Archive for Missing the “Mark”

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.

Walgreens Drives Customer Engagement through Personalized Marketing | Loyalty360.org

Resource: Daily News

Walgreens Drives Customer Engagement through Personalized Marketing

By: Jim Tierney, Loyalty360   BACK TO RESULTS

Walgreens has a powerful loyalty program, Balance Rewards, which has a membership hovering around 130 million.Reaching that lofty status, from a membership perspective, didn’t happen over night.  Mindy Heintskill, Senior Director of Loyalty and Vendor Collaboration, Walgreens told attendees during her Tuesday session, “Driving Customer Engagement and Sales Growth through Personalized Marketing,” at the 8th annual Loyalty Expo presented by Loyalty360 – The Loyalty Marketers’ Association, that she started at the company around the time the Balance Rewards loyalty program launched in September 2012.“We’re getting great engagement in the loyalty program,” Heintskill said.

Why did Walgreens start Balance Rewards?  “We wanted to thank our customers and gain customer knowledge and customer behavioral data,” Heintskill said. “It’s important for us to focus on retaining best customers. Data is very important. Walgreens doesn’t make any assortment decisions without looking at customer data. We had the opportunity to be more personalized. We have a commitment to testing. What we’re doing now is very traditional. We have all kinds of tests going on through different forms and different channels. You can’t be customer-centric on your own.”

Source: Walgreens Drives Customer Engagement through Personalized Marketing | Loyalty360.org

 

MH-Comments.  The headline is somewhat buried in this article.  Ms. Heintskill is not only responsible for shopper loyalty, but also “vendor collaboration”.  Too many retailers have not transitioned their vendor partnerships from pure trade support to actually providing targeted content for their loyalty programs.  

This commitment by Walgreens is significant and will bode well for the continued success of their program.

Do Our Customers Value Our Current Loyalty Programs as Much as We Do?

Loyalty Programs – Walk in Your Customer’s Shoes

Pre-posted with Permission by author, Jack Kennamer

March 2014

When it comes to loyalty programs, we know what we love and what we’d change if we could.  We love the deals, offers, and rewards. What we hate is being aked for personal information, filling out registration forms, having to go to websites and create yet another account.Juggling shopper

We know what it feels like giving a complete stranger our e-mail, phone number, address and more; or being asked to recite this sensitive information in front of a line of complete strangers. All of this hassle just to receive yet another loyalty card to add to our ever-growing stack or adding another mobile app we’ll probably never use more than once. We have all been there, and most the time we just say “no thanks”.

If, by some chance we do sign up, we are then faced with the aftermath of joining…e-mails, tons of them, day and night with no rhyme or reason.

For those of us in the retail business, as soon as we leave work we become a customer with the merchants we shop.  We all deal with these exact same issues day in and day out. I don’t think we’d find a consumer out there that loves the current “linear” loyalty system of today.  Just Ask. So, why not make it as easy as possible for consumers to enroll and participate?

What if we, as consumers could go into any merchant offering a loyalty program and enroll with the swipe of a single card, or the scan of a single app?  Just one! Not a deck of loyalty cards or a smartphone full of apps. Would that make us more likely to participate? No forms, no personal questions, no websites to hunt for to enroll in, just a single swipe! Of course it would!

And what if we, as a consumer, knew that our personal information was safe and secure, wouldn’t that make it easier and safer and less of a concern to join a merchant’s loyalty program?  We all know the answer – it is an emphatic YES!

What if we knew that our e-mail box was not going to explode when we joined and offers would come to us in way that makes them useable and specific to who we are? Would that make it easier to join?  Of course it would!

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.

 

mh

 

Finding Common Ground….that isn’t at the bottom of a pit

U.S. Supermarkets generate nearly $700 billion in sales and over 22 billion transactions per year.  With so much money and many shoppers in play, it should be no surprise about that the industry has traditional been a magnet for huge investments from the consumer package goods (CPG) community.  But there has always been something missing from brand and retailer interactions.  It is often very difficult to get into this topic very deeply without writing an entire book.  Incidentally,  Glen Terbeek did just that back in 1999 with a book entitled the “Agentry Agenda”.

