Archive for Retail-Brand Partnering

We Can’t We All Just Get Along?

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

Bi-lo and Winn-Dixie Replace Reid’s, Harvey’s and Sweetbay

From Morning News Beat….10-9-13

 

What’s in a name?  We will soon find out when Bi-lo Holdings changes the banner names of recently acquired chains Harvey’s, Reid’s, and Sweetbay.  Conventional wisdom tells us that managing many banners with various names and named programs is menacing, if not expensive.  

With overlapping stores in the many of the same markets, this decision is the correct one.  Now it is up to Bi-lo Holdings to use these conversions as an “excuse”  to create some excitement around these events.  Further and most importantly, it is also important for the Winn-Dixie and Bi-lo brands to begin to better define themselves vis-a-vis their formidable competition.  We wait for that to happen.

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Bi-Lo Holdings announced yesterday that when it closes on its acquisition of Sweetbay, Reids and Harveys stores from Delhaize, it intends to convert the Sweetbay stores to the Winn-Dixie banner and the Reids stores to the Bi-Lo name.The company said that it intends to keep the Harveys banner, though some of the stores using that banner could be changed to the Winn-Dixie or Bi-Lo name.According to the company, “The transitioning of Sweetbay and Reids stores to Winn-Dixie and BI-LO banners respectively is to reduce overlapping footprints. There is little overlap between BI-LO, Winn-Dixie and Harveys stores. Through this transaction, we will be able to provide our great products at a great value to a broader base of customers.”The transaction is expected to close in the first quarter of 2014. Bi-Lo said in May that it has a deal to acquire the three chains from Delhaize for $265 million.The Tampa Bay Times writes that “Sweetbay has had a prominent spot in the marketplace since 2004, when Tampas Kash n Karry changed its name to Sweetbay as part of plans to remodel stores, expand product selection and create a customer-friendly culture. The name comes from a type of magnolia tree.”But caught between customer service-oriented Publix and value-driven Walmart, Sweetbay still struggled to find its niche and gradually lost market share. In January, Sweetbay said it was closing 33 underperforming stores in Florida, including 22 in the Tampa Bay area.”

via MorningNewsBeat.

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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Is Your Digital Strategy “Active” or “Passive”?

All the hype, pomp and circumstance aside, digital marketing is mere blip on the radar screen for most retailers…especially those in the grocery channel.  I say this with all due respect to grocery retailers as I understand their need to hitch their wagons to those media and programs that represent critical mass.  Accordingly, digital engagement in the grocery channel, defined as communicating digital content and offers,  is far from grabbing the headlines away from traditional venues and promotions.

My assessment of as to why digital programs still live in the periphery of the retailer marketing options centers around whether digital programs are passively or actively promoted.  Pour another cup of coffee and let me explain.

Passive digital programs are those that are launched relatively quietly, typically exclusively on digital touch points.  For example, in the case of a grocery retailer offering load to card or load to account digital coupons, there is often little or no mention of these programs in the mass media such as weekly circular television, radio, or even direct mail.  Further and even stronger evidence of the passivity of promoting digital content, there is rarely any mention or reinforcement of the program in-store.  Please don’t bother asking a cashier or associate about the program in-store, you will only get a blank look and a shoulder shrug.

Another key component of a passive approach to digital is content itself.  Retailers who expect hundreds of meaningful, widely WinnDixe1purchased brands to drive the content bank of these digital programs, often find that unless the shopper is in the market for an obscure meat seasoning, or a new herbal toothpaste, the digital offers available have little relevance to their shopper’s needs. But yet retailers who take a passive approach launch programs with these offers and then wonder why engagement is so disappointing.

Here’s the first take-away for retailers.  Digital is not going away.  Shoppers want it.  Shoppers are hooked on the concept and other channels of trade and on-line retailers are setting the early shopper expectations in both content and technology. As Winn-Dixie aptly “tags” their new digital program, “The Future of Savings is Here”.  They have it right.

The second important point for retailers is that passively engaging digital and waiting for the content to arrive, is depriving them of a golden opportunity to become a committed leader and thus gain share of wallet from their current shoppers and actually be in position to lure shoppers from their competitors. But this can happen only if the retailer takes an “active” approach to digital.

