The Branded Pantry

These two (in their Jammies) get the award for the “most self entertained” shoppers during our excursion to the Grey Thursday => Black Friday promotion at Walmart.

I do believe we have discovered that shoppers want to be entertained, and are perfectly willing to join in and become part of the “event” when they sense an opportunity.   In addition to these two we encountered folks dressed up as their favorite footballers, although that may have been their natural state.

Fun at Walmart.  Who’da thunk?

In Grey Thursday => Black Friday I detailed my trip in the Grey Thursday event at my local Walmart.

I was able to observe my eldest daughter and her husband, two Ubershoppers, in their natural habitat.   When I encouraged the idea of visiting the Walmart, the two immediately hit their tablets to determine the environment we were likely to find and to understand the rules around the desired product, a Blue Wii for $99 which my other daughter wanted for her kids.

They found that the product was on a first come first served basis, limited inventory and was to be released during the 10 pm promotion as opposed to the items made available at midnight.

We hustled to Walmart, found a just vacated parking spot a block away and hurried into the bedlam at just after 10:30 pm.

We scurried, as best we could, to the electronics department (picture).  We did not see any Blue Wii’s.  A question to a clerk ended with a chuckle and a terse “long gone.”  The Ubercouple said not to despair but wandered about to listen in on conversations, hoping to hear about new stock.     I simply eyed a cart containing the Blue Wii hoping the cart owner would become distracted with some other bright shiny object.

Patience paid off as a rumor surfaced that there were indeed Blue Wii’s about over in some back corner.    The Ubershopper one began a systematic search and found a two layer pallet of the Blue Wii’s hiding in behind the light-bulbs, guarded by two fierce looking Walmart ladies.  It was determined that we needed a ticket to release one of the Blue Wiis and so we were summoned by smart phone to help guard the pallet in case a flood of ticket equipped consumers showed up.

Ubershopper number one went into “sweetheart mode” and convinced one of the two protectors to escort her to the “holder of the tickets.”  Ticket secured, we picked up the elusive Blue Wii momentarily ecstatic, until of course we realized that we had a two hour wait to check out.

Ubershopper two and I headed up to see if we could find an approach that would give us a shorter line.  We found one, but still had 20 or so shoppers with carts ahead of us.   Ubershopper number one stalked other lines and put in a smart phone call to tell us that the lines in electronics had become confused opening up the two center checkouts.  She pounced on the lapse and we arrived just in time to have a slightly bewildered young fellow check us out and ask where we had found the Blue Wi.

We were out the door by 11:06 pm with a Blue Wii strapped across the hood of the car.

Huge amount of chatter about whether Walmart’s call to start Black Friday at 10PM Thanksgiving Day was awful, smart or both.

I do not know how the sales numbers came out but I can tell you that it was a smash mouth hit in the Lake Zurich Store.  On a whim, my two daughters, son-in-law and I decided to check out the action and got to the store just after 10:30 pm.

OMG:

• The lot was jammed up.  Absolutely full.
• Streams of shoppers were already heading back into the lot, most with a bag or bags, or some sort of big box electronics.
• The cart bays in the vestibule were completely empty.
• The checkout lines were enormous, snaking across the entire width of this super-super-center (see picture, yep that is the checkout line.)
• Walmart had a ton of personnel and most seemed helpful, although a few seemed simply dazed.
• Walmart had a two stage deal setup; one beginning at 10 pm and the second beginning at midnight.  The midnight items took up a second main aisle parallel with the checkouts.  The displays were fully wrapped in transparent wrap so the goodies could be seen but not taken (sort of ) and each deal was marked with a balloon with a price.  Some folks were simply sitting on the floor, with already packed carts waiting for the next frenzy at midnight.

Clearly the objective to tap consumer’ purses early in the process worked very well.  It was clearly delineated on Walmart.com prior to the event and it seemed to have a hold over effect, as the lot was still full Friday afternoon, while Target and Costco were not so much.

Why not? 

