Archive for In-Store

Who Moved My Cheese….Literally?

Who Moved My Cheese? Literally.

Thinking back to the classic business book written by Dr. Spencer Johnson back in 1998, I find both the premise and the title to be very thematic to the challenges bricks and mortar retailers now face with their category placement strategies.

First and foremost, Who Moved My Cheese addressed the difficulties in handling change in a dynamic business world. I think we could all agree that we are indeed in that mode as retailers in 2017. Secondly, and of equal relevance, when retailers literally do move their cheese, (and other categories and items) within the store they most often do so without understanding the implications of their decisions in terms of shopper dissatisfaction and accordingly lost sales.

In my thirty plus years as a supermarket retailer, I had the opportunity to sit in on many fixture and merchandising plan meetings involving new and remodeled stores. Where we placed departments and categories within the store was always about retailer logistics and space availability. There was little or no discussion about shopper convenience or shopping efficiency. Essentially, this remains the approach of most retailers today.

Let me make the case for why this practice must change.

  1.  Changing Shopper Expectations: Shoppers are being ‘spoiled’ by the ease in which they can no find and order items on-line. Many of these items are formerly items that they were required to hunt and find in a large footprint retail store, requiring their time, effort and often angst.
    2. Waning Loyalty to One Store: Even without the intrusion of e-commerce retailers, shoppers have more bricks and mortar options than ever before to more conveniently and affordably offer items and categories that formerly were purchased at one store, albeit often inconveniently.
    3. Shoppers are Time Pressed: No matter how hard we try to create a warm, friendly in-store experience, most shoppers have better things do than to spend extra time shopping in any one store, given their hectic and demanding lifestyles. Shopping Trip length is short and getting shorter.

What to Do?

If I have convinced you that I might be on to something, let me suggest a few things retailers can do short of ripping down walls and upending your merchandising practices that will yield quick, incremental gains.

It simply requires retailers to re-think where they place departments and categories in a more holistic, shopper centric manner. I have seen this effectively happening in three steps.

1. First, recognizing that some categories are more important to your business than others and they should be readily accessible to the majority of your shoppers, without your shoppers having to work t
o find them. Contrary to common practice, purposely placing the shoppers most important categories in the far reaches of large stores to manipulate the shopper’s trip is becoming increasingly risky in this new environment of retail channel options.

2. Which leads to the second step, which is recognizing that there are areas in every retail store that are more sales productive than others. There are also distinct, existing traffic patterns in every store, which are much easier to leverage than to attempt to change. Most of us have seen heat maps and traffic pattern maps that depict “hot and cold” spots in the store.
Just know that some areas of your store are more void of shoppers than you would like. It is also important to realize that shoppers spend faster and more efficiency early in their trip and their trip time is inherently short and not easily stretched by “good merchandising” and using placement of “destination categories” as magnet to attract shoppers into parts of the store they are not otherwise interested in going.

3. Finally, many departments, categories and items have strong affinities with other items on the basis of how the shoppers view and use these categories and items. When possible use data to measure basket level affinity. I would encourage retailers to do this both quantitatively (basket analysis) and qualitatively (shopper questionnaires and shop-a-long research) to better understand the strength of these relationships and the importance of position these categories and items near to the other.

Enabling shoppers to quickly and efficiently find what they are looking for in today’s bricks and mortar stores are emerging as a key competitive advantage. As with most things retailer, there will always be an element of “art” in any empirical category placement plan. However, we are no longer operating in a consumer environment where our stores and merchandising plans accommodate our merchants first and expect the shoppers to adapt.

If you move your cheese now without first thinking about the cheese shopper, you will likely be selling less cheese in the future.

Five Important Questions Most Retailers Cannot Answer

Managing the retail business in 2016 has never been anything but challenging, but with the mountain of business intelligence data available today it has becoming equally challenging to determine which metrics are the most effective tools in that process.

question markWhen the retail business is growing, the important, ‘bankable’ metrics such as sales, profits, cash flow, labor and transportation efficiencies are reassuring numeric markers of success. Despite retailers continued reliance on these numbers, none of these stalwart metrics are sufficiently deep reaching to accurately provide a true diagnostic of the health of the business in today’s complex environment.

As a veteran of many “Monday Morning Retail Meetings”, I know personally that when sales are tracking the wrong way, it is usually theories and conjecture that serve as explanations, not empirical measurement. Also, many times a downward trend comes as a surprise, when in fact if the right diagnostic measurements were being monitored, pre-emptive steps could have been already in motion.

Encouragingly enough there are an entire new genre of metrics that have emerged over the past decade that can serve as ‘intelligent indicators’ of the health and vitality of the business. Use of these metrics begins with the retailer “asking the right questions” about their business these questions are of particular relevance to the bricks and mortar retailers, who have made significant investments in stores, inventory, and logistical support.

1. Are My Departments and Categories Getting Sufficient Exposure to Shoppers?
Whenever retailers look at shopper tracking studies in their stores, the number of key departments and categories that see only a scant few of the in-store shoppers typically astounds them. This is particularly true in larger stores (over 50,000 square feet). Simply put, you cannot sell something that no one sees. In fact, many of the highest margin categories in the store are typically visited by fewer than 10% of the shopper base. There are a variety of remedies for increasing shopper exposure, but it begins with understanding the lost opportunities of low traffic areas in the store.

