The Tesco Revolution – A better shopper experience?

shopper experienceAround four years ago I visited a Tesco store in Warrington in the UK, and used it as the basis of a rather scathing blog on the state of Tesco, some of their biggest suppliers, and the state of shopper marketing. The store was bleak, horrible to shop, and devoid of any marketing creativity. Since then Tesco has had major problems, but is potentially seeing signs of recovery under the stewardship of a new CEO. This summer I visited the same store: has anything really changed for shoppers? Has big retail turned the corner, and begun to deliver a better shopper experience?

Using the human touch to improve the shopper experience

First things first. When you walk into the store it is open and spacious. A wide center aisle that pulls shoppers into the store. There is also a member of staff to greet shoppers, and to help with any questions. Grab and go snacks and sandwiches are nicely zoned to the side, with a checkout conveniently positioned nearby – again with plenty of associates on hand. In fact, staff were much more visible than before throughout the store, and were helpful when approached.

Technology used smartly to enhance the shopper experience

shopper experience tesco digital in-store enhanceSelf-checkouts and self-scanning is front and foremost. The cynical side of me notes that the technologies that have been adopted to ‘improve the shopper experience’ also cut costs by reducing store headcount, but given the financial issues Dave Lewis inherited, who can blame him? In the apparel section there is a screen where sizes and items not available in the store can be ordered.

One bshopper experience butcher tescoig shop, but a shop-within-shop feel really enhances the shopper experience

The store is huge: on my last visit it felt like a warehouse. It still does a little, but efforts have been made to break up the store into shoppable zones to create a more varied shopper experience. Health & Beauty tries to feel like a drugstore, and the apparel area imitates a high street fashion store. From the small sample of shoppers that I observed (including my family!), this seemed to encourage browsing that simply didn’t happen with the old store configuration. That browsing (in our case at least) was converted into significant incremental purchase, too. The deli areas are dressed up like a cheese shop and a butcher, complete with butchers with traditional aprons.

 Too much space – One big problemTesco shopper experience

While these changes will, I am sure, be welcome to most shoppers, the store overall still has the feel of a warehouse. What is apparent from the amount of dead space, is that Tesco are struggling to know exactly what to do with stores of this scale. As shoppers split their shopping trips over more stores, and their shopping basket fragments, the need, and therefore the economic viability of stores of this scale must be questionable.

Out of stocks still damage the shopper experience

Tesco OTC shopper experienceFor all this effort on creating a better shopping experience, Tesco is clearly struggling with the biggest blight on shoppers: out of stocks. Throughout the store products were missing, and most of the missing items were on promotions. Tesco’s continued obsession with promotions continues to have a negative impact on the shopping experience.

Tesco are making the best of the stores they have

The new Tesco seems to be making a big effort to improve the shopper experience in some of its previously lifeless and depressing stores. Zoning, staffing and signage all help to break up the bleak scale of the store into something far more interesting to shop. But nothing can hide the vast waste of space which brilliantly captures one of the biggest challenges facing ‘big box’ retailers in the age of shopper fragmentation: exactly what to do with the biggest stores when shopping baskets shrink? Tesco are making big strides in improving the shopper experience, but perhaps have yet to resolve the challenge of what exactly to do with all that space. Until that is resolved, while the shopper experience may improve, improving the financials may still prove tricky.

For more on retail, consumer goods, and shopper marketing, check out my company’s blog at www.engageconsultants.com/blog

Retail design: Insight and simplicity rule!

retail design shopper marketingThe industry spends a huge amount of money trying to influence shoppers. Unfortunately, much of that is spent on discounts. Nowhere is this more true than in Turkey. I visited Istanbul for the launch of engage Turkey & Middle East recently. Shop after shop, the first thing that I saw as a shopper was a discount sign. And then I found one small store, tucked away in a corner of a shopping mall, that was a little different. Yes, they are using discounts, but they aren’t relying on discounts and discounts alone to win with shoppers. On the surface, they aren’t doing anything complicated either. Using retail design to win with shoppers requires a clear understanding of how shoppers shop, and what prevents them from buying. The thinking and the insights might be clever, but the actual execution is often quite simple.

Use smart retail design to make the store tell a story

It might sound obvious, but as most stores I visit are nondescript, I’m going to risk stating the obvious. Brand the store, make it mean something. Luggage isn’t a sexy category. I’d guess that the suitcase is the least exciting part of any trip. So what does this shop do? The first thing a shopper sees on entering this store is YELLOW – that’s different. That’s bright, uplifting, and suddenly the store doesn’t feel like a luggage store. It feels like a holiday store. And its not just color, either. The evocation of the holiday experience continues with the clever mimicry of airport signage, inspiring and bringing the idea of holiday to an otherwise mundane shopping experience.

Use retail design to help shoppers navigate unfamiliar environments

What I love about this store is that they don’t get carried away with the theme and the brand. They don’t let the brand or the idea get in the way of the shopping process. Instead they allow the theme to help shoppers. For many shoppers, navigating stores can be difficult, particularly if the shopper visits the store only rarely. I can’t imagine there are many people who buy suitcases more than once a year, so navigation is key to this store. The central signage is therefore doubly valuable. Note it doesn’t directly navigate – it doesn’t tell you where to find anything. But it draws in the shoppers’ eyes, then shows the shoppers where to look. This isn’t a sign with information, it is an arrow pointing, and human eyes like to follow pointing arrows. They guide the eyes to the next piece of information.