Online Grocery Shopping is pegged at about 4% of the combined grocery market here in the U.S..  In the U.K. it is double that. 

Why shouldn’t we be expecting a very rapid increase to the 30-50% range over the next 3-6 years?

What would prevent it?  What are the real hurdles? 

I have heard for years the old saw(s) about touching produce and smelling the bakery and I have never bought into any of it.  Fewer and fewer customers even know HOW to test produce by touch. 

Today online sales account for 42% of Staples business.  You say “sure, but that is office supplies with corporate buyers.”  OK, how about William Sonoma.  39% of all W-S sales come over the net.  Those aren’t corporate buyers, and a more tactile group of shoppers have never been!!.  

Some of the other old myth’s….

·         Too expensive to ship.  Why ship?  Amazon has 60+ wholesale operations across the country.  How many consumers live within 25 miles of those centers?   What about ship to store and fill parts of the order from there?  Walmart is set up this way.  So is Home Depot.  And so is Walgreens.  What about Dollar General who announced their online store this week?

·         Too tiny margins to support.  OGS shoppers order the largest baskets and come back more regularly than any other customers in a well run operation.

·         It will never happen in my industry.

o   Books

o   Shoes

o   Paper books (again) vs. Kindle and ilk

o   Movie rentals

o   Gourmet kitchen

o   Office supplies

o   Why not groceries?  

I know there are companies out there beginning to plan their assault on this. Why not, it is already the fastest growing segment of the grocery business. Why not aim high?

X (cross) Refer and document via pictures, any changes that are planned for the pog with the shelf status.

One of ShelfSnap’s discoveries in this journey with clients is that once a plan is built and agreed upon by trading partners, changes to that plan are never documented!  ShelfSnap’s experience with two of the top food marketers, with entries in both DSD and center store confirm the fact.

The ShelfSnap compliance service is very particular in delivering store by store discrepancies between what is found on the shelf and what is in the plan.  We routinely ask the client to review the store by store lists at the field level and at the supervisory level.

·         In one company no one could supply a list of approved trade-outs to the plan. 

·         In the other company we did manage to tease out the replacement products but no further approved changes could be documented. 

Recommendation to achieve X-reference to the plan and documentation of agreed upon changes: 

Whenever anyone makes a change to the section they need to take a picture of the entire 3-4’ segment(s) affected and send it to ShelfSnap.

Once uploaded to ShelfSnap the changes can be recorded, documented and incorporated into the current plan. 

ShelfSnap would also record the person submitting those changes. 

Using this method assures that agreed upon changes are documented in a way where they can be maintained.  It further assures that the period audits via pictures, and the pre reset “Fresh Start” will identify all unauthorized changes to the plan. 

Summary:

The F.I.X. process leverages current personnel to capture the shelf.  It takes very little time and almost no training to take and upload the pictures. 

The process leverages available technology as everyone has a digital camera or PDA. 

The process is primarily external to all current IT infrastructure for the retailer or the manufacturer with the exception of the direct feed into the POG software of client choice.

The process TCO is no more than other measurement techniques and yet it increases the probability that:

·         the plan will reach the shelf,

·         shelf changes will be documented and responsibilities identified

·         the plan will actually be able to be measured for impact

Other substitute methods for achieving the measurements necessary to support the F.I.X. are certainly possible.  Direct audits through surveys or hand scan methods have been available for years.  They are expensive to conduct because they take too much time to warrant the use of the normal in-store personnel.  They are difficult to record in a way that is accurate and does not involve some subjective collector judgment or even bias.  Any further clarification of the results is impossible because the source of the collection, the shelf itself, is consumed in the collection act. 

Another method is the use of  POS scan data or delivery data to at least confirm assortment.  This of course does nothing for position, size of set, facings and does surprisingly little for an accurate view of assortment. 

These tools have been around for at least a decade.  The use of these techniques has resulted in the compliance gap we have today.  The new news, is the innovation of digital merchandising measurements brought about through ShelfSnap.  

