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Retail Technology Archives - Mark Heckman Consulting

Archive for Retail Technology

Aligning Inventory Investment To Consumer Demand

From the Teradata Conference, September 13, 2016

Atlanta, Georgia



Presented by Victor-Luis Gualdi , IT Manager at La Anonima in Argentina

And Carlos Machain, Carrefour


It is always interesting to hear retailers outside the U.S. present their versions of many of the issues that effect retailers in the U.S.   Such was the case in a recent session at the Teradata Partners Conference in Atlanta, Georgia, where representatives for La Anonima, a Carrefour Supermarket Banner in Argentina presented their case for the investment in inventory and demand alignment. La Anonima is part of a 577 store country wide distribution channel and representing $1.7 billion in sales.

The presenters painted a fairly bleak picture of the logistics of their business back in 2005, prior to implementing automated ordering. Their company wide out of stock rate was over 25%, they were incredibly out of compliance in terms of theirs shelf sets, and the practice manual replenishment.

On the warehouse side of things, the distribution center carried 35 days of supply in house, much too much, given the amount of out-of-stocks that prevailed at retail. Their journey was not dissimilar to many retailers who have come to grips with the financial wreck and ruin they encounter when consumer purchases are not driving the ordering process.

In the current environment it is difficult image any retailer of scale attempting to compete without a shopper demand model generating store orders and warehouse purchases from suppliers. Inventory ‘awareness’ is absolutely essential in executing an omni-channel sells platform. Throughout the retail industry, thanks to more agile and affordable data, much progress has been made, but as the two presenters continually pointed out, there is significant ‘heavy lifting’ in getting to the point where a blend of automation and store level accountability work in tandem to maintain optimal amounts of inventory, while drastically reducing out-of –stocks.

After more than a decade of work, La Anonima now boasts an out of stock rate of less than 5%, while reducing days of supply at the warehouse by over 40%.

Demand planning and aligning is no longer an option, but a requisite for competing in the omni-channel marketplace.

For those just beginning the journey today, they do not have the luxury of building such a platform over ten years, or even half of that of that time, given the progress others, like La Anonima have already made. It will take investment, a very strong commitment, a plan created by experienced experts and the ability to understand the importance of combining the power and scale of an automated system with the flexibility of occasional ad hoc decisions as market conditions continually change.


From The MorningNewsBeat: No Plan Survives Contact With The Enemy

Wednesday Morning Eye-Opener:

By Kevin Coupe

Businesses of all kinds got some great advice from a sage military strategist this week, as retired Gen. Stanley McChrystal appeared on “The Daily Show with Jon Stewart” the other evening. He was there to plug his new book, “Team of Teams: New Rules of Engagement in a Complex World,” and Stewart began the interview by showing a chart from the book that focuses on the current military-political structure in the Middle East.

The subject, at the moment, was the Middle East. But the discussion could have been about any competitive business situation.While we think of many of the forces in the Middle East to be medieval in their orientation, ISIS, McChrystal said, “is a 21st-century organization that uses some frightening tactics, really quickly, and then they leverage Digital Communications to essentially tie their enemies in knots.”In fighting such organizations and creating a future strategy, he went on, “it is fundamentally impossible to predict.

So what we really have to do is go at things with an awful lot of humility that says what we’re going to to is approach things with the reality that we’re going to have to adapt constantly and iterate. You’re not going to come up with a 100 year plan, or a 50 or even a five year plan. You’re going to come up with general directions and frameworks, and you’d better learn every day, because that’s the world we’re in now.”And then McChrystal delivered the business lesson.”In the military, there is a saying that no plan survives contact with the enemy…I think that’s what we’re finding in business now, too.

You’ve got competition from competitors, garage start-ups, new technology, all of these things, and organizations that get very happy with being efficient, with very, very wired processes that have worked for their grandfathers, fathers and brothers, now don’t work.”One can’t assume that the enemy – or the competition – is wired the way we’d like them to be wired, that they are thinking in traditional terms or planning traditional strategies. Rather, one has to assume the opposite – that the competition is going to see the marketplace through a different prism, see opportunities for both effectiveness and efficiency where we’ve missed them, and use strategies and tactics that we haven’t considered.“No plan survives contact with the enemy”.