Use smart retail design to help shoppers find what they want

retail design shopper marketing
retail design shopper marketing
The signage above the fixture is too high to see up close, but that isn’t its role. Its signage from a distance. The central airport signage encourages a shopper’s eyes to look to the left or right and up – to see the signage and then understand where to go in the store. The signage is simple, and relevant to the shopper’s journey. Business or casual talks to consumer needs: The Samsonite sign pulls brand loyal shoppers. Again, this is nothing complicated, nor is it expensive.

Use insightful retail design to overcome shopper barriers

The kid’s section is visible from any part of the store and is sensibly positioned at the back of the store. Not just because this will pull traffic through the store as a child hurtles to check out the Disney gear at the back and parents are forced to follow. It also creates a relatively safe space for kids to linger while parents shop: something that wouldn’t be achieved had the kids section been positioned near the door. Anyone who has tried spending more than a few minutes in a store with a trailing, bored child, will see the value in that. So careful choice of location pulls shoppers deep into a store, allows a shopper to linger, and opens up the possibility of the shopper walking out with two bags (one for the child) instead of just one.

Good shopper insights often lead to simple execution

There is a lot of science that can go into retail design, and a lot of data and thinking can be done to optimize a shopping experience. At it’s heart is the need to understand shoppers, and that can be complicated. But the outcome doesn’t have to be complicated, difficult or expensive. Influencing shoppers is more about the gentle nudge, about smoothing the bumps on the purchase journey, and removing barriers to shopping and purchase. Sometimes simple is best! We’ve spent decades understanding shoppers, and how they shop: If you’d like to learn more, come and see us at one of our workshops.

Amazon Fresh – a tipping point for brands and retailers

amazon fresh shopper marketingJust when you thought things couldn’t get more competitive in the  grocery market, Amazon launches Amazon Fresh in the UK. Yes, it’s only in London, but its 130,000 products, next day delivery, and a competitor that seems hell-bent on getting a chunk of the market at any price. So Amazon Fresh is here: what can brands expect, and what on earth should they do about it? Amazon Fresh is the next inevitable step in the evolution of the grocery market. But it may represent a tipping point for both brands and retailers – now is the time for both to stop and think and change the way they work.

Amazon Fresh will create more pressure on price            

The UK grocery market has been obsessed with price for as long as I can remember, with Wal-Mart owned Asda consistently campaigning on best price, and market leader Tesco having its origins in the market trader “pile it high, sell it cheap” philosophy of its owner Jack Cohen. The resurgence of discounters has made this worse, and now we have Amazon. The prices of their current Amazon Pantry products already undercut most of the major retailers, and Amazon have committed to benchmark price across all the major retailers.

Amazon Fresh will put pressure on customer service     

Amazon is flaunting a same day delivery service, which will put pressure on all supply chains. Amazon will expect their suppliers to bear the brunt of this, and as other retailers inevitably scramble to match this, the expectations of suppliers will inevitably increase. Low inventories, high accuracy and near-perfect fulfilment will become the norm.

Amazon Fresh may drive a return to large ranges

At a time when the trend in grocery retail is to shrink ranges (Tesco last year reduced ranges from 90,000 to around 60,000) and with fast growing discounters offering very tight ranges, Amazon are bucking that trend with a promise of a range of around 130,000 SKUs. That might prompt some retailers to reverse the trend and increase ranges too. This might create opportunities for brands to gain (or regain) distribution, but of course that distribution comes at a cost (and my cynical side wonders if some retailers might be tempted to do it for the listing fees alone!)

Amazon Fresh will need bespoke marketing funds

How do you get found on a site in amongst 130,000 other products? The answer to many will be simple, but expensive. To get cut-through in that sort of range will require being featured above and beyond the listing, and that will cost money. (Actually there are lots of things you can do to get cut-through in an online store – one of the topics we cover in our workshops.)

Amazon Fresh will drive the costs of business through the roof

All of this comes at a price. While Amazon are planning to charge a monthly fee of £6.99 (around US$10) the cost of meeting those stringent supply requirements and those sharp prices will be large. Getting featured in amongst that range of 130,000 products will require marketing spend.  Other retailers will respond, and perhaps we’ll see the inevitable arrival of free delivery. Who knows exactly what will happen, but we are likely to see downward pressure on retail prices, and upward pressure on the costs of doing business.

Amazon Fresh is unlikely to lead to a real growth in your total sales

All of this would extra cost would be fine if Amazon Fresh were to drive incremental sales. But while it may be a success (and I for one wouldn’t bet against Amazon), and might drive sales – they will largely substitute against existing category sales. Consumers won’t use more toothpaste just because Amazon are delivering it rather than it being picked up at a supermarket, for example. So we have a significant increase in costs, but a less than significant increase in sales. Doesn’t sound too good, does it?

Who will pay for this all?

What we do know is that retailers, both old and new, will turn to their suppliers to support this in one way or another. There will be more customers to service, more distribution points, more listing fees, more demands on marketing. More discounts. More people, more complexity, more funds.

In the real world, neither teams nor funds are elastic. Things can be stretched, but at some point, they snap. It is simply inconceivable that manufacturers will be able to foot the bill indefinitely. When will manufacturers say no? When?

Amazon Fresh perhaps marks a tipping point

A few weeks ago I suggested that sales leaders should adopt a zero-based budgeting approach for how they invest at retail. The article created a large number of comments, and while nobody disagreed with the principle, there was some doubt as to whether it would ever actually happen. Well – things often happen for a reason, when the pain of current practice is too great to handle. Perhaps we’re about to get there in grocery?