The book described the “friction” created by brands and retailers in the grocery channel pipeline and the inefficiencies this friction fostered. Diverting, slotting allowances, misuse of trade funds and dozens of other trade practices designed to solve short term financial needs, have cluttered this ecosystem at the detriment of the consumer.  Years ahead of his time, Mr. Terbeek understood that with new digital devices and systems, eventually consumers were going to seize the reins of this inefficient process and find other ways to acquire grocery products if bricks and mortar retailers and their brand partners don’t start playing “nice”.

So let’s define the current environment, which I believe is the antithesis of  “nice”.  Having toiled on the retail side of this business for several decades, I can safely say that the retail version of not-so-nice involves a variety of practices couched in receiving as much brand money and content from brand partners without providing the brands much in return.  Further, retailers can be very short-sighted and tactical when it comes to their interactions with brands and almost always believe that their brands have more money to give them than they receive.

Retailers have implicitly admitted that making money by selling to shoppers is getting more difficult by the day.  Consequently they are looking to the brands for increasing support and funds to become more profitable buyers, not better sellers!

Playing not-so-nice for the brand community is exemplified as their short-term priority of driving cases sales of the product even if the retailer or consumer demand of the product does not warrant the product in the system.  This practice leads to ah hoc promotions which continue to “push” products into the system as opposed to being “pulled” by consumer demand.   This mentality also leads to diverting and other short-term trade practices that distort and clutter the pipeline.

For the sake of brevity, I have somewhat over-simplified the process and have intentionally indicted the entire food industry for inefficient practices.  My apologies to all retailer and brands that have broken out of this paradigm of short-sighted, self-serving objectives.  For sure, some have taken a longer view and are making headway towards actually creating synergies from their combined efforts.  For those that are moving forward, they are likely trading data, working together to layer their collective promotional efforts, and are being upfront with one another every step of the way, understanding the needs of the other out of the partnership and working in earnest to achieve those goals.

Finally and the point of all of this, if brands and retailers do not evolve to become better “agents” of the consumer, lurking around the corner, are new players positioning themselves to assume command. This proverbial paradigm shift will not be easy.  Mr. Terbeek sent out the first warning flare thirteen years ago with his book.  Little has changed since.  Together, brand and retailer incumbents have dug a pretty deep pit from which to climb out of.    Systems, intelligence and the models now are in place to begin to create synergistic partnerships.  Let’s hope brands and retailers can soon find new common ground……. somewhere other than in the bottom of the pit.

 

 

 

 

 

 

 

 

 

 

 

The Trouble with “Triple Coupons”

Many supermarket retailers could help me write this piece, as they have already (or should I say finally) discovered that offering shoppers the opportunity to cherry pick the store with coupon items causes more problems than the sales and traffic count these promotions create.  There are multiple reasons that such promotions have become increasingly ineffective, unless your goal is to drive a very short-term blast of unprofitable sales.

First and foremost, “triples”  appeal to the most cost-concious, price sensitive shoppers in the marketplace.  Most are already shopping predominantly at Aldi, Walmart, and even dollar stores for most of the grocery needs.  These folks are “students of cost containment”.  They have earned their Bachelor’s Degree in Savings  and are working on their MBA of Promotional Sciences.  In short, they know far more about how to manipulate the retailer  for  super-savings than the retailer could even hope to know about converting this group to loyal profitable shoppers.

Secondly, “Triples” and other traditional promotions do not lend themselves to becoming a proprietary, “ownable” promotion.  Any one can do it and negate any competitive advantage that such programs may yield.