Eye-Opening words to live by.

Source: MorningNewsBeat

From the MorningNewsBeat: Study Points To $1.75 Trillion In Retail Inefficiencies

There’s a new study out suggesting that “retailers worldwide lose a staggering $1.75 trillion annually due to the cost of overstocks, out-of-stocks and needless returns” – three components of what the study is a kind of “Ghost Economy” haunting retail.

“These inefficiencies, the study says, result in “monies left on the table and the loss of sales that otherwise would be available.” And it says that a retailer “addressing the inefficiencies and data disconnects throughout their organization could mean the equivalent of adding $117 Million in revenue for every $1 Billion in retail sales — or an additional $2.9 Billion in revenue for a $25 Billion retailer.”FYI … the annual inefficiencies break down to $642.6 billion in preventable returns, $634.1 billion in out-of-stocks, and $471.9 Billion each year in overstocks.

Kevin Coupe’s Comments:  The research was performed by retail analyst firm IHL Group, and commissioned by OrderDynamics.KC’s View:

As Senator Everett Dirksen is reputed to have said, “A billion here, a billion there, pretty soon, you’re talking real money.” Though these numbers might’ve staggered him.  Obviously, if retailers are looking at these kinds of inefficiencies, they need to address them.  My only caveat is that while they’re working to be more efficient, they need to spend as much money, time and energy trying to be more effective.  Because efficiency and effectiveness are not the same thing.

Source: MorningNewsBeat

Mobile, Mobile, Mobile

During a recent panel discussion* on the topic of digital coupons, I asked Ajay Amlani, General Manager and Founder of You Technology what his three top areas of priority in terms of increasing the efficacy and volume of digital coupons and content in the coming year.

His answer, without hesitation was adamantly

Mobile, Mobile and Mobile!

He went on to assert that the overwhelming penetration of smart phone ownership and increasing usage during the shopping journey should be enough provocation for anyone with a proactive marketing strategy to include a healthy dose of budget towards reaching shoppers via their mobile device somewhere within their shopping process.

Devising a cogent mobile strategy presents an array of choices mobileandtraditionaland complexities that are unknowns to even some of the most experienced marketers. Arguably, before retailers and brands get into specifics on mobile (smart phone) marketing, it should dovetail into a more traditional, comprehensive marketing strategy and a broader Omni-Channel Strategy as the neighboring graphic depicts.

While retailers are becoming increasing more comfortable with budgeting and executing Omni-Channel initiatives they are often done as tests or ad hoc. In turn these forays into new media are not strategically linked with more traditional merchandising and marketing programs.

So is it the case with Mobile Marketing. The following are quick points of consideration when building a mobile strategy.

  • A good place to start the process is to view mobile as a distinct medium to the shopper with the same stature of print, television, radio and outdoor. With an increasing number of shoppers using their smart phones to access circulars, deals, coupons, comparative pricing, and product availability, mobile deserves its own line item in the budget.
  • Secondly, gain an understanding of what is different about mobile vis-à-vis the other forms of communication. Establish the measurable elements associated with mobile and determine accordingly how success is measured. Clicks, Views, Open Rates and other new metrics are vital to understanding the basic level of engagement. If mobile marketing employs SMS texting,  email blasts or banner web advertising, benchmark successful engagement metrics in each of those elements. Be knowledgeable of what constitutes best of breed performance among your key competitors and retail channel.
  • Additionally, keep in mind that of all the Omni-Channel media, mobile is clearly the most pervasive as can serve as a connective tool to all the other facets of a marketing program or campaign. Consequently be prepared to measure impact of mobile communicated programs on sales, customer count, transaction size, category penetration and other traditional metrics. Without eventually correlating the impact of mobile programs with the metrics share holders and senior management value, even successful mobile programs can go unappreciated.
  • Finally, I think it wise to use mobile engagement as a means to better understand your shopper base. With each mobile engagement, be positioned to use the results of the engagement as a means to segment your shoppers. Knowing which shoppers and shopper profiles display a high propensity to engage via mobile is extremely valuable information as plans are made for future mobile outreach.