Here are a few recommendations I offer to become an active retail digital marketer.

1.  Shout about the program in-store. Point of sale signage, bag stuffers should tell the story.  Associates should be aware of the program and endorse it at every opportunity.

2.  Drive the digital content with retailer-sourced offers.  Make the commitment to have some of your “skin in the game”.  Measure results and then “invite” your brand partners to contribute based upon your early positive results.

3.  Tie digital into the mainstream of your marketing program.  If you offer paper coupons in your circular or paper direct mail, convert them to load to card or account.  Also, think about layering digital bonus savings on front page items, end cap features, perhaps have a “Store Managers Digital Offer of the Week”.  Get inventive.

4.  Measure the results and use the resulting customer data to become iteratively smarter about which offers and content drive the best results among your shoppers.

5.  Don’t forget to include store brand offers.  Nothing will get your brand partners interested in participating faster than if they see their share of category sales diminishing due to the impact of your store brand digital offers and campaigns.

Active digital engagement is an opportunity to lead, differentiate and embrace the future.  Staying passive will keep you comfortably operating in the past or at least until you fade from the scene.  It’s your choice.

 

 

 

 

 

 

 

Brand-Retailer Relationships: “Partnering” or “Biting the Hand that Funds You”

When the Food Marketing Institute met this year for its annual warm-weather retreat, aka, The FMI Midwinter cooperationsConference,  one of the topics that is being touted was “partnering”, specifically between the Food Marketing Institute and the Grocery Manufacturers Association, (GMA). A perfect partnership opportunity for the two major food industry organizations to combine forces, share expenses and develop notable synergies.  Stay tuned, but I see no reason that this new marriage should be a long a prosperous one.

But as for the members of these two fine organizations, the individual brands and retailers, “partnering” has produced mixed results.  Over the last twenty years several industry movements have served as catalysts for partnering.  Category Management (CM), Efficient Consumer Response (ECR), and more recently Shopper Marketing-Path to Purchase (PTP) have led to co-authored and co-funded studies that lead to books and presentations.   But lasting partnerships among brands and retailers, not so much.

Reasons for less than optimal results abound. The truth is that on key cultural and process issues, brands and retailers are wired very differently. Retailers live in the moment.  Brands often live in the future.  Retailers adjust the components of their business hourly, while brands deliberate and strategize over months and years.  Brands move managers and executives relatively quickly through their organization, while retailers tend to keep their team members in positions longer.  Both feel they “own” the customer and are keenly anxious to extend that advantage.  For these reasons and others, many retailers continue to “bite the hand” that funds them.  In turn, brands continue to believe they represent a significant portion of the retailer’s life to form a direct to shopper relationship.  Both practices are unwise and bode poorly for the future.

Technology and a sagging economy have nurtured a new variable, namely an empowered shopper.  This shopper has ceased control of the conversation and is quickly demanding better information, more relevant deals, and more efficient shopping alternatives that only the brand and the retailer together, can deliver.

Loosely translated, retailers with data and new shopper touch points need shopper insights and content from brand to attempt to satisfy the insatiable appetite of the new empowered shopper.  Sure, brands and retailers can try to go it alone, but given the short window of opportunity, new competitors pouring through that window each day, and the impatience of the shopper, it is hard for me to image anything but the power of a well formed partnership providing the best solutions for the new millennium.

As with all things that yield positive and timely results, there are requisites for success.  Here are some.

  1. Lasting partnerships are formed typically at the top of each organization.  The commitment must be clear and consistent.
  2. A good partnership has an accountable contact person on each side of the relationship, who must answer the bell when things get bogged down or do not flow as expected.
  3. Outcomes must be clearly communicated with success metrics known to all.
  4. There must be equal or near-equal benefit from the relationship.
  5. The partnership must grow and evolve, rather than stagnate and become mundane.

Perhaps the conversations at FMI Mid-Winter will serve as a harbinger for further brand-retailer alliances.  The shopper is waiting….waiting…waiting…

 

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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.