Conversely, fuel programs and other such continuity/ points programs create a special currency that can be claimed as the retailer’s proprietary savings offering.  A clear example of such is the current doubling and tripling of fuel rewards points for those chains that have well developed fuel rewards programs.  The perceived value of such programs also many times exceed the expense of the program, particularly compared to triple coupon promotions.

Finally, there is little or no measurable lasting loyalty effect from triples and others promos like it.  The shopper segment attracted to these promotions will not return and do full basket, profitable shopping with the retailer unless they are heavily invented to do so.  In addition, FSI coupons tend to focus on a few center store and HBC categories….not really conducive to building loyal full basket shoppers.

Let’s face it.  The game has clearly changed.  This extended recessionary economy has fostered a new breed of shopper.  Couple this mentality with the great new technology and applications that enhance the tool box of those that shop predominantly for savings and the result is the shopper is now armed and dangerous.

“Price Shoppers” will never become your best and loyal shoppers (unless you happen to be a $400 billion chain headquartered in Bentonville, AK.)   While it is not a bad idea to reach out to this group  for incremental gains of their “share of wallet”, do it in such a way they play the game according to your rules,  rules that appeal and reward your best shoppers over a longer period of time and involve many departments and categories.

 

 

 

The Consequences of Unintended Consequences

When you can measure what you are speaking about, and express it in numbers, you know something about it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind.….Lord Kelvin.

And so it goes with contemporary business. With new tools and technology, we can measure most anything that moves in retail.  Customer data, warehouse movement, refrigeration case temperatures are all trackable and manageable.

But what about those things that we still cannot easily measure?   It is a simple scientific process that enables the retailer to measure pre and post effects of making changes to the operation.  But what we don’t do a very good job with is measuring “unintended” results that often occur when our intended directives become reality.  Some quick examples of unintended consequences spoiling the “wins” we hope to get from our actions are familiar to all of us.  Reductions in labors are a great example.  These reductions often  that produce more efficiency and short term cost reductions, but the resulting impact on customer service erodes customer count and sales. But do we every attribute this erosion to the measured efficiency?  Likely not.

How about another initiative that is very much in vogue currently, “sku rationalization”?   Reducing inventory or selection within categories can have the predictable positive financial impact on that particular category, but in the longer run, negatively impact the stores’ ability to attract shoppers who like the extended variety that store formerly showcased.

You get the drift.  While we live and operate in an age where financial formulas have taken the lead in driving business initiatives, I think it is important to “think through” and identify the list of potential negative consequences that often mitigate any of the predicted financial benefits of  these so-called innovative efficiencies.

Avoiding such calamities begins with the decision making process.  I am not suggesting the financial or operational teams not have a role to play in the decision making process.  I am advocating that it is important to have a customer-centric, research based advocate voicing their opinions and evidence about potential “watch outs”  when considering making such changes.

It is important to remember the customer is in charge….a theme that continues to dominate  food industry research findings.  If reductions in labor or inventory do more damage to consumer satisfaction than create financial benefit for the company, it might be wise to re-think how decisions are reached and how the  potential impact of those decisions are measured.  If retailers and brands continue to make decisions without forethought to customer impact, they will likely be managing increasingly smaller sales and customer numbers going forward.

 

Too Many (Marketing) Chiefs and not Enough…

My outstanding reputation for impeccable political correctness prevents me from completing this once popular phrase, but I think we can all relate to situations where we were the recipients of significantly more direction and advice than actual physical help in accomplishing a task.  Said another way, “there are many that fancy themselves as captains and far fewer willing to serve on the crew”!

I have found this especially true in the corporate environment of marketing and advertising.  While many believe they have an incredible untapped talent in all things marketing, few are willing or even talented enough to roll up their sleeves and join the team.  Consequently, I challenge anyone to compare the “worker bees” of advertising and marketing with any other department in the company and I would wager the marketers are among the most valuable.