* From Panel Discussion at the Association for Coupon Professionals Conference, April 16, 2015 in San Antonio, TX

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.


Finding the “Sweet Spot” with Digital Coupons

At the recent ACP Conference in San Antonio, I moderated an expert panel discussion on the topic of the status of digital coupons.  For example, coupons that are printed at home or loaded from a website or shopper app directly to the shopper’s retail frequent shopper card or account are defined as such.  As an entity, they are indeed growing in use and evolving in terms of their sophistication and consumer appeal.

As in all things related to the space of retail consumer marketing, I have found the proverbial “Venn Diagramsweetspot” to be helpful in defining both the current status and desired direction of an initiative.

To that end, the adjacent diagram spells out one approach to understanding the elements of digital coupon proliferation and success.


1.  Stakeholder ROI:  Namely retailers and brands must see the monetized benefits of creating and distributing paperless coupons as an alternative to other collaborative consumer cost containment methods.  These methods include the FSI (weekly inserted coupon books in Sunday paper), checkout coupons, on pack coupons, etc.

2.  Consumer Ergonomics:  Before any new medium can grow, it must be simple for the consumer to engage.  We all agree that cutting paper coupons out of the newspaper is sub-optimal for the shopper.  The hurdle for any replacement medium, particularly if it is digital, is answering the question….”Can it be engaged by the shopper easier than alternatives?”.

3.  Content:  While satisfactory conditions could exist for the first two aforementioned factors, without meaningful, relevant offers the shopper will not engage.  There must be offers and content aplenty that represents the critical mass of shopper demand.

Satisfying all three elements is critical in finding the “sweet spot” of success, enabling digital coupons to continue to grow in both distribution and redemption.  During our panel discussion, our experts from many of the leading marketing services that promote digital “couponing” offered their views on how the industry is doing vis-a-vis these three elements.

In short, most believe we are at a “departure point” in terms of retailer, brand, and consumer engagement of this new medium.  It is also true that most believe that there is much work to be done before the “sweet spot” is reached.

In the weeks following, I will expand on each of the three elements depicted in the diagram and offer guidance (from the experts) in an effort to expedite the growth and shopper engagement of this new “digitized” way of conveying savings from the brand to the retailer and on to the shopper.


mark heckman




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.


Three Key Messages from Savvy Shoppers


changesBy Travis Lewis…………

This year’s Inmar Forum brought a host of top speakers to Winston-Salem, including Andreas Weigend (formerly

the chief data scientist at Amazon), Peter Fader from the Wharton School, John Phillips with PepsiCo, Matt Gymer

of Novant Health and many, many others. But as insightful and informative as these and the other expert presenters

were, the most impactful sharing at the conference may have come from the eight “everyday folks” who

participated in a panel discussion exploring shopper attitudes toward promotions, the in-store experience and the

retailers and brands trying to engage with them.

The collective commentary from the panelists was candid, at times colorful and very, very telling. Here are some the key messages we heard from this diverse group of consumers:

Technology is critical to shoppers’ efforts, but traditional sources have not been abandoned.

The panel members, who ranged in age from 19 to 71, all spoke to their use of the internet to search for product information and availability, make price comparisons and find coupons and other savings opportunities. A multi-source search for savings was common practice among the Forum panelists who spoke of using retailer and manufacturer websites, apps and coupon blogs when looking for coupons and discount opportunities. However, while smartphones and apps were the preference of some consumers, newspapers, Sunday circulars and direct mail were all acknowledged as having real value and a definite place in the pre-trip planning process.

Engagement must be relevant, genuinely facilitate the shopping effort and deliver real value.

The collective message from this group of cost-conscious, self-described “savvy shoppers” was that outreach from marketers had to align with their demonstrated wants and needs. Random or “hard sell” techniques were not effective in moving them to trial or purchase. If they had an interest, the panelists would voluntarily engage with a retailer or brand – but, with the expectation that the “return engagement” would deliver information and offers of immediate, obvious value.

