Archive for CRM

Picking Winners and Losers

Traditional supermarkets are currently losing business on both ends of their customer spectrum.  On the “price” end of the business, Walmart, Target, Aldi, Sav-a-lot, and Club Stores continue to chip away at center-store categories.  Conversely, fresh specialty chains like Whole Foods, Fresh Market, and Trader Joe’s are showing up with increasingly regularity as accepted additional options for traditional supermarket shoppers.

Harris Teeter Supports Local Growers

The resulting impact on many, (not all) traditional retailers are negative comp sales, lower margins, and poor overall financial performance.  Some, such as Food Lion, have tried to overhaul their image and offerings with new private label lines, lower prices and sharper promotions.  Others, like Raley’s in Northern California, have launch significant new loyalty programs.  Still others are remodeling their stores and adding new fresh and organic lines of perishables to stave off further attrition.

Two, retailers, however, have continued to produce positive comp sales and have grown their revenues through a variety of programs and initiatives.  The first is Kroger.  Much has been written and said about their dedication to investment in data, fuel programs, and overall pricing prowess.

The other is Harris Teeter, based in Matthews, NC.  Harris Teeter recently posted nearly 4% same store comps for the year, while increasing their shareholder dividend.  They have consistently innovated by offering in-store grocery pick-up, expanded their perishable offerings and services, and have cemented their leadership in their communities through giving and sponsorships.

One could also argue they understand who they are and are not.  They are competitively priced, but certainly not attempting to compete with Walmart and the other “price” players in their markets.  What they have done is expanded their value proposition on-line with digital coupons, and extra value for their e-Vic (electronic frequent shopper program) shoppers.

In essence, Harris Teeter exemplifies a retailer who follows the basic, but often times difficult formula for success. They understand their value proposition to their shoppers and continually re-inforce it.  They stay competitive in price with innovative promotions and embracing digital content.  They also are not shy about making some aggressive investments in their stores and programs to keep shoppers engaged and loyal.  All of this is executed with remarkable consistency.

Harris Teeter is a winner.  But winners are often targets for other winners to challenge.  To that end, Publix has recently announced a major move into the Charlotte, NC market, one where Harris Teeter has significant share.  So Harris Teeter will be tested once again to make adjustments to defend their turf.  But one thing they will likely not do to beat Publix is change the formula that has yielded so much success in such tough times. 





The Great Digital Disconnect

Like many things that come along in the world of retailing, digital content and especially digital coupons have been a disappointment to many with regards to their immediate impact to the business.  While shoppers are increasingly pre-shopping on-line, loading coupons and building shopping lists prior to their journey into the world of bricks and mortar, their activities still remain on the peripheral of most retailers mainstream focus.  This is particularly true in the grocery channel, where I have spent the majority of my career.

There are number of theories about why digital content has not become a more significant element of shopping.  Some of the barriers that are evident to me are;

  • Lack of Technology Integration In-store:  That translates to the inability for most retailers to allow the shopper to actually use their mobile device in-store to aid in the shopping experience.  Mobile payment capabilities, while catching on, is still not ubiquitous to the point of becoming mainstream for the shopper or the retailer.
  • Competing Value Propositions: Brand money and retailer focus always migrates to those elements that move cases, drive sales and can be measured.  While digital content is considered slick and most retailers believe it is the communication media of the future, paper coupons, weekly circulars, and other traditional promotions still bring drive the vast majority of sales and the quick return on investment that brands and retailers must have to run their business.
  • Dearth of Digital Content:  This is the biggest void.  Clearly many retailers and manufacturers are dipping the toes in the water, but digital offers and information continue to be an under-nourished entity, which is especially damning if the brand and retailer want to target this content so that it is meaningful to the shopper.  Hundreds of digital offers, covering some of the highest household penetration categories need to populate the offer bank, not a just few dozen, that mostly contain high margin, low penetration categories, that is the norm today.

Digital content has been wrongly positioned (in my humble opinion) as a series of stand alone events and content that often have no connection to the mainstream value proposition of the retailer.  To that point, there is an opportunity to gain acceptance and reach a degree of critical mass with digital content, if two things happen.

  1. The digital content is directly linked or layered to existing value elements of the retailer.  This means digital deals that are positioned as bonus savings on end cap items in the store, front page items in the circular, or even targeted offers that are in direct mail or email communications.
  2. There must be evidence of these digital offerings in-store.  Signs with QR codes to connect with content, references to how to load digital content to the shopper’s account while the shop in the store is rare.

When these conditions are met, shoppers will embrace the offers, engage with digital content programs at a much higher level.  Consequently, brands will be more likely to spend their trade or shopper marketing dollars with the retailer who can deliver a more holistic digital approach.  Then the fun begins.




The More Things Change……

How true is the proverb “the more things change, the more the stay the same”….in the supermarket business?  Having the benefit of having witnessed four decades of variouis changes and new initiatives, I do have a perspective on the topic.   First, the bad news.  Supermarkets, compared to 40 years ago  are still square boxes, they still have aisles and checkouts, and spend billions of dollars on newspaper inserts and weekly circulars, and shoppers still tell us that visiting the supermarket is no fun.  And by the way, brands and retailers still shake their heads when they refer to the other’s business practices.