For a complete copy of this whitepaper,  please email cyndi.metallo@shelfsnap.com

ShelfSnap has documented a great deal of learning in CPG merchandising over the last two years.

A new area of study has begun to uncover and document a stubborn and significant gap between the product images featured on mobile - online applications and the actual product packaging at the shelf.   We are pleased to have the first publication of this occur in an important new online community of CG and Retail professionals called BrickMeetsClick.com. 

The focus of this new community is the intersection of where online and in-store shopping converge.  The founder and “architect” is Bill Bishop.   He engages what he terms black-belt thinkers from a variety of disciplines to help foster the discussion.  We were pleased to be his first black belt effort.    Read the piece here http://www.brickmeetsclick.com/stuff/contentmgr/files/0/5d7c27b7e82fad98115e93aaeaf5363a/files/do_the_images_match_6_14.pdf

and make BrickMeetsClick at least a weekly visit.

We will be examining more on this subject shortly in this blog as well.

The day after Thanksgiving.    Traditionally the best shopping day from a retailer or manufacturer standpoint.  From the consumer standpoint; “it is the best of times, it is the worst……”

 I ventured out on Friday morning to visit my local WalMart.  I needed a few things including some motor oil (a T-giving gift to my RX-8), some shampoo, and some sugar for my world famous pecan pie.    

I probably could have delayed a bit, but the “8″ is cranky if it doesn’t get its oil and I am always curious about how the big retailers stand up to the pressure of the cagey consumer on busy days.

There was  a pile of people in the parking lot, and the cart selection gave some view of just how many people were wandering around the inside of the store (a bunch).

I found my products without too much incident, and the only merchandising comment of value I could come up with was….Who the heck took the password to the sign printing program at WalMart?   The signs I saw were hand scrawled with some creating pricing (where does that pesky decimal point go anyway?) some numbers I was unfamiliar with and some spelling that had me guessing (despite the fact the sign was affixed to the product with the brand very much in view.)

As I meandered up to the checkout area, I caught my first indication that perhaps the trip was not going to be uneventful.  There were lines of consumers waiting to checkout.  Long lines.  But only three of them.

I wandered down to the self-checkout lanes which were unoccupied, puzzled about why no one was using them.  A store employee yelled out….”those are closed.  They don’t work in cold weather!”    Huh?   This is the Chicago area.  We have cold weather for at least 7 months each year.  The self-checkouts don’t work in the cold weather?   And the lone sign-person had not gotten around to putting a sign up to warn customers that “cHekouts don’t werk in cold Wether.”

So, I wandered back to the now longer lines and waited.  I waiting and noted that at least two of the people checking out customers had little or no experience running the checkout process.  On at least two occasions a “price check” was called for, but there were no personnel available to go look for the prices.  On another occasion a cooking bag, stocked at the checkout was “not-on-file” in the scan system and so the consumer could not buy the product.  Why it could not simply be put in by hand was beyond me.

To their credit the employees rallied and opened three more lanes while I waited and I grabbed the opportunity to check out.   On my way up I saw four abandoned carts in the checkout area alone.  All were quite full.

As I left the self-checkouts were still inoperable due to the cold weather.  This day was not going to be a sensational sales day at this particular WalMart.

A black-eye on black Friday.

Those words, were uttered by a senior customer officer from a top 10 CPG Food company in a meeting last week to which ShelfSnap was invited.  The words help delineate the line between individuals attempting to lead the industry through the next great leap in productivity and those who view the current state of in-store execution and maintenance as an acceptable cost of doing business.

It isn’t the sentiment that clearly puts the individual into the later group of industry executives.  After all every merchandising program, plan and expenditure made by either manufacturer or retailer has a business expectation of compliance.  As Doug Adams from Prime Consulting said in our white paper Measure Twice, Profit at Once “A lot of people discount the plan numbers about execution.  However if the plan is good, why shouldn’t things be done 100% according to the plan?” 