Either way, it’s about time manufacturers started taking a more proactive and dynamic approach to the management of channels and retailers. New listing opportunities, new management costs, new management skills – all represent choices that manufacturers need to make. But how to make them? The key lies in focus and prioritization, and targeting shoppers lies at the heart of that. It appears more and more likely that it is going to be impossible to continue to invest in all channels, both old and new, to the extent that retailers may demand. It is also clear that there should be no need. For every shopper trying a new channel like Amazon Fresh, that’s less traffic down at least some of the aisles of some store or other. There is no need to continue to invest in all channels – a good job too as it is patently unaffordable. So which channels and retailers should we invest in?

Brands must consider a number of factors:

  • Which channels are likely to deliver value and volume sales in the future?
  • Which channels are likely to deliver profit in the future?
  • In which channels am I likely to be able to find my target shoppers in the future?
  • In which channels am I likely to be able to influence my target shoppers in the future?

Investing in big customers because they are big isn’t enough anymore. A more dynamic approach to retail investment and channel management is required. And at its heart must lies a deeper understanding of shoppers. Not shoppers in general, but our target shoppers: who they are, where they shop, and where they can be influenced. Whether you adopt a zero-based approach to budgeting or not, investment planning must reflect the new reality of a multi-channel world.

 

How to use generic shopper data to fuel real shopper insight

shopper dataThe internet and conference presentations are full of shopper data soundbites. Apparently shopper behavior can be wrapped up in simple soundbites and generic shopper data  such as “24% of shoppers use their mobile when shopping”. Yet in my experience understanding shoppers, and then using that understanding to influence shopping behavior is far from simple. Doing it successfully is a nuanced blend of art and science. So beware generic shopper data: let’s think a bit harder about how we use shopper insight to drive changes in shopper behavior. But let’s not ignore generic shopper data either: it can be valuable, if it is handled with care!

The danger of generic shopper data – different shoppers behave differently!

When I look at my own behavior as a shopper and compare it to, for example, my wife: what we want from a shopping trip varies dramatically. We go out shopping together and for me, a great shopping trip is over in fifteen minutes, and requires going to no more than two stores. For my wife, a trip that didn’t involve several stops, and going to places we hadn’t planned to visit to buy stuff we hadn’t planned to buy – well that really isn’t a proper shopping trip.

Same shopper, different trip? Different shopper behavior!

And then if I think more about my own shopping trips I find that my behavior varies. Often I want my shopping to be quick and simple. But put me in a music store, or a video game store, I’ll browse for hours. I’ll check reviews on my phone. I’ll check prices. I’ll go to different stores. I’ve even messaged a friend in another country to check the price there.

I met with a client who made computers recently, and we discussed their global path to purchase model. It was full of words such as ‘inspiration’ and ‘discovery’: it all sounded very plausible. Shoppers research extensively, both online and offline – the usual path to purchase stuff. Yet last time I bought a PC, my journey was quite different. I was due to go on a business trip the next day, and my PC stopped working. It was quite old, and I needed a new one anyway. I was happy with my current brand, so I bought the most up to date version of the same brand. No inspiration. No discovery. Now I’m not saying the model is wrong, but it is just that – a model.

The reality is that shopping behavior is highly varied. It depends on the shopper, for sure. It also depends on the shopper mission, on the occasion, on the store, and, quite possibly, on the weather. Which is why any reports which start with “Shoppers say…” need to be taken with a pinch of salt.

Using generic shopper data to fuel your own shopper insight!

Don’t get me wrong: the articles published with generic shopper data are not useless, but they have to be used with caution. If handled with care, however it can add value. Here is how to use generic shopper data  to add value to your business.

  • Consider what the shopper data actually means. The headline is written to make us think that the shopper data is significant and newsworthy. Let’s consider the ‘24% of shoppers…’ for a moment. What does it actually mean? It suggests that in any store, almost one in four shoppers are on their phone. But what it actually means is that 24% of shoppers claim (not did, claim) that they have used their phones, in a shop, at least once, in a certain period of time (probably a month, or longer). Think about how many shops you’ve been into in the last month, and how many things you’ve bought. The significance of the fact that you’ve used a phone once in that time depends greatly on how many shopping trips and how many purchases you’ve made. If the average shopper has been on 10 shopping trips and bought 50 items, then 24% of shoppers could become 0.5% of shopping decisions. Quite a difference, as you can imagine.
  • Consider whether these shoppers might be your target shopper. For every tech hungry shopper there is a traditionalist. Different shoppers do different things. The 24% is only interesting if you are targeting that 24%!
  • Consider how this might vary by channel. Think about what you know about how your shopper behaves in your category and channel. All of this data is hopelessly generic. Even if we accept a 24% number for a moment: is it the same across categories? Of course not! Channels? Don’t be silly! But that doesn’t mean the behavior isn’t happening.
  • Consider your objective. What actually do you want your shopper to do? Let’s suppose your shopper, in your category, and in the channel you are targeting, does like to look at their smartphone. While that’s a good start, it doesn’t mean that mobile is the best media for you. What is it you want the shopper to do? Try, buy more, switch brands, enter your category for the first time? The fact that a shopper is prepared to use a particular media is merely data: the skill comes in deciding whether that media is going to be effective given your goal.
  • Use the soundbite to generate a series of hypotheses about your target shoppers. What if they behaved like this? Which channels might this behavior happen in? If it did happen, how might you use it to generate changes in shopper behavior.
  • Prioritize these hypotheses based on the potential value to your business, and whether you would be able to act on them if they were proved. Hi tech solutions are great, but if they don’t add value, or implementing them would be too expensive, then let’s drop them now.
  • Once you have these hypotheses, review any existing data you have to seek support for those hypotheses (or indeed anything which would disprove them). If nothing exists, seek to research these if they are valuable enough, or potentially seek an opportunity to test them at retail.