If category sales are lower than is acceptable, before you make adjustments to pricing, promotions, and presentation in the store, measure the categories shopper exposure rate. If fewer than 20% of shoppers are exposed to the category, the fastest way to sales increases is to either move the category or more likely create secondary placements of the category in higher traffic areas.

2. To Optimize Exposure, Are My Categories and Products Positioned Optimally in My Stores?
Ask any retailer why they position various departments and categories where they do and you will hear anything from “that’s where they have always been placed’ to ‘perishable departments are more efficiently operated if they are on the perimeter of the store near back room work areas’, to that’s where they need to be for theft and security monitoring. While all of these reasons are viable, none speak to optimize the sales and profit of the department. None speak to the sequential order that makes the most sense to the shopper, which will enable the shopper to more quickly find the items they want and move on to the next purchase.

As a group, shoppers develop a cadence and flow in your stores that can be leveraged with the creation of selling events along the ‘dominant path’ that carries the majority of traffic in most all stores. If there are 10 product categories that are driving a disproportionate amount of business, insure they are position to be intercepted by shoppers on or near the ‘dominant path’ of the store.

3. Are We Selling the Right Mix of Items in Our Stores?
There are essential questions that should be asked continually in order to understand the efficacy of a retailer’s product offerings.

i) Of the top selling 20% of items in my stores, which items are growing in sales, flat, or shrinking?
ii) Of the bottom selling 20% of Items in my stores, which items are relevant and valuable to the overall mix and which should be discontinued?

The rationale for carrying items in larger, inventory intensive stores often falls to moneys or deals that are offered by manufacturers as incentives for shelf placement. As shoppers become more accustom to on-line purchasing, where filters and past purchases help shoppers make choices, slow moving items that clutter the shelves and make the shopper’s purchase decision more difficult are a luxury of the past.

Understand the ‘contribution of sales’ of each sku that is slotted on the shelf and determine a survival threshold for each product, one that dictates a certain level of relevance to your shoppers if it is to remain in the mix.

4. Are Shoppers Able to Efficiently Navigate Our Stores?

Most retailers have no clue as to how long the average shopping trip in their stores last or how fast the shopper buys during that trip. Both are important metrics and both will likely surprise the retailer upon their discovery. Length of trip is vitally important in that shoppers have a finite amount of time to spend in stores. Efforts by retailers to entice shoppers to linger or move into areas of the store that are not relevant to their current mission, typically do more to frustrate the shopper, than to place additional items in their basket.

Within the short, finite amount of time, the faster the shopper is finding their needs and making purchases, the bigger their basket size will ultimately be. The notion of helping shoppers ‘expedite’ their shopping trip is not only counterintuitive to most retailers, but flies in the face of the long accepted belief that the longer shoppers linger in the store, the more they will buy.

Measure, benchmark and strive to improve shopper ‘buying rates’ in stores. Shopping trip length, while it will vary upon the physical size of the store, is a clear indicator of how efficient your stores are for you shoppers. Do not be alarmed if shopper centric merchandising practices reduce the shopper’s time in the store. As long as they are buying faster and building basket size in less time, shorter trip lengths are a positive indication that you are connecting with your shoppers on their terms, which is how it should be. The faster the shopper buys, the more they will buy on any given trip. If shoppers are spending at slower rate, lower basket sizes will result. Set benchmarks on shopper time and spending rates and work to steadily improve through smarter, shopper-centric merchandising.

5. Are We Relying Too Much on Discounts and Promotions?

As a new store manager, a wise man once said to me, “Mark, anyone can give it away, but only a good merchant knows how to sell at a good profit”. Certainly deals and promotions can be very powerful tools, especially for retailers that are positioned as a ‘high-low’ merchant. However, too much of the business being sold on promotion can be a harbinger for bigger problems to come. First and foremost, too many or too frequent promotions serve to dilute the impact of any single event. Further and more critical to the life of the business, it could be an indication that the everyday pricing is out of sync with the shopper’s expectations and the competitive environment.

It is difficult for anyone to make grandiose generalizations about pricing and promotion to specific retailers, as their effectiveness is driven in large part to localized variables such as demographics, shopper income levels, and competitive environments. However, on the whole, retailers discount too much and rely too heavily on promotions to drive their business.

To my knowledge, know one in the retail industry has developed a sure fire method of measuring the amount of wasted ‘markdown’ a retailer investment in a merchandising program. Most retailers would tell you that they intuitively know that what the retailer can measure is how much of their business is sold on promotion/discount versus full margin. If I were a CEO or CMO I would asked this question every week with the knowledge that good merchandising, good operations and good service can work in tandem to reduce the reliance on deals to drive more profitable sales.

It’s About Time ….Making the Case for Shopper Time Management

Most would agree that we have entered in a period of radical change in shopping behavior. Almost nothing is the same as it was a mere five years ago. New on-line competitors, technology aided shopping apps provide shoppers new options and retailers new ways to compete for shoppers. Through all of this progress, there is one thing that hasn’t changed. There are still only twenty-four hours in any given day.

To that very point, while shoppers are interested in new tools to help them save money, early returns indicate that shopping apps and new in-store technologies that save the shopper time are the ones rising to the top of the pile.

Traditionally, retailers almost totally ignore the “time investment” shoppers make to buy from them. Ask any retailer what their shopper’s average trip length is or how fast shoppers buy once they are in one of their stores, and you will likely get blank stares.

