Shopper Segmentation Models: Why you need your own one now!

segmentation modelsThere are lots of things that make a difference when it comes to getting value from your shopper data, but the single biggest differentiator between lackluster analysis and insight-driving work is shopper segmentation. Segmentation lies at the heart of all good marketing, and shopper marketing is no exception. But why should shopper marketers bother with creating bespoke shopper  segmentation models? Most shopper market research agencies have their models which they share with their clients. Many retailers have their own models too, and prefer their suppliers to use these. Why go to the trouble of creating a bespoke shopper segmentation models?

Agency shopper segmentation models are generic

Most shopper segmentation models developed by market research agencies are generic: designed to work across loads of different categories. One hopes that it is a generically useful model, but it was built to work for everyone, not just you. It’s a good starting point, don’t get me wrong, but how do we know that their model is the best one for you? It might be, but we don’t know. To be ‘the best’ the shopper segmentation model would have to be based on what it is you are trying to achieve. The shopper segmentation would need to take into account your consumer strategy. And (unfortunately) the only way to guarantee that the model is the best for your business is to be prepared to test and try loads of different segmentation approaches to see which ones add value. Unfortunately, most agencies don’t do any of these things – they use a generic model (and we know this because we see loads of agency reports!)

Retailer build bespoke shopper segmentation models, so why shouldn’t brands?

A second thought – if generic models from agencies were the best way of segmenting shoppers, why is it that most large retailers have their own bespoke model? Maybe they know something we don’t! Retailers build their own shopper segmentation models because they want to understand they shoppers, and to identify which of these shoppers they will target which which strategies. They know that their shoppers are different to other retailers, and their strategies are different too, so it stands to reason that a standard shopper segmentation model isn’t going to be optimum. If retailers need a bespoke model, why wouldn’t brands want a bespoke model too?

Retailers build bespoke shopper segmentation models to serve their business

So why shouldn’t brand owners just use the retailer’s model? After all, the retailers will want us to use that language when we present, so doesn’t it make life so much simpler? Again, practice suggests that this doesn’t work well, and for two reasons. Firstly, that the retailer’s segmentation model is built for their business, not yours. It is built to help them hit their objectives, and align with their strategies, which are not the same as yours. Retailers are looking across multiple categories, not just yours. Retail shopper segmentation models should not be used to drive a brand’s shopper strategy; rather, they should be used in selling and executing (customer language is always useful in a selling presentation!)

Bespoke shopper segmentation leads to competitive advantage

These models are useful, and are a step forward from thinking in terms of a homogeneous, generic shopper, but unfortunately, standardized models rarely create competitive advantage. If marketing guru Michael Porter is correct, and “the greatest opportunity for creating competitive advantage often comes from new ways of segmenting, because a firm can meet true buyer needs better than competitors or improve its relative cost position,” then relying on a standard model created by an agency, or using a model that was designed to support another organization’s competitive advantage, is perhaps not the best idea. If you think your brand could benefit from a new way of looking at your shopper data, and that a unique shopper segmentation might help, please get in touch and we’ll share some case studies showcasing the power of shopper segmentation.

One Step to Power Up Your In-store Activity Evaluation

Activity EvaluationMost organizations we’ve surveyed don’t do much in-store activity evaluation. Those that do typically evaluate activities based on sales uplift. Arguably better than nothing, but it does miss out a key point. To understand the value of shopper marketing or in-store activity, we need to understand the impact of that activity not just on sales, but on consumption too.

Activity evaluation must recognize that shopper marketing value comes from changing consumption

Yes. We all like a sales uplift. And yes, it does help hit those monthly targets. And yes, those monthly targets are important. But if there is little change in consumption behavior, or the change in consumption behavior is not sustained, then the returns from the shopper marketing activity may be small, or negative.

Understanding why understanding consumption is key to shopper marketing activity evaluation

To unpack this a little, let’s consider a fictitious example. Four shoppers walk into a store. Each buys two packs of a cereal which are promoted, let’s say with a ten percent discount. Sales are usually three packs in total – this week we have eight –  so as a brand owner we’re seeing a substantial uplift. Probably we have a very happy team! Targets will be hit this month!