Social media also plays a part in the panelists’ shopping experience, as several in the group expressed a willingness to “like” a product or brand on Facebook in order to receive promotions. Twitter posts were also identified as influential, but more so when broadcast as informative enticements rather than direct advertisements.

Quality customer service trumps convenience in building shopper loyalty and driving repeat business.

Whatever their particular level of engagement, the panelists were consistent in their expectations of quality service – both in-store and online. Ready availability of product information, easily accessible and personally delivered offers, direct and prompt customer service, assurance of product quality and ease of return where all cited as reasons the panelists remained loyal to both retailers and brands.

The panelists also said that they would travel further to those retailers who provided superior customer service, especially when it came to retail pharmacy. Those panelists speaking to their experience in this area voiced that personal attention, close consultation with the pharmacist and the availability of information relative to medication and patient care were the primary decision drivers – having much greater influence than either cost or convenience.

While the panel did not comprise a scientific sampling, the comments from the group did represent, as our Chairman and CEO David Mounts said, “first-person verification” of previous research by Inmar Analytics showing increased use of technology by shoppers along the path to purchase as well as the desire among shoppers for more personal, relevant engagement from retailers (grocery stores, pharmacies and mass merchandisers) and brands (both food and non-food CPGs).

Hearing directly from end-users has always been a particularly powerful information-gathering experience. It’s a reminder that there is always something more to be learned from – and about – the customer.

Travis Lewis is President of Inmar Promotion Network. More information: www.inmar.com.

via Home.

Many Consumers Say Marketers’ Mobile Alerts Aren’t Useful or Relevant

Many Consumers Say Marketers’ Mobile Alerts Aren’t Useful or Relevant.

When technology outpaces content and strategy, alerts and other automated consumer messages can become more of a negative distraction, than a positive disruption.

Think before you hit “send” is an acxiom from which we can all benefit!


So Many Retailers, So Little Time……


Like many of you, I have become a very accomplished “speed deleter” of un-targeted and irrelevant retailer email.  I believe my record is a hundred and seven deleted emails in twenty-five seconds.  Too lazy to actually unsubscribe to the author of the email, I rationalize staying connected by believing that they may actually send me something of value someday.  I wait.

En mass “email speed deletion” may be this consumer’s way of cutting a an email marketer off in mid sentence, but with more merchants doing un-targeted email blasts, the lower the open rates will become for everyone. While email has become a preferred alternative of more expensive direct mail, its efficiency is waning as more join the fray.

Alternatives are emerging.  Blogger-fed websites and the more established coupon distribution sites are beginning to build a following with shoppers who seek deals and content as they plan their next shopping trip.  These sites have a distinct advantage over the email distribution method.  First and foremost the shopper is motivated to come to the site, looking for deals.  The more relevant the offers and the retailer’s are to the shopper, the better the traffic and the results will be for that site.

All You, Retail-Me-Not and Savings.com are three such sites that are gaining traction by creating enough content from enough retailers to make the visit to the site worthwhile for the shopper.

They are on the right track.  

However, they still suffer from being disconnected from the total shopping experience.  Many of these sites have mere passive relationships with the retailer content they post on the site.  While coupon codes, shopping lists and circular content are available, a shopper cannot fully engage with each retailer by checking on their point totals for continuity programs, or drill down into their loyalty clubs and personal preferences.  For that content, the shopper must go back to the retailer’s own site in turn making the shopper’s life more complicated, not less.

One answer appears to lie in the creation of comprehensive central content aggregation site, one in which the list of participating retailers satisfy key requisites for shopper-centric loyalty.  I see them as follows:

1. Content: The retailers must understand the enhanced reach they will receive by “actively” posting both targeted and mass content on an additional central shopper/loyalty site for shoppers and use the site as a means to allow full integration into points, personal profiles, and past performance. While they maintain their own sites, this new central site provides the shopper a new, additional option for engaging the retailer.

2.  Community: This central site must represent the major players in each of the Shopping Communities built, meaning one or more major supermarket, mass retailer, chain drug, sporting goods, home improvement, electronic superstore, and an array of smaller complimenting loyalty retailers.  Consumer Research tell us that Shoppers wildly support the concept of a single site with overwhelming numbers of intended engagement if such thing every existed.