Aside from some attention to expedite the checkout process, retailers continue to assume that their shoppers relish looking for new ways to invest more of their time exploring aisles, alcoves, reading labels and scrolling directories. In 2015, this is nothing more than a retailer’s fantasy. To demonstrate this misguided mentality, store footprints have continuously grown over the years and along with it the corresponding decline in shopping efficiency.

closingspeed

 

The More Options Shoppers Have, The Less Time They Have for any One Retailer!

To put a finer point on it, food retailing study after study tells us that as much as 85% of the shopper’s time is wasted in-store navigating massive stores with extraordinary amounts of products, searching, seeking, but NOT BUYING. Aside from the most ardent “price shopper”, “time” is the shopper’s most prized possession.

Retailers, whether they be bricks or e-commerce, that invest in new ways to give some of the precious commodity of time back to the shoppers will rule over their respective marketplaces.

The Payoff and Rationale of Shopper Time Management
What we steadfastly know is that the faster shoppers buy, the more the buy. Conversely, the long it takes for a shopper to make a buying decision, the less likely they will make one at all.

In fact, shopper time management is the first logical step in a shopper centric merchandising. Dr. Herb Sorensen, noted expert on retail shopping behavior and author of the top selling book, “Inside the Mind of the Shopper”, lays out a new road map for retailers. He refers to this map as the Five Vital Tenets of Shopping Behavior.

5 vital

Use the link for more detail on the Five Vital Tenets http://acceleratedmerchandising.net/?page_id=90

Following this guideline represents both a new and necessary methodology of in-store merchandising. Every step of this process is focused as to how the shopper shops, not how retailers would like them to shop. The Five Vital Tenets of Shopping Behavior is predicating on understanding the importance of element of time in the success of connecting products with shoppers in an efficient manner.

As retailers begin to measure and react to shoppers’ “habitual” tendencies when they engage bricks and mortar retailing, connecting shopping efficiency with basket size and shopper visitation increases will provide the empirical justification for changing the mindset of how physical stores are designed and merchandised.

The data is compelling. The relationship between a shopper’s ability to buy faster and every retailer’s goal of increasing sales is irrefutable.

What’s Next?
Seldom does any thing in retailing happen quickly. Adaption speed of Shopper Time Management will be no exception. Retailers are deliberate beasts and venture in a step-wise fashion into new business paradigms, as they are heavily invested in the current retailer-brand monetary ecosystem.

The good news is this. In high volume retailing, even step-wise, incremental gains in shopper efficiency can produce significant impact to the bottom line. It’s time to incorporate the element of the shopper’s time in the mix of merchandising metrics. Those retailers that do so will find their time-starved shoppers thanking them with more of their dollars and enduring loyalty.

Amazon Must Deal with “e-Out-of-Stocks”

Welcome to the vagaries of retailing, Amazon. With the advent of the recent “Prime Day ” event that promised “Black Friday” type deals and excitement, many (if not most) shoppers were left with the equivalent of looking at bare shelves. Certainly there is an understanding among shoppers that really “hot deals” carry the “while supply lasts” caveat, however when the supply is so small that only a fraction of the audience can participate, the risk of alienating more shoppers than you endear, becomes very real.amazon-o-o-s

Ironically, for e-retailers, one of their key advantages over bricks and mortar stores is their ability to access “endless aisles” or virtually unlimited inventory, minimizing the notion of out-of-stock. However, when Amazon and other e-tailers overtly promote specific deals and sales events, they better be prepared to sell some merchandise, or risk alienating the very audience they are attempting to attract. If an on-line shopper logs on one hour after the sale begins…. only to find the popular items such as portable chargers. Click here for reviews of portable battery. Deals are gone and only remnant items are left, the e-tailer will have done more damage to their customer constituency than good.

Further and finally, social media provides an instantaneous shopper feedback forum.  Yesterday’s post event tweets were dominated by such terms as “garage sale”, “flea market” and “crappy yard sale”.  Angry shoppers tweet more than happy ones. E-retailers should know that the report card on their efforts will be immediate and cutting if their sale disappoints more than it delights.

Playing “Small Ball”…..the New Game in Retailing

“Small” is the latest “big thing” in contemporary retailing in 2015.less is more     Ironically, the impetus for the reduction in size of store footprints is in significant part due to a recent trend of building huge stores over the past two decades. During that period, Walmart, SuperTarget, Costco and even the likes of Kroger found nirvana in retail formats well over 150,000 square feet. Others followed. “Size Matters” was the battle cry.

The size of traditional supermarkets doubled in many instances. Categories and variety were expanded and even the most traditional retail supermarkets made ample space to “sell everything but the kitchen sink”. It should be noted that Midwestern DIY retailer, Mennards actually does sell groceries and the kitchen sink.

Fast forward to present day. That quest for size is largely responsible for saturated and sub-optimally productive retail markets.  As a consequence, many retailers who opted for big boxes find their revenue per square foot in constant decline. Additionally, Amazon and other e-retailers have taken a sizable chunk of sales and productivity advantage away from these larger box operators by not having to operate thousands of labor-filled stores and burgeoning on-hand inventory.  Now….. even the retailers that invented “big” are nervous.

Walmart believes part of the answer is building smaller Neighborhood Markets and even smaller “Express” stores. Other retailers across the Food, Drug, and Mass channels are experimenting with limited variety “express” formats. Target, Whole Foods, Stop and Shop, and regional independent, Martin’s are chains that have made recent headlines with their experimentation into the world of smaller “express or urban” formats.