There are no shortcuts in shopper marketing as there are no shortcuts in any marketing. The more you understand your shopper, how they behave, and how they can be influenced, the better. That is the heart of shopper marketing, and it lies at the heart of what we share in our workshops. If you want to learn more about the real art and science of shopper marketing, I hope to see you soon!

 

Retail investment – who’s afraid of a zero-based approach?

retail investmentA while ago I wrote a post endorsing Unilever’s move to a zero-based budgeting approach for its marketing spend. It was one of my best-ever read posts (who would have thought that budgeting was such a hot topic!) I argued that Unilever’s move would bring a much more responsive approach to their spend and challenge marketers to ensure that they truly were investing in the right activities. I discussed the post with a Sales Director recently. I suggested that she should adopt a zero-based approach to retail investment too. Her eyes nearly popped out of her head. But if zero-based budgeting is such a good idea for marketing investment, why not for retail investment too?

The alternative to zero-based retail investment budgets doesn’t work

The alternative (which too many organizations still use) is a trade spend budget based on history. Sales Directors start the retail investment planning process, not with their plans, but with what was spent last year. If we spent 25% of sales with Tesco last year, the argument goes, we’ll end up spending at least that. Further, spend is often tied to specific types of activity (we spent x on mailers last year, so we’ll have to spend something similar this year).

There are obvious flaws in such a method. A large retailer is important, for sure. But just because a customer is large, doesn’t necessarily mean that it will drive a large proportion of your growth. Growth could come from any channel: it will depend on who the target shopper is, and what we need them to do. But if spend is tied to past performance, there is little space to flex this spend to fit future plans. Likewise, just because a type of activity worked in the past, doesn’t mean it’s the right activity for the future. How can we invest in growth drivers if our hands are tied by history?

In a changing retail world, current practice is crazy

But the world of retail is changing, a lot! Big retailers aren’t always continuing to grow. Take a look at Walmart-owned Asda in the UK. Asda have just hit their seventh consecutive quarter of sales decline. New retailers such as discounters, and online operators are appearing. Where will sales directors find the funds to invest in these retailers?  Sales leaders find themselves trapped between large incumbent retailers who desperately want to hold onto their funding, and new retailers who offer new opportunities to reach shoppers, and are becoming demanding in their own way.

Shoppers are changing their shopping habits rapidly. An investment in the aisles of, let’s say Tesco, might have made sense a few years ago. But what if 50% of the shoppers you were targeting no longer buy that category at Tesco? What if they’ve switched to other channels? That would have a dramatic effect on the economics of the activity, for sure.

Isn’t zero-based budgeting for retail investment just common sense?

In a zero-based budget world, sales leaders and key account managers would have to justify the retailer investment spend each year, rather than just getting a sum of money based on statistics, trends and last year’s budgets. Is the idea of checking that our retail marketing spend goes on the most effective activities in the right stores such a terrible thing? Zero-based budgeting makes sense in any environment. But as the pace of change in retail and shopping gets faster, the alternatives make less and less sense.

Zero-based budgeting for retail investment wipes the slate clean. It allows a business to ask the questions that lie at the heart of effective retail investment, as follows:

  • Which shoppers am I targeting?
  • In which stores can I influence them?
  • Which activities might influence them?
  • How can I use my retail investment to support those activities?

There are many benefits from zero-based budgeting of retail investment

Zero-based retail investment budgeting changes all of that. As the name implies, budgets start at zero. Assumptions are parked. Plans are built from scratch, and then costed. There are many benefits from taking this approach; here are a few of the key ones

  • Tuning in to shoppers. Without zero-based approaches it is too easy to spend based on habit – a particular activity is repeated because, well, just because it’s what we always do. But shoppers are changing their habits and so assuming that shoppers are still shopping where they used to is dangerous. With zero-based budgeting it is easier to tune retail investment with a brand’s target shopper’s behavior.
  • Tuning in to retail trends. As argued earlier, different retailers attract different shoppers, and this changes over time. A zero-based approach allows retail investment to fit much more closely with current and future retail trends, rather than being locked into a picture of the past.
  • Closer alignment of retail and consumer marketing investment. Zero-based budgeting allows for the opportunity to be much more flexible on what is spent, where, and on which activity. This creates the opportunity to ensure that investment at retail is better aligned with the brands overall goals.
  • Encouraging evaluation. If key account managers need to fight for every dollar, perhaps investments will be put under more scrutiny and evaluations are likely to be pursued more frequently, and with more diligence than currently, if only to create the ammunition to justify future spend. The current approach almost guarantees future spend, so why waste time on evaluation?

I’m not suggesting this is easy. I’m also not suggesting that zero-based budgeting will miraculously re-tune all retail investment so that we can spend it exactly where we want to. Not at all. Big retailers will still be demanding. Precedents from previous practice will limit our flexibility. We’ll be far from perfect. But at least a zero-based approach creates the opportunity for flexibility and change; the opportunity for a bit more creativity in where funds are allocated; the possibility to better align retail investment with our marketing priorities. Even if retail investment patterns only moved a little each year, it would be worth the trouble for the simple reason of the scale of the monies involved.

Zero-based budgeting is a sensible way to approach all business planning: and retail investment is no exception. It ensures that investment is much more closely aligned with plans and priorities, and forces trade marketers and sales leaders to be far more considered and accountable.