Activity Evaluation – How valuable is that uplift?

First things first, let’s understand the change in shopping behavior. The first three shoppers usually buy the brand in question, and were planning on buying one pack. They saw the deal and thought it was good value, so bought two each.  Shopper four usually buys a different brand, but liked the deal on this brand so picked this one up. Never tried it before but friends have recommended it, so they bought two packs.

What is the value now? One could argue at this point that the purchase by shopper four is much more valuable as we’ve created trial AND extra volume. A shopper marketer might argue that the sales uplift is still good (it is). A smarter shopper marketer however might worry that three quarters of the product has been bought by regular shoppers, at a discount, and now ask the next massive question. When will they buy next?

This is because the true value of the promotion depends not just on the impact it has on the purchaser (in this case, which purchaser and what they do), but also on the impact it has on consumption. Let’s extend our theoretical exercise one more step.

Activity Evaluation – Consider consumption behavior as well as shopper behavior

Shopper one usually eats the same cereal every day. Consumer marketers would call him a loyalist. Now that he has bought two packs at a discount, he continues to consume the same amount of cereal, every day. Now how do we feel about the value? Over an extended period of time this shopper will buy the same amount of cereal because his consumption behavior won’t change. But he’s paid ten percent less for it. This month sales are up, but over a longer period of time, revenues are down.

Shopper two is also a loyal consumer, and consumer every day like shopper one. She carries on eating every day, but decides to use some of the extra cereal to make some chocolatey treats for the kids at the weekend. They use up a whole packet of cereal (the extra one she bought), but the kids weren’t keen so she decides not to make them again. In this case, the extra purchase has led to extra consumption in the short term. Because the promotion drove extra consumption, there is no cannibalization of future sales, and this shopper will continue to buy on her usual schedule. This is a genuine incremental sale, therefore, because the extra product got consumed in addition to the regular consumption.

Shopper three usually consumes the brand twice a week, and consumes another brand on other days. For a while she started eating this brand every day and likes it. Perhaps she feels better, or notices she’s not as hungry during the morning. She resolves to continue eating this brand every day from now onwards. How valuable is that? Pretty high! Not only have we created extra consumption in the short term, we’ve changed long term consumption too. This shopper will now buy more ongoing. Very high value!

And what about shopper four, our trialist? Shopper four tried the product, quite liked it, and finished the box. But next time she went back to the store, she saw her usual brand on promotion, and bought that. In this case we gained one incremental pack (of equal value to shopper two perhaps), but no long term changes in consumption.

Activity Evaluation – Which shopper is most valuable?

“Shopper marketing adds most value when it changes shopping behavior in such a way as to positively impact the long term consumption of the brand/category.”

It’s impossible to understand shoppers without understanding the consumer or consumption that they are buying for. Its impossible to truly evaluate shopper marketing activity without understanding its impact on consumption. For a real life case study of how shopper marketing can impact long term category and brand consumption, check out this article.
PS – who buys your promotions? Which shopper type buys most promotions? In most categories, the shoppers who buy deals are similar to shoppers one and four the least valuable in our fictitious example. If you want to know more about how to change the in-store marketing mix to drive real growth, contact us for a free conversation.


Image: Creative Commons

In-store purchase decisions: Unpicking the myths

in-store purchase decisions POPAI reportThere are lots of reports about the level of in-store purchase decisions by shoppers: the best known is probably the report from POPAI. In their 2014 report they suggest that “82% of all shopping decisions (are) made in the store.” While we can all accept that there is a lot of in-store purchase decision making, is it really this high? And if the level of in-store purchase decisions is high – what should a marketer do about it? In this post I’m going to attempt to cut through the myths about in-store purchase decisions, and consider how marketers, sales professionals and retailers can use this to their advantage.

What we mean by in-store purchase decisions

Before we go any further, let’s clear up what POPAI mean when they say that 82% of all shopping decisions are made in the store. POPAI asks shoppers which categories and brands they are planning to buy before they start shopping. After the shopper has completed their shopping, the actual purchases are compared with the plan. Anything purchased that doesn’t exactly fit the plan counts as a decision made in-store.