Simply said, lots of smart people from very successful retail chains are diving in head first into smaller footprints. But reducing store size has its inherent risks and consequences. The following are areas of four shopper dynamics retailers should consider in when designing a more concise footprint;

  1. Shopper’s Variety Comfort Zone: Smaller footprints necessitate dramatic reductions in both breadth and depth of categories. Without extensive research into the reasons shoppers frequent a retailer’s physical stores, eliminating variety can create the risk of sending the wrong message to shoppers who find comfort in knowing a retailer has what they want, when the want it. Balancing the benefits of less space with the loss of variety is a delicate, but very important process.
  1. Before Shrinking Store Size, Have a Viable Companion On-line Shopping Alternative: Before a retailer leaps  into smaller footprints, it would do well to first develop a consumer centric approach for shoppers to have access to less frequently purchased items. This could be accomplished  via an in-store kiosk where items can be ordered and dropped at the store for pick-up or delivered to the home, as just one example.
  1. Operational and Merchandising Limitations: With reduced space comes with it the opportunity for faster moving items to be more readily out of stock. With all the current issues even the best retailers are having with out of stocks, reducing inventory capacity in smaller footprints may only exacerbate this problem. Also for those retailers who still rely heavily upon brand dollars for slotting allowances, end caps reservations and other in-store placements, there will be much less room for such things in an “express” store. Technology, planning and customer data can mitigate these issues if included in the design plan.
  1. Inefficient Layouts: Multiple studies have concluded that a significant portion of the inefficiency with larger formats is not simply connected to the actual amount of square footage retailers must merchandise, or shoppers must navigate, rather much of the problem lies with inefficient store layout. During the design phase of a smaller footprint, it is an excellent time to lever research to better understand the dynamics of the current formats. Shopper traffic flow, hot and cold spots, dwell time, optimal departmental placements and are critical in enhancing the Customer Experience (CX). Once armed with the knowledge of how shoppers are engaging existing formats, large format stores can be improved and new smaller prototypes, can be made more efficient out of the gate.

Market conditions are conducive for smaller formats to continue to populate urban areas and saturated markets. Reducing store size brings with it the opportunity for more efficiency, productive sales areas and a more efficient customer experience. Conversely, with less space to sell into, merchandising the stores and engaging the shopper will require thoughtful planning based upon measureable in-store shopper behaviors. Let the discovery begin!

 

mark heckman

 

 

 

Fumbling at the Goal Line

Retailers often spend inordinate amounts of capital and expense in creating an inviting shopping environment.  Music, fixtures, terrazzo floors, digital signage and wall graphics are all meant to allure shoppers into the store and entice them into spending more.

shutterstock_120974128While all of this expense is well placed, its benefit can be negated in just a few minutes at the checkout line.  Calling upon a popular football analogy, it is tantamount to fumbling at the goal line after a productive long drive.  

Admittedly, checkout systems have improved.  Self checkout can be both a benefit for the shopper (especially one that does not crave interaction with an under trained, minimum wage associate) and the retailer’s labor expense.  However, shelf checkout, coupled with new, but slowly emerging mobile checkout technology, not withstanding, most checkout experiences are pretty much the same as they twenty years ago and they are often excruciatingly slow.

This is especially true in the food channel, where there are more tender options, frequent shopper codes, coupon types, pricing snafus, and numerous other situations that render being the “next one in line” an unforgettable adventure in frustration.

A recent VideoMining Study revealed that the average grocery shopping trip lasts only thirteen minutes, (without checkout time). While this is an average, and stock up trips last significantly longer,  the brevity of time spent on an average trip underscores the need to avoid the excessive time spent at the checkout.

Other studies show that time spent at the checkout ranges from market to market.  In very efficient markets, the checkout wait time can be as few as a minute or less.  In other markets, mostly in the Eastern region of the U.S., checkout wait times can be as long as eight minutes.

Key is keeping the in-store wait time as a very low percentage of the time spent in-store.  

Kroger is one of the leaders in the grocery channel addressing checkout wait times.  In most markets they offer a shopper monitoring system that tracks the number of shoppers that have entered the store and the time they entered.  Using average shopping times, they predict how many check lanes they will require at various times throughout the day.  This system announces this information on video monitor screens where both Kroger associates and shoppers can view the information.

Having a sufficient number of lanes open is indeed a key factor for keeping the checkout process from grinding to a halt.  Associate training is yet another.  Trained associates know the difference between an artichoke and a rutabaga. They understand the various tender types and do not need constant supervision assistance that freezes the line, as their training continues.

Without making the technical investment of a Kroger, retailers can “observe a lot by watching”.   Managing the front end of the store is a requisite for a smooth and shopper pleasing checkout experience. Waiting until lines are five and six deep in frustrated shoppers before opening new checkouts is not good front end management.  Retailers that have a management person with their sole responsibility centered on smooth checkout experience are winning this battle.

A shopper’s last impression of the shopping trip tends to set the tone for their overall experience.  Erring on the side of investing in excellent customer service on the front end will pay dividends in terms of customer satisfaction and their repeat business.

 

Can Loyalty Marketing Finally Fulfill Its Promise?