3.  Consistency:  This central site must strive to grow its community of retailers in both number and volume of content, by promoting a dialogue with its shoppers and retailers, meeting their evolving needs. Shoppers and the components of loyalty are extremely dynamic and if retailers are going to actively participate, they must see the platform as one of consistent growth and progressive thinking.

4. Centricity:  Big retailers will not engage any new commonly-shared platform with other retailers unless the central site and its engagement platform embrace the importance of maintaining the retailer’s control of their brand equities and their shopper database.  Both are table stakes for participation. Attempting to lure big retailers to the site without recognizing their requirements and strategies, will not succeed, no matter how loud the clambering from the shopper.

Final Thoughts on the Subject

Creating a comprehensive, central shopping/loyalty site will not happen without investment in both systems and strategy.  Actively sharing content from multiple retailers ultimately means a Single Shopper ID for each shopper that links to shopper back to each of the retailers on the site.  “Innovators” are in the marketplace and focused on just this concept.  Like many “Big Ideas”, a comprehensive central shopping/loyalty site is much easier to image than to execute, but if memory serves me correctly, I believe that’s what some said about scanning UPC Codes back in the seventies!!









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.


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!

Amazon “Prime”….a “Prime” Example for Others?

Shopper loyalty is being redefined everyday.  New mobile applications and other new shopper touch points are raising shopper expectations and also raising the bar on what it takes to secure some semblance of loyalty from an empowered shopper.  With that challenge as a backdrop, the value proposition of many of the long-standing loyalty programs are becoming insipid and less engaging as time wears on and the number of cards shoppers carry increase.

One infrequent, but yet interesting approach to adding some punch to lackluster loyalty programs involves the creation of a “pay for benefit” club that is a “premium tier” of loyalty.  Not an unheard of concept, especially to those of us that shop Costco or Sam’s Club.  But in the context of most retailer’s loyalty programs, paying for benefits remains a rare occurrence.

It should be obvious to all that the key to being able to charge the shopper for any service or commodity is to create a viable value proposition.  Consequently, if retailers are considering a “premium tier” to their loyalty program, a commitment needs to be made in terms of investment into incremental benefits that are worthwhile to the shopper to warrant a fee.

Not a complicated concept.  So why aren’t many retailers pursuing this strategy?

BigYSilverSavingsClubLet’s start first with examining a few retailers that have ventured into premium, fee-based tier of  their loyalty program.   New England supermarket chain, Big Y and Amazon are two retailers that have explored this concept with some success.

Big Y stepped out a few years ago with one of the very few pay for benefit cards in the traditional supermarkets space.  For a $20 annual fee, Silver Savings Club members receive benefits such as;



The “Silver Savings Club” has endured. I interpret that as it must being providing both Big Y and its members value. Sams, Costco and other pay-for-benefit clubs have proved that the model works.  But we have not seen many of the other major retailers offer a pay-per-view upgrade edition of their loyalty programs.   Often the problem lies in the potential investment the retailer must offer to warrant a $25-$100 annual subscription fee.  My guess is that many retailers are not ready to make that commitment, nor invest in the human resources to management an elite loyalty program.

amazon prime2The Amazon.com model, adroitly named  “Amazon Prime” offers free two-day shipping, free movies, and eBooks as their major features for a $79 annual fee.  Early reviews are positive.  The premise makes good business sense.  By providing an upgrade for moderate to heavy Amazon users, the “Prime”  shopper feels vested in the process with their annual fee.  The return on investment is easy for the shopper to calculate and for those that find the Amazon Prime benefits appealing the investment is a good one.


I believe Big Y and Amazon have paved the way for “fast followers” to launch their own elite programs.  While it requires thought, investment, and on-going commitment, such programs can provide retailers a much needed boast in their loyalty program participation.  Done correctly, the subscription fee coupled with the incremental revenue generated from this “elite engagement” should self-fund the effort, but more importantly prove to be a solid step forward for retailers looking for “new news” for their programs that need a shot in the arm….or other extremities!




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.




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.