There are a number of reasons why marketing and advertising tends to lead all departments in efficiency, but also under appreciation.  I  learned early-on, if you are going to survive as a marketer, one needs to recognize a couple of unavoidable retail truisms that tend to relegate marketing and advertising to something less than is.

 

1.  Almost everyone thinks they are a marketing expert……This ubiquity of pseudo marketing knowledge is couched many times in years of valuable anecdotal experience, i.e.

“I know what I like and certainly know what my wife or Aunt Nellie likes”.

Or how many times have we heard, “I never buy….. (fill in the blank)” or “I never shop at……”

And more germane to new social media and new customer touch points, you hear “I don’t think anyone plans their shopping trip on the internet prior to coming to the store, I know I would not”…….

… Which of course means no one else does… how could they?

Rarely do you hear anything that resembles quantitative analysis from these folks, after all, marketing to them is more about how they feel, and any “factual information” to the contrary is ignored.  Now add to that mentality a bit of rank and the power of a corporate position. The result is an amazingly potent combination that most often results in unbelievably boring stories in the meetings and more seriously, poor marketing decisions.  It also can mean the perpetuation of the lack of  appreciation of the talent and the sweat it takes to do quality, creative marketing and advertising.

This leads to a second marketing credibility barrier.

2.  Marketing output is  less tangible than merchandising, operations, accounting or even the corporation’s janitorial service to most people.  These “experts” are not interested in numerics, unless it is the traditional sales and profit numbers they  grew up reviewing.  After all, how do put value on the creativity and clarity of messaging, clever TV spots, or even a more readable weekly circular?    Not many understand rating points, or awareness scores.  Too many on the C-level of corporate America believe good marketing is simply table stakes, with the integral pieces almost automatically falling into place no matter who or how few is tasked with its production.

My point is that true marketing and advertising professionals acknowledge research so they are tuned into the customer, not their Aunt Nellie, or their own personal tastes.  Sure we all have our bias and perspectives, but marketing pros must maintain the position as intermediary, not advocate.  Good ones do just that!  We must also acknowledge that EVERYONE has an opinion and their own set of marketing values and these personal interjections must be encountered and navigated around with pragmatic marketing metrics….and some diplomacy.

The line I often use when besieged with personal, anecdotal marketing suggestions from C-level experts, “REMEMBER, WE ARE NOT THE TARGET AUDIENCE”……which indeed most are not!

 

 

mh

 

 

In-store Must = On-line


When you walk through any retail store today most of us in the business (as well as most shoppers) can quickly discern if the store is well stocked and merchandised.  But “what we cannot know is quickly becoming just as imperative as the more obvious traditional aspects of the retail environment.  That is to say, we cannot know whether or not the physical store is in compliance with its plan-o-gram, merchandising plan, or even whether its carrying all the sku’s it is prescribed to carry.

Why has compliance become so important?

To be honest, a store could be out of sync with its plan and still be a pleasant place to shop.  In fact, it could be a very successful, high volume store, making cash hand over fist.  After all, the customer doesn’t really care about all of those brand/retailer dynamics, “just be in stock on my items and don’t make me stand in a long line at the checkout!”

But in the day and age of brands paying for shelf placements, end caps and promotional execution, there is an opportunity cost for both brand and retailer if plans are not executed at retail level.  There are potential lost sales for out of stocks, as study after study tells us that a significant percentage of shoppers choose no substitute if their first choice is AWOL.  We also know that advertised promotions and programs that are not available or supported in-store bears a cost of sorts.

While systems agents, and processes are in place (or at least available) to monitor compliance, there does not appear to be the sense of urgency in the retailing industry to improve in this area. Perhaps the primary reason for complacency is the dearth of cogent metrics that accurately describe the finacial impact of being out of sync with the plan.  In my view, remedies need to present themselves quickly as now there is a much more compelling reason for compliance.  Enter the on-line “pre-shopper”.   With the elevated consumer expectations that are being fed by the on-line experience many shoppers have prior to visiting the bricks and mortar store, the physical store must not disappoint.