It has been well over twenty years since the first “electronic” card based loyalty programs entered the retail scene. Supermarkets led the way, given their propensity to offer coupons and deals, coupled with seeing their customers more once a week. Loyalty programs seemed to be a good fit for their business model. Furthermore, most supermarket retailers understood that about 20% of their shoppers were delivering about 80% of their sales. For many, it made good economic sense to focus on building further rapport with the most valuable shoppers and promote less often or differently to those outside that group.

From the early fanfare of these programs, it wasn’t long before the reality set in. Retailers discovered that creating a separate marketing strategy with offer banks full of meaningful, special deals for targeted shoppers was problematic. With the limited technology of the day, it was often too expensive to target shoppers. CPG brands, while appreciating the concept of targeting, were of little help with content given they often held different targeting objectives than their retail customers.

 

firehose1For those and other reasons most card-marketing retailers, quickly gave up on building relationships with their top shoppers despite having mounds of customer data to smartly do so. Frustrated and mired in the day-to-day struggle for “comp sales” and gross margin growth, they simply reverted to using the card as a new prerequisite for shoppers to get the deals they were already getting before the program launched.

Shoppers for the most part played along. However, over time these programs became very milquetoast and provided little or no point of advantage for retailers. With rare exceptions, the early promise of loyalty marketing went unfulfilled. Consequently, a number of good retailers have abandoned their programs, while other successful retailers felt vindicated by staying away from electronic card marketing.

Fast forward to present day.

Shopping technology is exploding. Shopping Apps are abundant. Some would even argue apps are too abundant and present so many options and functions that shoppers are overwhelmed with choice. Apps with “geo-fencing” capabilities like Shop Kick (www.shopkick) and Ping4 (www.ping4.com) alert shoppers when they are in geographic proximity of the store. Still other Apps, like Aisle 411 (www.aisle411.com) use iBeacon® or similar technology to sense the shopper is in a particular area or standing in front of a certain display in the store. Still, others are focusing on the collection of deals across many stores. Couple that with every major retailer having their own proprietary app, each with their own version of loyalty points or rewards.

New technology adaptation is also changing the shopper and their expectations. Upwards of seventy percent of shoppers now carry a smart phone with them while they shop. Some are even using it to help them find items, download coupons and explore nutritional content. On an increasing basis, shoppers are deciding where they shop based upon the presence of shopping technology. Said another way, retailers must innovate and adapt popular technologies or risk losing market share and shopper relevance.

Techno-Loyalty is here to stay.

Pad-signal copyIn my view, loyalty programs must be communicated and executed through technology to remain relevant. Shoppers want automation, simplicity and consolidation of the many offers and rewards from each retailer, both on-line and in the physical store. Consequently, while loyalty cards live on, they are gradually giving way to shopping apps, wireless chips and other technologies that identify the shopper both on-line and in the store.

Further, options are emerging for shoppers to manage their own loyalty. Shopping sites such as Retail-Me-Not, (www.retailmenot.com) , All You, (www.allyou.com) , Savings.com (www.savings.com) and a host of others have aggregated offers from multiple retailers for the shopper to access in one consolidated place. While these sites are growing in popularity they often lack full retailer participation, meaning they work independently from the retailer’s own website or shopping app. This separation often requires the savvy shopper to visit both websites to insure they have the complete offering from each retailer.

In an effort to create the ultimate level of consolidation, solutions like LOC Loc Card(www.locenterprisesllc.com) enlists the retailers to participate both in-store and on-line to extend the reach of their current loyalty program, by creating a consolidated on-line “shopping mall” where shoppers can access the full compliment of their favorite retailer’s offers and rewards, on one website. In-store, the LOC card or app either replaces or augments the retailer’s own mechanism of shopper identification.   Shoppers naturally love the idea, while retailers, who are deeply vested in their own websites apps, appear to be gradually understanding shoppers will ultimate dictate the manner and place in which they interface with the retailer.

Looking Forward, the Retailer Must Take a Holistic View of the Shopper

The future is now defined as “next week or next month”, not “next year or the next five years”. The rapid development of shopping technology has accelerated the shopper’s expectations and has put the onus directly on retailers to elevate their loyalty game. The first step in that process is to first acknowledgement that each retailer, no matter how big, is just one piece of the shopper’s loyalty environment, not the alpha and the omega of the shopper’s needs as many have viewed it in the past.

Concurrently, technology companies understand that working with (not around) the retailer is optimal, as it provides the most holistic shopper solution. On the other hand, if retailers remain guarded and over protective of their programs ignoring the increasingly loud voices of their customers to become more holistic in their approach to building relationships, even their best efforts of offering stand-alone loyalty will miss the mark with the shopper.

After two decades of struggle, technology has finally arrived to deliver on the promised returns of loyalty marketing. It is now up to the retailer to either embrace a new model of holistic, technology-based loyalty or run the risk of being rendered irrelevant, even to their most loyal shoppers.

 

Chasing the Ghosts of Shoppers of the Past.

The deliberate, time rich shopper of the past, to whom we market our stores, no longer exists. Quite the contrary, In general shoppers are time starved, distracted, and in some cases just flat out annoyed when they enter our stores. This new shopper increasingly finds ways to short-circuit the store plan, finding their items and moving on as quickly as possible, despite the retailer’s best efforts to induce the shopper into a long and deliberate visit.

Shoppers are trying to tell us something!