The first watch out is the definition of ‘planned’. The 82% actually refers to purchases not “specifically planned”. According to their report, any purchase referred to generically (e.g. a category), but not specifically by brand in the pre-store planning interview, counts as an ‘unplanned purchase’. So if my stated plan was ketchup, but I didn’t mention a brand; then if I buy a ketchup, that counts as an in-store decision. So if I only ever buy one brand of ketchup, but didn’t actually mention that brand during the interview – that’s a decision. What if I couldn’t remember the brand name, but I always buy the same pack? That’s still an in-store decision.

In-store purchase decisions : what does POPAI’s number actually mean?

The number quoted by POPAI reflects the “number of purchases made in-store that were not consciously planned at a category and brand level prior to the shop”. It doesn’t trip off the tongue quite as well as “82% of purchase decisions made in-store”, but it is a little more accurate! And nothing wrong with that: it still shows that an awful lot of decisions are being made in-store, just maybe not quite as many as POPAI suggests.

Just because I don’t list a category and a brand, doesn’t mean there isn’t a plan

POPAI states that they ask about planned categories and brands. But categories and brands are ‘manufacturer speak’. Some shoppers may have plans that don’t include this language.  ‘Some drinks for the party’: no category or brand reference, but still a plan. “Something for dinner” – again, it’s a plan that doesn’t fit into the POPAI definition. If a shopper is looking for ‘something for dinner’ there is clearly space to influence that purchase decision in the store. But it is disingenuous to suggest 82% of purchase decisions are made in store. The decision to buy a meal (and which shop to buy it in) were clearly two decisions made pre-store, and neither would be counted by POPAI.

Just because a shopper doesn’t have a plan, doesn’t mean you can get into their basket

The real danger I see in this is the assumption that just because a shopper hadn’t consciously planned to make the purchase on 82% of occasions, that somehow that means that we can win in-store on those occasions. I’m afraid not. The reality is that yes, in-store stimuli are clearly at work, and are clearly important. But the implication (not one that POPAI makes overtly, I hasten to add) that 82% of purchase decisions are a ‘blank page’ is patently untrue. And just because I don’t have a robust, conscious plan to buy your competitor, doesn’t mean I might consider you. Going back to the ketchup illustration. I might see a sign for the Heinz brand, which reminds me that I might need ketchup. But when I go to the shelf I buy the private label product I always buy. I didn’t have a plan, but I was never going to buy the brand. Just because a shopper doesn’t have a plan, doesn’t mean you can get into their basket.

In-store purchase decisions: important, but beware the generalizations

Putting all of this misinterpretation aside, whatever the number is, there is a number. The in-store environment is important. But these numbers are averages – generalizations that can be misleading and dangerous. It will vary dramatically by category. In our shopper research, we’ve seen categories (snacks, for example) with very high levels of in-store switching, and other categories (kids milk for example) with tiny levels of in-store decisions (below 10%).

Further, different channels attract different shoppers and different missions, so we can expect to see the level of influence vary dramatically by channel. The number will vary by shopper segment too as different shoppers will of course exhibit quite different behaviors. So until we are clear on which shoppers we are targeting, and in which channels, the number is, to say the least, a little academic to say the least.

Understanding in-store purchase decisions is critical

To be clear, I don’t have a problem with POPAI (though a little less hyperbole on the headline statistic wouldn’t go amiss!) They work hard to raise awareness of the importance of the in-store environment as a medium for influencing shoppers. But as a raw, generic statistic, it is low value and perhaps dangerous. As with all data points, it’s essential to make sure you understand exactly what the data means, and use it only as a jumping off point to start asking high value questions about your business. What is the number for your category? How does it vary by channel? How does it vary by shopper segment? How does it vary by shopping trip or mission? Then we’re really getting somewhere!

For more on understanding shoppers, and using this to drive more effective marketing, check out the blog at for free advice and insights, every week.

Unilever Shows How the Consumer Goods Wars will be Won

Marketing spend Unilever consumer goodsSame day delivery. Omnichannel consistency. Personalization. The list of what shoppers and consumers want is long. What is even more scary for manufacturers and retailers however is not that they just want these things, but that shoppers want them for free. Oh, and lots of low prices too. Consumers and shoppers want it all, for less. This seems to me to represent the biggest challenge facing the entire consumer goods industry. It could change completely the way that industry does business. How are you going to face this challenge, and can the recent strategies of Unilever perhaps point the way?