Allow me to expand on this notion.  As more and more consumers practice the art of “pre-shopping” on-line prior to the next shopping excursion they are loading coupons to card, printing others out…..you better have the product in the store, or their efforts are for naught.  New software facilitates an intelligent shopping list, listing the items in order they are found in the store.

If the store is not in compliance with this layout due to store set changes or other….more consumer frustration is on the way.  I could continue for a number of paragraphs on examples where consumer expectation have now be elevated due to the convenience of shopping applications and software.  If the store is not up to the task, lost sales are a certainty, lost customers are an eventuality!

More will be coming on this topic with additional points of view and case studies that will begin to put some empirical numbers behind non-compliance. But even without the numbers and the data, it would seem to make intuitive sense tht developing a new system or enhancing the existing process that store managers and their team employ to check on and remedy non compliance situations is worth a conversation.  Whether the resulting tool set is a series of scorecards, software and daily reports, or other…..shoppers are going to migrate to the retailer that presents the most consistent environment where ever the shopper encounters that retailer.

Stores where “on-line ≠ bricks and mortar” will not retain their fair share of the growing number of cyber savvy shoppers that have more shopping choices than ever before.

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.

 

mh

Strategy Matters

 

Managing by the Numbers Often Leads to Really Bad Numbers!

Let’s face facts, somehow along the way, the accountants have taken over much of our business. In some organizations they are calling most of the shots these days without having a basic understanding of what drives the business.  Instead of assuming their more traditional role of an internal service provider, most now are setting the direction for the business, sending out mandates, rules, and budget templates, everything on their timeline!!  If I can continue the whining just a bit more, we marketers now must “cost justify” everything we do, even though much of marketing is based on qualitative relationship building, sponsorships and community involvement….etc, etc.  Marketing Armageddon is here!!

As means of full disclosure, I am a business-marketing major that suffered (and I do mean suffered) through three mandatory finance and accounting classes some years ago at Indiana University.  In each of those classes I was painfully weary that someday I would need to remember the how to read a P&L sheet or understand the concept of  “net present values”.  But it was my fervent hope that those “accounting” moments would be few and far between.

But when it came time in my business career to interact with these accounting and financial tools, it became immediately evident to me that these numbers and techniques were actually very useful to a marketer or the care-taker of the brand. Much due to the fact that there are now means and metrics to measure most of the marketing efforts.  In fact, armed with customer data, I was in better shape to analyze and decipher program results and promotional investments than anyone in the organization.   But it also became very clear to me that how companies prioritize and position these tools and their metrics, has everything to do with what type of company they become…..or if they even survive!

Let me explain.   When companies are led by their finance and accounting department’s generated sales goals, margin

“Beans I understand, the rest of the store, not so much”!

rate requirements, etc.. in many cases these spreadsheet projections do not reflect the competitive landscape, nor the aggregate goals of each part of the business. In this top-down budgeting model there is little empathy for the economic impact of customer service, marketing, sponsorships, pricing, and all the other components of the brand affect those numbers.  When sales are built from a list of financial requirements, bad decisions are almost always the result.

I call it the Retail Law of Unintended Consequences (RLUC). The essence of the law is …..

For every positive manipulation of numbers on a spreadsheet to improve profit and grow sales there is VERY STRONG potential opposite negative impact that could damage customer service, employee morale, and the shopping experience”.

While short-term minded accountants, financial gurus, and efficiency consultants often dismiss these effects as necessary pain points to reach financial obligations or objectives, they (more often than not) find themselves wondering why their manipulations do not result in the intended profit gains prognosticated by their spreadsheets.

The answer to this dilemma is spelled out in the (RLUC)  It is well understood by good, long-standing, profitable companies everywhere. Cutting expenses, managing labor numbers, reducing store hours, without regard to the aforementioned consequences, will chase customers away, reduce sales and ultimately put the enterprise in a worse, not better  financial situation .