To amplify my point, there exists quantitative research in abundance supporting the notion that bricks and mortar stores are rapidly alienating themselves from the evolving shopper. Among several notable KPI’s (Key Performance Indicators), such as Dollars per Square Foot, Same Store Sales and Customer Counts are trending in the wrong direction for all except the very few that have strategically embraced the new shopping paradigm.

Dr. Herb Sorensen1, who I consider the very best source of empirical knowledge on consumer shopping behavior, stated in one of his recent publications that the relatively short time the shopper spends in a retail store is mostly devoted to moving from point “A” to point “B” and not engaged with actual shopping at all. This is particularly true in larger foot print stores of 50,000 square feet and more. In fact, only twenty percent of the entire shopping trip involves the shopper facing the shelf and engaging in the purchasing process.

 

The implications of this information are profound. Retailers and their marketing partners spend annually $275 billion2 in the U.S. on advertising, marketing, and promotion initiatives. These monies generally are regarded as less than efficiently spent, due to a variety of reasons, but chief among them is that those funds are not reaching the shopper effectively at the shelf, when and where the majority of purchased decisions are made.

 

According to website designers in Scotland and the UK, new advancements in web technology are around the corner and with it, retailers and brands alike now have access to new research techniques and resulting data that can help them re-think how they lay out their stores and categories. Ultimately, each retailer should have a Visual Strategy for its bricks and mortar stores. Much the same way a web designer uses Google Analytics to build and fine tune an efficient website, physical stores must be approached in the same way.

 

MorningNewsBeat–Weis Simplifies Saving

Pennsylvania-based Weis Markets said yesterday that it is launching a Three More Ways to Save program that it said will offer discounts on more than 2,000 products in every store department.

The company said that the savings program will have three elements: a “lowest price in the market” guarantee on four weekly items, everyday lower prices on 1,000 items throughout the store, and a 90-day price freeze “on thousands of seasonally relevant items that will remain at these prices through April 13, 2014.”

• The San Diego Union Tribune reports that Baron’s Market, a four-store independent operating in the San Diego market, will open a new store in the town of Alpine, in a location formerly run by Fresh & Easy.

Baron’s has a unique approach – simplifying shopping by offering fewer options, a “curated selection of healthy and affordable foods, all tasted and approved by a committee of managers.”

An opening date has not yet been set.

• The Associated Press has a story reporting that the US Food and Drug Administration (FDA) is in the process of revising nutrition label requirements, saying that “knowledge about nutrition has evolved over the last 20 years, and the labels need to reflect that.”

No word on when the new guidelines might be released.

What’s

via MorningNewsBeat.

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.

Building Loyalty at Kroger …with Digital Overlays

I love the “digital overlay” concept.  It makes so much sense to me to drive digital coupon adaption by linking these new savings options with more traditional promotions.  It is not a surprise to me that Kroger is leading the way, employing brands and promotions with these digital overlays.  Details below;

“ConAgra has also effectively employed programs with digital overlays. For example, a January 2013 meal-solutions program sent an email blast to Kroger’s loyalty card shoppers with load-to-card coupons and incorporated a customized landing page at ReadySetEat.com. “Growing business with Kroger’s loyal shoppers is our priority too,” says Yurovski. “The programs that focus on loyal Kroger shoppers and our brand shoppers return higher ROI than those that target the competition’s [shoppers].”In each of these efforts, Kroger relied on its email database from global market research firm dunnhumby the retailer owns half of dunnhumby USA to identify and reward Kroger’s most loyal shoppers. The company’s ongoing partnership with Kroger has long set the industry standard for effective targeted marketing. “Over the past few years, dunnhumby has raised the bar with increased emphasis on post-program analysis, including following the shopper’s purchase behavior beyond a single mailer and introducing targeted digital communications,” says Catapult’s Cross.”

via Retail Intimacy, Part 3: Building Loyalty at Kroger | Path to Purchase Institute, the leaders in shopper marketing.

Is BIG POS in BIG Trouble?

Point of sale systems, (POS), are the largest single technology investment for the vast majority of retailers.  The capital investment required for these systems, even in modest sized retail chains easily reaches high six figures, more often millions.  In the past, these investments were made with the mindset that they were required investments, despite their complexity and expense. POS behemoths like NCR, IBM, and Fujitshu controlled the lion’s share of the market and enjoyed healthy margins.

mobile-posToday that is less true.  Mobile technology is emerging and an increasing number of consumers are adapting to PayPal, Google Wallet, and other mobile payment solutions. Early adapting shoppers like the flexibility of payment without a credit card or check.  Not surprisingly, with alternative payment alternatives emerging, the incumbents are not simply standing by.

IBM and NCR  are amping up their internal capabilities to adapt to mobile payment systems, knowing full well the once healthy margins related to selling billions of dollars worth of checkout systems are a thing of the past.  BIG POS is also gobbling up targeting and loyalty solutions to position themselves to offer a more holistic solution to their retail clients. The NCR/Retalix acquisition is a perfect example of two solid past performers understanding they need to combine forces to effectively compete going forward.

Despite these efforts, the entrance barriers into the POS marketplace are melting away.  Google, Microsoft,  Datalogic, Motorola, Intermec, and countless other smaller application providers are pitching their solutions to retailers and gaining market share.

Enter the consumer.