On the other hand, from my perspective, much has changed, at least in the way of amenities and technology.

I was introduced to the grocery business by my father, who ran his own store, “Kash is King”  for a number of years.  At the tender age of 15, complete with paper hat and apron,  I was cutting steaks, quartering chickens, making ground beef, and stocking shelves.  I still have vivid memories of the meat counter, the wrapping station, and the faces of our regular customers.  As with most small, neighborhood stores, we were not the cheapest, nor did we have the nicest facility…by far.  What we did have was customized service.

We knew our shoppers by name, what they liked, what they didn’t like and provided a little extra service, conversation, and would even deliver the groceries to their home if they were unable to come in.  We knew our shoppers and what they wanted and gave it to them when and where they wanted it!

Fast forward more than forty years…..

Stores are magnificent, but in most markets and for most supermarket retailers, dollars per square foot are in decline.  Over storing, competition from new channels and now the emerging popularity of commerce all put pressure on these magnificent stores.  Promotions and lowering of prices represent a piece of the answer, if executed smartly.  But in this economy and market conditions, promotions and low prices are not sufficient to change lasting behavior. 

Now for the more encouraging news.  The ingredients are out there, floating around just waiting for someone to put them all together in a nice package that could change the fundamental way shoppers, brands and retailers interact.  It takes data, (which most retailers have), affordable and ubiquitous technology, (that would be the mobile phone), and intelligent, relevant, and compelling content, (ok, this last component is still in the incubator).

Said another way, the first to crack the code on the mass marketing of the Kash is King model using technology, relevant content and shopper data will position themselves for lasting and profitable growth.

OK, at first glance, this sounds very intuitive.  I think about the old Steve Martin comedy routine describing the key steps of becoming wealthy when he begins with….”first, get a million dollars, then……..”

But very much like acquiring wealth, achieving competence in all three of these areas is a daunting challenge.  There are companies and practitioners that have become very adept at one and in rare cases, two of these elements, no one yet has brought them all together in a cohesive, manageable package.

As a consultant with many years of being a retail practitioner behind me, I understand how difficult it is to conquer this hill.  But I also know that it if we could do it 40 years ago, without a single MBA among us….we should be able to do it now!














Forget “New” Business Until You Maximize Existing Shopper Base

Ok, perhaps the title of this piece is  bit over dramatic, but I still maintain that retailers spend much too much time, money and newsprint on chasing new and highly unsustainable shoppers when they do next to nothing to “mine” more dollars from the shoppers they already have coming through the doors and web portals each week.

When mentioning this obession with new customers to my colleagues in the past, the almost instinctive answer is that we have to have both…new and existing shoppers and if we fail to chase and capture our fair share of new shoppers each week, marketshare and sales will suffer and some would insist that  disease and pestilence will reign over the countryside.  I  disagree.  But there are ways to use mass media more intelligently, so that in the process of reaching out to new shoppers, you are not alienating the ones who pay the bills for you

Let’s start the conversation with the Grand Daddy of Mass Communications, of course, I’m talking about the weekly supermarket circular.  First of all, I am not advocating the total destruction and abandonment of the weekly circular.  So let’s agree that the circular is far from extinction.  But let’s also think about using the circular in a smarter more targeted way above and beyond it representing a means to extract trade dollars from the brands.


Despite all sort of new and targeted ways to reaching shoppers, the weekly broad sheet or tabloid is about is close to a sacred cow as it gets in the grocery business….and other retail channels aren’t far behind in their reverence to this aging beast.

But there are ways and means to use the circular to better understand who is using it, buying from it, and more importantly, answer the questin, “How are the best and most profitable customers using (or not using) the weekly ad”?

Best and most profitable is another way of saying “Top or VIP Shoppers”, which most retailer have some means of identifying.

Here are five quick questions that can be answered through some pretty basic database queries:

1.  What percent of best shoppers purchase from the front page of the circular?

2.  How do VIP Shopper basket sizes differ from best shoppers who do did not purchase from the front page, and how do they differ from other shopper groups that did or did not make a purchase from the front page?

3.  Which items, over time, resonate the best with top shoppers, more casual shoppers, and the ultra price sensitive that shopper predominantly for specials and deals?

4.  For more advance applications and segmentation practices, which deals are more apt to be purchased by social media community shoppers?

5.  By store type or geographic segment, which items attract a larger percentage of shoppers and what are the associated weekly sales by store segment and geography with various combinations of front page items.

Armed with this basic intelligence, circular adds can be a great learning tool for making offers more efficient and strategic.  Purchase indices can be quickly calculated to help merchandising understand  which items and item combinations are more attractive to the each shopper segment.