But there is hope.  Good senior executives, even some controllers and CFO’s  are learning to ask the right questions before advocating and implementing any alluring spreadsheet maneuvers.  Some of these questions are;

  • Are your financial goals reasonable given your marketing position in the marketplace, your competitive environment. etc?
  • Are your margin rates tenable given your competition and the shopping experience you offer and the lingering down economy?
  • What effect does the service or offering that is to be cut or eliminated have on sales?  Does it negatively impact a competitive advantage?
  • If expense reduction is advocated, how could this reduction diminish the “value proposition” you have with your customers, your trade partners, and your employees?

The list could go on for several pages, but the gist of the message is that even the smartest of retailers can sometimes become infatuated with consultants who make their living off of shaving expenses and the promise of enhanced EBITDA (on paper at least).  While some of these expenses could represent real savings and true efficiencies, many represent real opportunities for damaging your brand and suppressing sales.

Someone smarter than I told me a long time ago the best way for a retailer to “take more money to the bank” is by growing sales and customers, thoughtfully….not cutting services, hours, amenities, etc. But as in most things retail, a balance between more “artful” sales and customer-driven investments and the spreadsheet efficiencies is the optimal environment.  Also important is having the right checks and balances in the organization so that financial-based decisions are properly examined and vetted before being put into play.


This is my experience speaking…..love to hear from you.


 

In-store

Location, Location, Location!!

For many years in the retail food industry it still baffles me as to why more retailers and brands do not understand the importance of product placement in the retail environment.  To be clear, I am not talking about whether a can of beans is placed at eye-level, or the bottom shelf, although there are learnings to be had in this area.

But just like commercial real estate, there are “hot” traffic spots where shoppers are a plenty and conversely, “cold” forgotten places in the store that neither customer or stock clerks frequently traverse.  In fact most retailers design their stores today much the way they have for the past thirty years.  Perishables on one side or the other, Meat, Seafood, and Dairy along the back of the store and everything else is slammed in the middle…..usually driven more by logistics and the placement  of freon lines than anything to do with how the customer traverses the store.

In my humble opinion, the smartest guy in the room on this subject is Herb Sorensen.  Herb recently retired from TNS-Sorensen Research in Troutdale, Oregon, but Herb is one of those guys that will re-define retirement, just as he has redefined how we should be thinking about store design and layout.   I had the pleasure and honor of working for Herb for a brief time, but he departed much wisdom on yours truly, wisdom that I have vowed to continue to propagate whenever the opportunity presents itself.

Red "Hot" Spots and Blue "Cold" Denote Variations in Shopper Traffic

For instance, when retailers put all the sale items and perishable departments on the perimeter of the store, intuitively the “race track” around the store benefits from more traffic, but there are proven techniques to modify shopper traffic, populating “cold areas” with shoppers by eliminating barriers and strategically using “driver” or destination categories as a means to balance the traffic in the store, thus exposing more shopper traffic to more categories and departments, without inconveniencing the shopper.

 

 

While end caps are often coveted or even “sold” to the retailer’s brand partners, the amount of traffic and the likelihood of purchase various greatly from one end cap location to the next, depending upon where the end cap is located in the progression of the shopping trip as well as it’s location vis-a-vis the in-aisle location of the category.

Further and finally, shoppers spend more earlier in the their trips than later, they move faster the longer they are in the store, thus creating opportunities for “selling” and impulse buying in selected areas of the store, early on in their trip.  There are at least a dozen more “store traffic flow truisms” that are valuable principles for every retailer, no matter what store size or configuration.

Retailers who understand these basic principles of shopper traffic in their stores, can increase sales and shopper satisfaction, by leveraging this information for a more efficient trip for the shopper and a more profitable trip for the retailer!!  Measuring and modifying traffic flow in the store can be a very inexpensive way of increasing sales and making promotions more effective.     mh