Consumer Goods Challenges – Shoppers Want More For Less

Same day delivery. Omnichannel consistency. Personalization. Each of these elements drive cost, often massive cost. Supermarkets used to get shoppers to do their own product picking and delivery. Shoppers used to be happy as long as a product listed in their local Wal-Mart: no need for integrated websites and ‘everywhere media’. And everyone was happy with either the same product, or minor tailoring at best. Not anymore. But who is going to pay for all of this? Where is the money going to come from? If shoppers aren’t prepared to pay for all of these things, that means prices don’t go up. And that means, costs must come out. Here’s two ways Unilever are moving to strip out cost without destroying value.

Unilever Strategy One: Zero-based budgeting, done correctly, drives customer value

The first move is their controversial move to introduce zero-based budgeting for all marketing activities. Historically, zero-based budgeting has been used by businesses cutting costs to prop up profits, or to ready a business for sale (or spin). But Unilever are (we hope!) a bit smarter than that. To quote their CFO “Zero-based budgeting will help us identify the next efficiencies and costs that don’t add consumer value. It’s essential to underpinning our strategy.” Implicit in this is a statement that an awful lot of marketing costs simply don’t add any value to consumers. They were perhaps an affordable luxury in the past, but as the needs of shoppers and consumers are increasing, smart brands are focusing their spend only on activity which adds value.

Unilever Strategy Two: Challenging the retail-supplier model – force it to add value

The second is the dramatic acquisition of Dollar Shave Club. Unilever has just spent a whopping one billion dollars to buy Dollar Shave Club, a subscription-only service which sells cut price razors and other grooming products online. Its a vast sum spent on a loss making business with turnover below 200 million dollars. The price suggests that this is a big deal, a big throw of the dice, and something that Unilever really wanted. Why? The business isn’t huge, subscription shopping is still small, and Dollar Shave Club only operate in three markets. This acquisition is about recognizing that big retailers too, no longer represent good value to the shopper (or the supplier). They drive in costs (stores, parking space, extensive inventory held at numerous places) which apparently does not add enough value to enough shoppers.  As shoppers continue to split their shopping trip across more and more channels, the retailer-supplier relationship has come under more and more strain. Retailers are under pressure, and are demanding more and more from their suppliers, at a time that they are representing less and less of a brands’ business. Manufacturers are being asked to maintain, or increase their investment in traditional retailers at the same time as needing to invest in new channels such as online. The Dollar Shave Club acquisition is a move to challenge that model. It’s a massive move towards serving the shopper directly, in effect cutting out a middle man which potentially doesn’t add enough value.

Both of these changes recognize the reality that the consumer goods industry needs to move on. The simple model of big brands locked in with big retailers is a diminishing one: shoppers have seen the light and are now voting with their wallets. The next five years will see more of this: more cuts to marketing budgets, more disruption in retail, and more ‘surprise’ acquisitions (and exits). How can CPG industry professionals survive and thrive? Take a leaf out of Unilever’s book!

Consumer goods success will be powered by shopper insight

All of these challenges come from changes in shopper attitudes and shopper behavior. If you don’t understand your target shoppers, how they behave, and what motivates them, you are dead. Or you will be soon. It is as simple as that. Shopper insight used to be optional. Today, shopper insight is mandatory.

Consumer goods winners will drive massive value

If Unilever are buying and conducting a lot of marketing activities that don’t add enough value, I’m pretty sure that you are too. Nobody is perfect. Now is the time to stop resting on laurels, and make sure every cent adds value. Think like a small business owner. Because your next competitor might well be a small business, who does zero-based budgeting because they are starting from scratch.

Consumer goods winners will be focused

You can’t be everything to everyone. Omnichannel is unaffordable. We need to focus. Who are the target consumers? Who are the target shoppers? Where can you influence them most? What is likely to influence them?