Making sensible investments in shoppers and channels change is difficult. Download this free e-book if you’d like to learn more about Channel Strategy in the Age of the Digital Shopper.

 

Image: Flickr

Shoppers are changing their behavior: are you prepared for a fragmented retail future?

shoppersIn case you hadn’t noticed, things are changing in the world of retail. And not just by a little. They are changing a lot! And at its heart is a revolution in the way shoppers are shopping. If ever there was a rationale for the existence of shopper marketing, this is it, or rather, now is it! To win in the world of consumer goods, brands and retailers have to win with shoppers. And that means all marketers, whether marketing to consumers or shoppers, need to invest in understanding shoppers, segmenting shoppers, targeting shoppers and marketing to shoppers better than anyone else.

Shoppers’ behavior is shifting radically

Changes in shopper behavior are sending shockwaves through the industry, but many misinterpret and over-simplify the situation. What we are seeing in shopping behavior shifts is more than a simple move to online, and it is more than shoppers being more price sensitive. To understand shoppers properly shopper marketers must dig a little deeper to understand what has driven shoppers in the past, to better understand the likely patterns of the future.

The internet has clearly liberated shoppers from the tyranny of having to shop in the stores in a specific locality, and has helped price-conscious shoppers dig out the best deals through price comparison sites. But while that might have been the catalyst of these shifts it is an oversimplification to look at shopper behavior as a movement online. What is actually happening is a reversal of a sixty-year long trend in shopping and retail. What I’m talking about is the end of the one-stop-shop.

For decades shopping trips have coalesced into fewer and smaller shops: driving the collapse of specialist retailers and the growth of superstores and hypermarkets. At its heart was a shoppers’ desire for convenience, quality, selection and price. These superstores offered a reasonable compromise at a time when the independents they competed with didn’t. Those who look back with nostalgia on the high street of yore forget that for every quality butcher or baker, there were many who sold mediocre produce, relying on the fact that shoppers in the town had little choice about where to buy.

Shoppers are making different decisions

And that is where this shopper revolution begins. Shoppers now have choice, and they seem to be rather enjoying it. Not just a choice of buying online, but a choice of where to buy, and what to buy, and who to buy it from. A choice of which categories and brands to invest time in, and which not to. Shoppers have suddenly found themselves with more options than a shopper has ever had. And they are loving it.

Retailing is disrupted as shopping trips are fragmenting

Shoppers are smashing the one-stop-shop into pieces – their shopping is fragmenting over multiple shopping trips and multiple shops. Don’t believe me? Convenience stores are booming across the world. In the UK, entertainment specialist HMV, driven into administration just a couple of years ago by the big superstore retailers and online retailers such as Amazon, now sells more music than Tesco, and is the UK’s number 2 entertainment retailer. Specialists are growing in all sorts of categories, driven by the desires and needs of some shoppers to experience something that the likes of Amazon and Tesco can’t create.

Discounters are growing too, as there are categories which, for some shoppers, are all about price. Categories where a wide range of products simply isn’t important. Yet the discounters’ offer clearly isn’t all about price. In the UK, Aldi and Lidl have just won a whole bunch of awards for the quality of their own label product. Hardly what one would expect of an apparent ‘hard discounter’.

Shoppers shift, retail responds – brands caught in the crossfire?

Now is the time for brands to really start thinking carefully about shoppers, and how they are going to engage with them today and in the future. This shopping fragmentation creates challenges, for sure, but also creates a number of opportunities for manufacturers to reconfigure the way they market to shoppers and invest in the retail trade. Brand manufacturers have some really tough decisions to make. They are being pulled in multiple directions. There is a need to invest in new channels and retailers as they are potentially ‘the future’. Yet customers such as Walmart-owned Asda, who this week announced a massive sales slump, will still demand investment (indeed might be demanding more!)

How to survive? The answer is quite simple in principal (though let’s not pretend that its simple in practice!):

Different shoppers will go to different channels and stores for different things

Genericism is never good in marketing. In the past, however, it hasn’t been fatal in the world of shopper marketing and retail investment. Evidence the walls of price discounts in most stores. In the future, this type of ‘marketing’ will simply not be good enough. Shopper marketers must focus and adapt. It is impossible to win with everyone, everywhere. But by understanding, segmenting and targeting shoppers effectively, brands can both drive growth and improve returns on shopper marketing and retail trade investment.

Start by identify your target shoppers

It’s not possible to win with every shopper, everywhere. Omnichannel in its purest form isn’t possible. But we can win with the right shoppers in the right environments. The starting point of real shopper marketing is therefore to understand who your target shoppers are. Trying to understand too broad a set of shoppers will lead to generic data which doesn’t lead to insight. True marketing is about focus and targeting, and shopper marketing is exactly the same.

Prioritize the channels and environments where you can influence your target shoppers

There are so many environments, both online and offline, where shoppers can be found, the choices facing shopper marketers are dizzying. But investing in all places is inefficient, if not impossible. Shopper marketers therefore must invest in channels where there target shoppers can be found, and influenced. Just because a shopper is present in a channel, doesn’t mean it is worth investing in. We’re all on Facebook, but that doesn’t mean you can influence my choice of detergent there. And again, the key comes in focusing on those target shoppers you want to influence, and prioritizing channels based on where they can be found, and where they can be influenced.

Invest in the right shopper marketing mix

With clarity on which channels and environments are influential for your target shoppers, the next step is to identify the right shopper marketing mix to create the desired behavioral change in those target shoppers.