Now, back to VIP Shoppers.   Most supermarket retailers report that even the very best shoppers are only sourcing about 65% of their grocery requirements from their favorite store.  If you happen to be that favorite store, you know two things for sure,

1.  These shoppers like you better than anyone else (at least at this point) and are very familiar with your store (s).

2.  There is still much more potential business available for these households.

Using circular ad analysis to better target VIP Shopper segments is pretty basic stuff.  But it works and allows you to draw even more ROI out of  your ad program by using the data to refine future ad combinations and versions, designed to build basket size with your very best shoppers.

I have found it always much more fruitful to attempt to get shoppers to do more of what they are already doing ….than chasing new shoppers and spending 3x to 5x of markdown investment to get them to change their behavior and still not assured you have created any real loyalty in the process.

I am truly adamant about focusing on existing shoppers.  They offer much more upside than most retailers recognize.  I will write more on this topic very soon.






Mobile Loyalty…Shoppers on the Move

With more than half of the U.S. now has a smartphone.  With this new audience that clearly represents “critical mass”, new applications and businesses are sprouting up like dandelions on a Spring day.  This is especially good news for many of the loyalty programs in the supermarket channel who have struggled to find a way to communicate with their card holders in an affordable, convenient way.

But that is only true if they the supermarkets, understand the medium and how it is different from other media they have traditionally used.  There is a downside for retailers that comes with new mobile touch points, its called “consumer options” .  Not necessarily good news for retailers who already see even the best shopper’s share of wallet dwindle each year.  Now shoppers have the means to comparison shop at anytime during the store selection process.  New mobile applications are putting new pressures on the retailer’s hold on the shopper.

Mobile applications have also made it much easier for shoppers to view deals and offerings from many different retailers, before making their choice.  Point of decision for these shoppers is now a pre-shopping exercise, long before the walk through the doors of the brick and mortar store.

Retailers are at a critical fork in the road….embrace the new technology and its customer implications, and create a customer enterprise system and culture that enables a consistent view of and conversation with the shopper.  To do this effectively a single, master customer database collects and assembles all shopper activity whether it be from the checkout in-store to the downloading coupons on-line, or even a social media interaction.  Knowing the preferred method of interaction for each shopper will also enable the CRM program to communicate with the shopper on their terms and along the point of purchase path at just the right moment.

As I have said before in many meetings and at industry forums….”Somebody will figure this out.  It might as well be you!”









Nothing “Super” about Supermarket CRM

Almost 20 years after the introduction of the first loyalty card programs, the promise of a new way of doing business, smartly targeted and one to one, remains elusive.   I recall reading everything the Brian Woolf (former CFO of Food Lion) had to offer on the subject.  His 1996 treatise, Customer Specific Marketing, was poised to be the Bible of the new order of supermarketing.   He made a very strong case for the economic advantages of moving from mass communication to thoughtful customer-centric targeted relationships.  Finally, I thought, a new initiative in the mundane world of grocery store marketing that was more than an acronym, more than just something that was fun and creative.  This could work because it made economic sense.


But two decades later, only modest progress is evident among most CRM-savvy supermarkets. Sure there are some good programs out there that have distinguished themselves from the pack.   CVS Drugs and their reward program comes to mind in that almost anything marketing related has to do with their little red key fob and offers and coupons printed directly on the customer’s receipts.  Kroger has devoted dollars, energy, and human resources to its “dummhumby” approach to customer segmentation schema. Their periodic vendor funded mailers are steady and reasonably effective (depending upon whom you talk to) and they appear to be using the customer data to fine tune their assortment, pricing, and in-store merchandising.

But beyond CVS and Kroger, most others seem to be struggling to achieve the prominence for their programs that was foretold by Brian Woolf and others.  In fact, twenty years later, paper coupon usage is up, not down….pages and pages of print circulars still clutter mail boxes and driveways each and every week, despite prognostications of weekly ads and the expense of tons and tons of newsprint disappearing from the landscape.

The reasons for the lack of progress of CRM are many.  But no reason looms larger than the persistence of both brand and retailer basing their financial relationship off of their short-term insatiable appetite for volume and quick bottom-line dollars.   In the case of the brands, the pure number of cases sold, no matter how inefficient the process remains paramount.  To that point, diverters still have plenty of product to fuel their discount pipelines.

Many retailers continue to want “all the money brands have “while having no specific commitment to spend the money in accordance with the brand’s strategy or providing any consumer response data back to the brands.

I am not suggesting that volume and case sales should cease as an end goal.  Nor do I think that mass print circulars should totally vanish from the scene.  What I do strongly believe is that CRM should be the first option.  Targeting and relevant offers should dominate, not be the exception.  Retailers with customer databases and new digital touch points should make their own investments into changing the way they do business and provide “preferred status” to brands which partner and provide content for those initiatives.


Brands should continue to embrace “shopper marketing” for it’s true and practical benefit.  That is,  they should work through, not around, retailers with incentives and resources to enhance their targeting initiatives, thus drawing dollars and resources away from mass initiatives such as sweepstakes, case discounts, and FSI’s and funnel that content to the retailers who are willing to use it to reward their customers, not filling their financial funding buckets.