Mobile POS is on the move because shopper’s adaption rates are increasing.  Estimates of growth in mobile POS is conservatively placed at around 12% annually.  I would not be surprised to see this rate increase rapidly over the next five years.  In a recent study, the IHL Group touted estimates of  spending on mobile POS systems in North America will pass $2 billion this year, with 28 percent of North American retailers planning to adopt mobile POS by the end of the year.  Further the research found that specialty retailers are deploying about 45 percent of all tablets shipped to retail for POS.  It is just a matter of time and and consumer demand for on-line shopping, home delivery, and in-store pick up, before supermarkets and mass merchants follow the specialty and department stores into this new age of payment.

The IHL Group study also predicts that retail mobile POS devices will replace 12.4 percent of traditional POS shipments in North America by 2016. The highest areas of replacement will be department stores and specialty retailers. Translation, NCR, IBM,  and Fujitsu  current dominant share of food, drug, and mass (FDM) is at risk.

Unfortunately, many retailers in the FDM channel are still dealing with the monumental task of herding the cats when it comes to establishing communication and unity between their customer transactions, their accounting, and merchandise billing and inventory databases.  Changing or layering a new POS system to accommodate mobile is just one more project they have little time or resources to tackle.  Accordingly, I do not anticipate a mass exodus from the incumbent POS systems overnight…..but I do see those retailers that innovate and deliver mobile POS solutions to their shoppers as winners, and those that do not, will PAY the price.

 

 

 

How “Healthy” are Supermarket Nutritional Programs?

The discussion of health and nutrition continues to be prevalent in our society and certainly in the food industry.  Whether it be the controversy of Mayor Bloomberg of New York banning large sodas, or the discussion of the epidemic of obesity in the U.S., there is a growing acknowledgement that America has a nutritional problem.

The food industry has reacted, but in the case of supermarket nutritional programs, I truly wonder if they are achieving the goals of the retailers that have invested in them.   Further, I question whether the consumer finds them helpful or practical.Fooducate-Android-v0p9-on-Nexus-product-small

Certainly progress is evident.  Vestom’s “Healthy Aisles”, Hannaford’s Guiding Stars, and NuVal have a foot print in thousands of supermarket.  Larger chains like Safeway and Kroger are testing their own proprietary programs, each with some semblance of similarity to the next.  These programs typically include shelf tags with ratings, health state categorizations and in some cases some actual nutritional information.  But there is only so much space on a shelf tag, or even adjacent sign to convey all the benefits and nutritional information that is available to communicate.

To fill that void, new mobile apps have also emerged.  Apps like “Fooducate”, “Serve it Up”, “Food Fight”  and my personal favorite , the “Beer Nutrition Calculator” are among the dozens and dozens of tools shoppers can access on-line and on their smartphone as they stroll down the aisles of the grocer.

In addition, consumers are telling us consistently in shopper research that nutrition is important to them and having such information is said to be a true benefit.  But while shoppers with various medical needs and dietary requirements are using these programs to varying degrees, it is at best unclear if these programs are making any significant impact on the diets of Americans.

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For sure, some supermarket retailers that are doing an outstanding job with providing both nutritional information, health screenings at the in-store pharmacy, and have even placed dietitians and nutritionists on staff.  Others are doing far less, while some seem oblivious to the whole concept.  But even among the best nutritional practitioners, there remain opportunities to “nurture” these programs so that more consumers engage.

 

 

 

In addition to subscribing to a nutritional shelf tag program, the following are just a few ideas to ponder;

  • Use syndicated demographics or proprietary customer data to understand the basic needs and nutritional priorities of your shoppers, by market and by store thus making intelligent decisions about what type of items and issues prevail on a local level.
  • Put the in-store pharmacy and pharmacists in play conducting health screenings, providing food/drug interaction information, and dietary recommendations for various health states.
  • Perhaps the biggest opportunity lies in directing deals and promotions towards healthy items.  To that end promote nutrition with themed promotions and campaigns focused on low sodium, hearth healthy, and gluten free items.  Involve brand partners and include sampling and on-site nutritionists.  “Healthy Savings”, etc.
  • Develop nutritional programs involving kids and brands that have nutritional value for young consumers.
  • Highlight healthy items in each key category and develop a reputation of having easy to find healthy alternatives.
  • As mobile applications continue to proliferate, partner with healthy eating application (or internally develop such) as a key portion of your shopping app content.
  • As with any program, listen to your shoppers and continue to evolve with their needs. This is a topic that will trend in different directions frequently.

For numerous reasons, “healthy eating” is a topic that will remain in the forefront of consumer thinking, but it is the extent that supermarket retailers provide ease and value of choosing a healthy alternative that will accelerate shopper adaption.  For those that do it well, it can be a significant point of differentiation!

 

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Making Digital Coupons “Less Invisible”

Updated 10-13-13

We live and shop in an age where apps and websites are designed to improve the way we shop, including reducing the use of paper circulars and coupons we use to save money.  To that end, I am amazed as to how many new smartphone apps are now available, most designed to deliver many of the same tangible benefits of the past, but now in a more flexible and consumable fashion.   But despite the obvious advantages of both cost efficiency (of eliminating paper) and consumer ergonomics (of not having to clip and carry coupons), the adaption rate of digital coupons, while increasing each day, still represents less than 3% of all coupons redeemed.   

Further, adaption rates of shopping apps are also growing, but look around the store the next time you shop for groceries and count the number of shoppers using their phones to either shop or pay.  You may grow old trying to find one.  So if “digital” is so wonderful, so flexible, so efficient, why do we not see more digital use?