Reconfigure trade investment to support your shopper behavioral goals

The last step is to then begin the process of reconfiguring retail trade investment to support the right activities in the right environments. This might mean reducing investment in some retailers as the stores which they own simply aren’t that influential. It will certainly mean investing in different ways. Easy? Not at all. Necessary? Absolutely! Brands simply can’t afford to keep investing in activity which isn’t effective.

These are turbulent times for the consumer goods industry, and those who think that business as usual will somehow be good enough are in for a rude awakening. The world is shifting radically, and new approaches are needed. Tough decisions need to be made, but those decisions must be informed.  And that means all marketers, whether marketing to consumers or shoppers, need to invest in understanding shoppers, segmenting shoppers, targeting shoppers and marketing to shoppers better than anyone else. Want to know more? Come and join one of our workshops. Register your interest here for free, and we’ll notify you when we’re coming near to you!

 

Digital Marketing Rules: Do We Need Shopper Marketing?

digital marketingShopper marketing has barely established itself in the marketing lexicon and in the halls of consumer goods companies, and yet it seems to be facing a new existential challenge. In this age of digital marketing, the worlds of the consumer and the shopper seem to blur: I can be a consumer one moment and a shopper the next. The neat line between the world of the shopper and that of the consumer is harder to define. Surely it is time to ask a key question. In this age of digital marketing, do we still need to differentiate between consumers and shoppers? Do we even need shopper marketing?

Digital Marketing blurs the lines between shoppers and consumers

It is true that the lines have certainly blurred. There used to be a simple approximation: that the world outside the store was ‘consumer’ and inside the store was ‘shopper’. But let’s be clear – that was always an approximation as there were always shopper-related activities taken outside the store (think about writing a shopping list, or deciding where to go shopping – both are clearly shopper decisions).

So the in-store versus out-of-store model was just that: a model. An approximation of the real world that was useful to marketers to help them recognize that consumers and shoppers are different, but to give a practical model that they could work to.

Fast forward to the age of digital marketing and that model has long since broken down. Shopping can happen anywhere, and shopping activities have invaded spaces which were always considered to be the realm of the consumer. So how do we as brand marketers cope with this new reality? It is quite simple: we need a new model!

Digital Marketing accelerates the need for a new marketing model

One alternative model would be to consign shopper marketing to the trash can, and just go back to talking about consumers (or for those of you who still haven’t caught up with the reality that consumers and shoppers are different, just carry on as you were!). But this model really doesn’t approximate reality. Shoppers still are different. Or rather, when I am in ‘shopper-state’ I am different to when I am in ‘consumer-state’. The lines are blurred, for sure, but they are still different. The last thing we want to do is go back to thinking that marketing to shoppers is basically sticking the consumer message in front of a shopper. No, we need a new model.

An alternative would be a blend: to think of people as ‘shopsumers’ (yes, I hate that word too!). But that ‘average’ runs the danger of being just that, an average. Consumer and shopper are two different states which switch ‘in a heartbeat’ – that much is true. But two states which switch in a heartbeat are still two states and while on average we in between, that is a poor approximation for what we are at any time. Put it this way, imagine you are betting on a two-sided card – on one side of the card is a zero, the other side has a ten. If you have to place a bet on which side comes up, what would you do? On average the score will be five, but betting on five will be a loser every time. Trying to understand a ‘shopsumer’ is just like that.

The new digital marketing model still needs to reflect the differences between consumers and shoppers

We need a model that reflects that consumer and shopper are potentially two different states, but that people switch between them. We need a marketing approach which understands how to appeal to consumers, and how to influence shoppers. We need to develop a marketing mix for consumers, and a mix for shoppers, and they need to be integrated.

Is this new digital reality make things difficult? Yes! Does it validate a move back to consumer equals shopper? Not in my mind!

Digital Marketing brings together consumer marketing and shopper marketing

Great marketing in the future will be marketing that recognizes both consumers and shoppers but is able, at any given touchpoint, to work. The way we develop this for clients is to develop a consumer marketing mix, and then a shopper marketing mix, and then to integrate this, touchpoint by touchpoint. Some touchpoints are pure consumer: some are pure shopper. Some need to be a blend of both.

This calls for a much closer integration between consumer marketers and shopper marketers, and will, I believe lead to more companies bringing shopper marketing within their broader marketing teams, rather than (as many companies currently do) housing it within the sales team.

For more about Total Marketing and how it works in the age of digital marketing, why not join the one of our workshops.

 

 

Consumers and Shoppers have Different Brand Relationships

shopper marketing brand relationshipsI’m often asked why we need shopper marketing (thankfully less now than before). There are many possible answers – but here is one: Shopper marketing exists because shoppers and consumers have fundamentally different relationships with brands. Consumer marketers spend an enormous amount of energy creating (or at least attempting to create) ‘brand-love’. But brand relationships aren’t all about love. And that love is, unfortunately, far from ubiquitous. This is no more true than in the world of shopper marketing. Or, to put it another way, The Beatles would have made lousy shopper marketers. In the world of the shopper we need more than love.

Consumers and their brand relationships

Consumers can have very intense brand relationships. For example, there are some brands I really love. Not many, but some are truly awesome. But let’s explore that love a little.  When do I love these brands? Where do I love them? I love them when I’m consuming. I love them at the point of consumption (or at the point of anticipation of consumption). I love my minty shower gel when it zings me in the shower in the morning. After that, I don’t give it a second thought for the rest of the day. At that precise moment, it is awesome. Ten minutes later I’ve “dumped” it for that Illy coffee which is hitting the spot at the breakfast table. Consumers are promiscuous, and their love is short-lived. I don’t mean within a category necessarily, but my love lasts for a few precious moments of consumption, and then I’m off professing my love for the next brand. A consumer’s brand relationships may be intense, and  may be long lasting, but the periods of intensity that you, my dear brand, are ‘in the zone’, are fleeting.