Consumer goods winners will measure return on investment

Which of your current channels or brands are actually profitable?  A brand/channel profitability matrix (which is something we do for our clients) can often make chilling reading. How profitable are your relationships with key customers (and yes, you need to add ALL of the costs).

For all the talk of ‘customer focus’ it appears that there is a lot of activity which is anything but. For consumer brands to survive (and I don’t think this is hyperbole, this is a matter of life or death for brands). Customer focus for the consumer goods industry means focusing on three customers, not just one: companies must rethink the way they market and interact with consumers, shoppers and retailers. For a demonstration of how we have used this thinking and approach to add value to major consumer goods companies the world over, please contact me.

When Retail Execution Goes Wrong (and how to get it right)

Anyone involved in shopper marketing, for agencies or manufacturers, will likely have been frustrated at some point by a retailer who was reluctant to install their brilliant work. Even with a great argument, backed by objective research, retailers can be tough to persuade. Why is this? Sometimes it is simply that implementing and maintaining that shopper marketing solution at retail over time is simply too much for a retailer to manage. A recent store visit to a Tesco store in the UK shows this perfectly. Hang in to the end of the post for five key questions which will help you get a ‘yes’ from a retailer, and deliver a lasting impact with your retail execution.

Retail Execution: Secondary Locations and Out of Stocks

Retail execution out of stock

Secondary locations are a great way of intercepting a shopper outside of the category. They can create incremental sales for the category and therefore benefit both the retailer and the shopper. Here we have a secondary location of an allergy product in oral care. Looks nice. But as this example shows, they are also prone to out of stocks. Why? Firstly, inventory levels are managed at a total store level. While this display is out of stock, the store itself might be recorded as ‘in-stock’ and new inventory won’t be dispatched. Secondly, who is responsible to maintain the inventory? If I’m restocking oral care, am I also supposed to restock allergy products? Am I even allowed to? Perhaps not.

Retail Execution: The Perils of Permanent Signage

Shoppers often need guidance, and shelf strips and signage are a great way to help shoppers navigate a complicated category. In the UK and across the world, craft and specialty beer is growing fast, and that results in a rapid growth in product varieties, which might cause some shoppers problems. So many unfamiliar brands – what should I buy? This is where on-shelf communication should come to the fore. But look at this execution.

Retail Execution Guinness

In the first picture, Guinness and Porter are labelled as ‘light and refreshing’. Now I like Guinness more than most, but I would never describe it as light! Shown in the next picture, in an attempt to promote its local (and possible environmental credentials) there is a section for ‘local beers’ with even the suggestion that Tesco was working with local breweries. This store is in Cheshire in the north of England. The beers are from Dorset and Hampshire, about as far away as you can get within England. On the shelf labelled “ginger beers” there was real ale (I couldn’t find any ginger beers!)local small

A good idea forgotten (or maybe not that good in the first place)

Above the wine section is a great sign: color coded wine showing which wine goes best with which food. A great idea, and you can imagine the insight behind it, suggesting that wine was often bought for a specific occasion, but that some shoppers struggled to decide which wine to choose. The trouble is that this sign was the only reference to this color coding I could find. There seemed to be nothing on the bottles, or on the fixture, to tell me which wines fell into which category. Now of course this could be because I simply couldn’t find it, but a great idfood and wine smallea poorly executed is no good to anyone. If you look closely the sign is peeling and damaged: perhaps a great idea that died some time ago?

So if you’re ideas are getting rejected, or even if they are accepted – think hard about the long term implications of execution. Too often agencies and brands focus on the immediate execution. But what happens a week, a month, three months afterwards is key. Ask the following questions:

  • How long will the installation last?
  • In that time, what else is likely to change? (think range reviews, product listings, seasons, promotions, etc.)
  • What challenges will this execution create for day to day operations (think stock checking and shelf stacking especially).
  • What contingencies need to be created to manage these eventualities?
  • How will I measure compliance ongoing, and what will be the procedure if things go awry?

These five questions aren’t fool proof, but they will help create shopper marketing activities that retailers will support, and ensure that your activities will keep delivering in front of shoppers for the full duration of the activity. Do you have any examples of retail execution which has gone wrong? Or any tips or tactics to share to ensure great retail execution? Please share in the comments section below.

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

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.


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