In my mind, one of the key deterrents of digital coupon adaption lies in one of its inherent advantages.  It’s INVISIBLE!   Yes, without the muss and fuss of clipping coupons, load-to-account, digital offers are “clipped” electronically, placing them in the shopper’s account, requiring the shopper only to identify themselves at the store through a card or account number and purchase the said item related to the offer.  Pretty simple.  But brands are still balking at the efficacy of digital coupons, all the while taking advantage of the targeting flexibility and perhaps more importantly, the ability of “capping” the markdown expense by simply “deactivating” the offer once a threshold of coupons have been either redeemed or “digitally clipped”.  The fact of the matter is that brands very much like the “advertising equity” that paper coupons and  paper circular placements provide, elements that digital coupons do not typically offer.

No one should criticize the brands their right to cap their exposure vis-a-vis digital coupons, at least until more data is available that yields the response history needed for reasonable comfort in letting the digital coupon run until a pre-determined expiration date is reached.  But ultimately it will be important to eliminate these caps in favor of a prescribed expiration date, if digital coupons are to reach critical mass.

Accordingly, what we have today are digital offers that “float”  invisibly and out of the stream of consciousness of the consumer, coupled with the possibility that the deal could “vaporize” at any moment, at the discretion of the brand making the offer.

So it would seem to me that if we could retain all the benefits of “invisibility”, but yet provide more tangible reminders and evidence of digital offers, we just might see the engagement rates of digital offers increase significantly.

PublixDigitalEnter the retailer.  While the fate of digital coupons is widely thought to be in the hands of the brands that create the vast majority of the offers, it is the retailer who can provide the single most salutary support mechanism, namely in-store offer recognition.  This “recognition” may manifest in various forms.  It could be an app that senses where you are in the store, or a targeted SMS text message, a printed shopping list loaded at the retailers website or at an in-store kiosk, or a number of other new “at the shelf” message venues.  But more often than not, this recognition will be a good ol’ sign.  That’s right, a shelf sign (or tag) that is sufficiently intrusive to break out of the clutter of  thousands of messages thrown at the shopper each time they venture in a retail store.

Realizing that targeted offers cannot be signed with item and price as they are often directed to subset of shoppers, support signage can come in the form of general information about the ability to receive offers by signing up for the program.  However,  it is important that a digital specific price and item program anchor the digital program.  This can be accomplished by the retailer offering  and showcasing each week an array of digital deals that either are stand alone offers and even more effective, bolster existing traditional offers as a “digital bonus”.  Other more overt options for digital offers are waiting to be created.

Like all things retail, digital coupons must compete with the many other cost containment programs the retailer offers.  If digital content remains largely invisible and “behind the scenes”, the odds are that the program will never reach a significant amount of shoppers.   In obscurity, digital content will never be in position to truly change the retailer’s connection to the shopper, a connection that the shopper is looking for, and will find at a competing retailer if necessary.

 

 

 

 

JCP–Back to the Future??

In the life cycle of any retail brand there are watershed events that provide a venue for re-invention.  In the case of JC Penney’s, the venerable retailer is in the midst of one such opportunity.  Having recently fired CEO, Ron Johnson after the unsuccessful re-branding and merchandising campaign, JCP has predictably launched a “recovery campaign”, complete with an opening mea culpa and a plea for their shoppers to return.

We can debate the merits of such a strategy but on the surface it would seem to make sense to admit the sins of the past and ask for forgiveness, at least as an initial message.   The first salvo of messages in this recovery campaign has done just that.  But that’s the easy part of the process.  Now on to the task of winning back old shoppers and bringing in new ones.  But unless I have missed my guess on this one, JCP, new CEO, (which just happens to be the CEO that was fired in favor of Ron Johnson), will be tempted to immediately get back to being the Penney’s of old.

If that is true, all bets on a successful and sustainable recovery are off.

backtofuture-16an3nd

Clearly, the merchandising schema of days-gone-by of heaving “”percentage off” discounts, one day sales and day part sales should be considered in the mix of marketing elements that Penney’s uses to re-engage shoppers.  But if returning to the ways of the old is both the alpha and the omega of their strategy, they will be missing out on important opportunities.

  • First, re-invention of the retail brand creates an opportunity to embrace new merchandising elements whether they be new on-line services and policies,  new store-with-a store offerings, new co-branding relationships with famous brands.  “Something New”  not only can lure some of the old guard back through the door, but can serve to attract, new younger shoppers, who were not seemingly enthralled with the Penney’s of the past.   In short, big changes and big announcements, done thoughtfully,  provide real reasons for shoppers to return.
  • Secondly, and equally as important, this is an opportunity to re-invent the culture of the company, from the sales associates on the floor up through the corporate ranks. Becoming truly shopper-driven remains a marketing position opportunity that Penney’s cans cease, albeit not an easily achieved and sustained.  Solicit and listen to shoppers every step of the way.  Make investments into products and services that shoppers want and competitors are not providing.

Putting a finer point on the matter, Penney’s can either chose a path to recovery, or a path to re-invention.  If recovery is their goal, they will likely find themselves only slightly better off than today despite spending big bucks on media and message.  If true re-invention is the goal, innovation and shopper centricity will guide their decisions and the odds on not only surviving, but actually thriving ……increase substantially.