Shoppers often have very different brand relationships

This is especially true when I’m shopping. Most brands fail to create that quality of relationship with shoppers. Apple may be able to recreate powerful brand relationships in their stores, but they are the exception. Out there in the store the shopper may not even be the consumer.  But even if the shopper is the end consumer, they are now in shopping mode, not loving mode…. And that makes the shopper a completely different target with a very different brand relationship.

Here on the shelf the brand I love is just another product, and it’s hard for marketers to conjure up that “consumer-love” that exists at the point of consumption. In the store brand relationships are diluted by all of the other stuff that is going on: the noise, the deals, and all the other elements of my shopping mission. In the shower, that shower gel was the main event, if you like, but here in the store it is only a small contributor: my budget, my time, the check-out queue, the other things I need to buy today – they are all vying for my attentions.  At this point, as a shopper, I am so far removed from the intimacy of the consumption moment –  it is hard to believe that marketers believe that what works for me as a consumer would also work for me as a shopper. Where I do buy a brand regularly, it is often out of habit, more than love – it’s easier that way, and no other brand is offering enough of a reason for me to switch.

But it doesn’t have to be this way, dear brand. Whilst the in-store environment may never be quite as intimate and close as those consumption occasions we share, there are things you can do to woo me in the store.

What can brands do to improve brand relationships and create a little love in the store?

  • Be realistic. Not everyone loves your brand. And those that do probably feel that love in or around the moment of consumption – only at that point of relevance. Be realistic and recognize the real reach and power of brand-love.
  • Rekindle the romance. Can the magic be conjured up in-store? Is it possible to remind the shopper, there in the store, of just how special that consumption moment is? And, no, I don’t mean playing your commercial on in-store TV – but what cues can be delivered to rekindle the romance? It might be difficult to build significant brand value in a store, but reminding shoppers of values that already exist is often eminently possible.
  • Check if the consumer is the shopper. If they are not, then that consumer love is even harder to work with. The shopper almost certainly has little love for your brand. Live with it.
  • Recognize habits – don’t disrupt them. If your brand relies on shopper habits, then please let’s not disrupt those habits. Execution focus must be on availability, and almost certainly on the home shelf. Take care with promotions, or any activity which makes it harder to maintain availability. The last thing we want to do is to force shoppers to change their habits.
  • Add value to the shopper. Consider if there is anything that can be done to add value to the shopper (and I don’t mean a coupon!). What would make their life easier as a shopper? Easier to carry? Easier to shop? Easier to find? Choice of sizes? By understanding the shopper’s value points as distinct from the consumers, we may be able to find something to build just a little ‘shopper-love’.

Understanding brands as they work across consumers and shoppers requires a paradigm shift. Successful brands require a Total Marketing mix which recognizes that the target market is a consumer AND a shopper. By understanding the difference between the brand relationship at the point of consumption, and that at the point of purchase, our plans in both areas can be much more effective. Integrating consumer marketing and shopper marketing can be a challenge. If you’d like to learn more, join one of my workshops. Register here and we’ll let you know when we’re in your area.

The Complexities of Understanding Shopper Behavior

shopper behaviorWinning with shoppers is key to consumer goods success: I think we can all agree on that. And on the surface, shopper marketing looks pretty straight forward. Stick some activity in a store and a shopper responds… Simple eh? Alas not. Shopper marketing is fiendishly complicated. Deep understanding of shopper behavior is key to shopper marketing success. In this post I’d like to dig into why understanding shoppers is a lot more complicated than many think: and to share some guidance as to how shopper marketers can cut through this complexity. Some of this is pretty straight forward, but please read through to the end, as there are some subtleties to this that even some of the most experienced shopper marketers miss from time to time!

Shopper behavior varies by outlet

First and foremost, shopper behavior varies by outlet type. I’m pretty sure you all know this, but it’s worth repeating. Too often similar activity is implemented across channels without any real thought as to how shopper behavior varies. A shopper in a convenience store is different to a shopper in a superstore. They are in a different environment, with potentially a different mission, and different needs. It stands to reason that they will respond differently to stimulus. Someone buying (let’s say) a beer in a superstore might be interested in browsing and checking out new offers: in a convenience store, grabbing my favorite brand may be my priority and any attempt to interact with me beyond this may be ignored.

Shopper behavior varies by category

If it were just that simple. If all convenience store shoppers were grab and go and all superstore shoppers were browsers, shopper marketing would be pretty straight forward. Alas – it isn’t! Shoppers shop differently in different categories – even in the same store – even on the same trip. A shopper might be “grab and go” in one category, and then browsing in the next aisle. They might be deal hunting by the time they get to the next aisle, and looking for information in the next. This is where most retailer-based shopper segmentation approaches fall down. They look at overall shopper behavior, and try and allocate shoppers to a generic segment such as ‘Family deal seekers’. The trouble is that this simply isn’t nuanced enough. Just because I seek deals in some categories, doesn’t mean that defines me across all categories. As shopper marketers, we need to understand shoppers’ behavior by channel, by category.

Shopper behavior varies by shopper

Of course, not all shoppers are the same. I might deal seek in toothpaste, and browse in hair care. The next shopper might do the opposite. Unfortunately, there isn’t a fixed pattern. Different shoppers behave differently in different categories in different channels. To market effectively to these shoppers, shopper marketers must effectively segment shoppers, and understand how different groups of shoppers behave (by channel, by category).

