implementing effective in-store media is having an in-store media plan in place.  Layering programs on to other programs for the purpose of receiving revenue-sharing checks from third party media providers does not lend itself to success.  Too many signs or messages dilute the impact of the entire effort.

It is also important to think as if you were a shopper.  What is the most effective in-store media to help shoppers make quicker and better decisions.  There is no benefit, none….of attempting to keep the shopper in the store longer than they want to be.  Its all about “spending productivity, that is the pace of which they are making purchase decisions and placing items in their cart of hand basket.

If your in-store media is effective, it will not only produce incremental sales, but also make the shopper’s journey through the store more efficient.  To a shopper that translates into getting everything they are looking for, and perhaps a few additional items in the shortest amount of time possible.  To that point, retailers who are truly interested in optimizing the media that place in their stores should view it holistically by inviting shoppers to provide feedback as to their ability to find find what they want in an efficient way.

More to come on the topic…..