Shopper behavior varies by shopping trip

OK – last one, I promise, but this is the best one and the one that (most of the time) gets missed. We’ve agreed that shopping behavior varies by shopper, category, and channel. But there’s more. The same shopper, in the same category, in the same store, but different behavior. How can this be? Sometimes shoppers use outlets for different purposes. In a recent study in Singapore, we found two very distinct behaviors. The same shoppers used a supermarket in two distinct ways. Sometimes they went for a small, top up shop: picking up necessities for the next twenty- four hours or so. On these trips, shoppers were highly planned, and rarely strayed from that plan. The same shoppers also used the same outlet, in the same category, in quite a different way. They also had different trips where they stocked up. They bought product for the pantry, often travelled with their family, and took a lot more time over their shop. The trip was less planned, and the shopper was much more likely to be tempted to buy other brands. Which shopping trip should a brand target? The second one of course!

Shopper marketing is complicated. Marketing to shoppers at the highest level requires an in-depth understanding of shoppers. Even before shopper marketers consider which activity they should use, they must understand the following:

  • Who is my target shopper?
  • What shopping missions do they have, and how does my category fit with these?
  • Which stores do they use for which shopper missions?
  • How do they interact with my category/brand, on those trips?
  • How open to influence is the target shopper on each of those trip types?

This information helps the shopper marketer understand whether, and where (and when) there is the best chance of influencing a shopper. Only then should the shopper marketer start planning activity.

To learn more, check out our free e-book – “Managing Channels in the Age of the Digital Shopper”.

 

Eight Steps to optimizing in-store investment

in-store successMy last post argued that often (though not always the case) the role of shopper marketing is to disrupt shopper behavior. This is critical to shopper marketing success: if the shopper doesn’t behave differently, it is unlikely that our results will change. Most marketers I know are looking for growth: and growth means that some shoppers at least must change their behavior. Different shoppers, in different channels, all behaving different. Every situation is different. We also know that a huge amount of in-store investment is wasted. So how is a shopper marketer to know which activity to focus on to make their shopper marketing effective? Loads of people asked how best to plan, so here (in as much detail as I can cover in a short blog post) is how to tune your shopper marketing activity to have the best chances of changing shopper behavior in a way that works for you and your brand.

Who is the target shopper?

I’ve discussed the target shopper this at length before. In any marketing situation, we are not interested in everyone. A consumer marketer isn’t interested in all their consumers. In the same way, a shopper marketer isn’t interested in all shoppers. We are interested in a specific group of shoppers – our target shoppers. These shoppers are the ones that are critical to us achieving our objectives.

What is the current in-store behavior of the target shopper?

The starting point of any behaviorally based shopper marketing is to really understand the current behavior of the target shopper. Where do they shop, where in the store do they go? What do they look at, what do they notice? What do they touch, smell, read?

What will happen if I do nothing (and will that help me hit my objectives?)

This might seem like a pretty simple step, but it is worth some thought. At one level, if we do nothing, the shopper is likely to continue to do what they currently do, right? First things first, are we happy with their current behavior? Are they, for example, buying our brand? Are they buying enough? And most critically, if they don’t change their behavior, will we hit our targets? If not, we either need a new target shopper, or we need to change their behavior!

What do I really want the shopper to do in-store?

Assuming that we do need them to change their behavior, the next question is obvious – what do we want them to do? Are we trying to get shoppers who have never tried the category to try it? Are we trying to get competitor shoppers to try our brand? Infrequent shoppers to buy more frequently? Or a shopper who usually buys one pack, to buy two? I hope you can see that a really clear and focused understanding of who the target shopper is, and what is their current behavior, is key to this step.

Is there any evidence that the shopper might be prepared to do that?

Before we get too excited, it’s time to check whether this is realistic. What do we know that suggests that the shopper might do this? On the contrary is there any evidence to suggest that the desired behavior is a stretch. To be clear, I’m not looking for a cast iron case to prove the shopper will definitely do it: that I find is too constricting and kills off some of the best ideas. What we’re looking for here is enough support to suggest that the behavioral change is at least credible.

What activities are most likely to encourage the desired behavior in the target shopper?

We are now clear on the behavior we want to encourage: the next step is to decide which activity to deploy. We can use previous activity evaluations and any shopper research we may have to support this. If you don’t have either, then it is time to start evaluating activities! But, if you genuinely don’t have much data, then go with your gut! What makes sense? What feels right? And then – evaluate

Will those activities have a negative impact on other shoppers?

This is the only step in the process where we do need to think of the other shoppers. For our own sake, and that of our retail partners, we need to consider the impact of our activity on their behavior. Is it going to have a negative effect on other shoppers who currently buy our brand (but are not the target shoppers of this initiative?) Is it going to have a negative impact on brand perception? Will it have a negative impact on the overall category sales, in which case our retail chums are unlikely to be happy!

How much will this activity cost, and am I likely to get a return on investment from this activity?

The last step is to remember that shopper marketing activity is an investment, and we should seek to make a return on that investment. So we need to calculate how much the activity will cost; calculate the incremental profit that it will deliver, and that will enable us to ensure we are likely to deliver a positive return on investment.

At the heart of all of this is the need to build a better understanding of shoppers. If you haven’t started your shopper research journey yet, check out this free guide to conducting great shopper research. If you have some data, but are looking to squeeze some insight out of it, don’t worry: we’re writing an e-book on shopper insight right now! Click here to be notified when it’s ready!