However, in the discussion reported above, no measurement had been part of the equation.  The discussion continued when ShelfSnap reported between 20-60+% variances from plan in planograms, promotion, new item cut-in and shopper marketing efforts.  The executive remained steadfast in his belief that those numbers should not happen and that it was the responsibility of the broker/distributor to execute flawlessly. 

The truth of course, is that those woeful discrepancies exist despite the best efforts of those brokers and distributors, and that the tools to manage execution and maintenance are simply inadequate to control the chaos that is the shelf within the store. 

So while the executive and his company pay for 100% compliance, they get far, far less than that and as long as they continue doing what they are doing today…that level of problem will continue to exist.  In fact those performance levels become the “cost of doing business” until industry leading companies break out of the pattern and establish new practices that change the result.

With new tools such as ShelfSnap, accurate measurement of the critical on shelf conditions and facings are finally possible and since the actual data is based on pictures, it is indisputable.  For the first time pictures drive the data, they are not arm candy for data collected by the old fashioned, inaccurate, distorted and very disputable hand scan techniques of the past.  The leading edge image and object recognition technology pioneered by ShelfSnap in the middle of the last decade and improved upon every day since, has generated important new clarity and understanding of the vast opportunities that exist simply by level setting actual conditions back to the plan based on ShelfSnap direction.

Some companies led by executives who know that the early adopters will reap the largest competitive gains have a new motto, “trust but verify”.  Or if you like a less controversial statement, this one from Mr. Churchill: “no matter how beautiful the strategy, you should occasionally look at the results.”  

CG companies are struggling with the prospects of having line items, entire brands (and in some cases entire companies) delisted from the shelf lineup at the “BIGS.” The “BIGS” are the large retailers such as Safeway, Kroger, Wal-Mart, Walgreen, 7-Eleven, Target and others.  These retailers have been the engine of growth for CG companies for over 20 years.  The retailers, following each other and now being followed by mid-tier players are all pursuing at least a two prong strategy to bolster profits and build a stronger bond with their target customer segment.  Prong one is the systematic reduction of entire national brands or sizes/flavors of national brands in order to reduce stocking and inventory costs.  Prong two is the introduction of a stronger lineup of Private Label items. 

CG companies will lose sales on the items and brands “rationalized” out of the lineup.  Profitability on items that remain on the shelf will be challenged as the CG companies are being asked to spend more of their ad & promotion dollars supporting those remaining items.  Interestingly the items that will no longer greet consumer on the shelves of the BIGS all have assets, the most important of which are brand equity, roughly translated into consumer interest and loyalty.  Manufacturers who own these brands/items now have decisions to either harvesting them or to build a strategy to thrive, without the “BIGS.” 

Life is possible, and can be quite good the “BIGS.”  There are tens of thousands of items and thousands of brands that have never been distributed, at least broadly, through the “BIGS.”   One such product is SPARKLE. Sparkle was born in WWII as a military formula for reliably cleaning B29 Gun Sights.  After the war it was produced and sold by a paper company, A.J. Funk throughout select channels nationally and more broadly in certain geographies.   Over the years Sparkle was sold by a direct sales group coupled with brokers and distributors.  It gained distribution primarily in grocery stores.  It used the usual promotion and advertising vehicles including radio, print and some local TV.   

As more and more retail consolidation occurred, it became evident that Sparkle needed to find distribution independent of the traditional grocery channels.  Sparkle feared delisting due to limited geographic distribution.  It was also tougher to fund promotions profitably in a market dominated by national brands with much deeper pockets.  In one sense Sparkle was very much caught between a rock and a hard place.  It was a product with some unique glass and plastic cleaning characteristics, but was used most often for cleaning windows and in that regard, was unremarkable vs. the national brands.   Dick Lane came to Sparkle from Jewel to head up sales.  He moved into the President slot after a few years.  He put his very considerable skills to the task of laying out a strategy that would see less dependency on traditional, more competitive markets while developing a path to increased consumer brand recognition and appreciation.   

Dick recognized early on, the appeal of home centers as an alternate shopping choice for Midwest staple needs, particularly general merchandise and cleaning products.  There are some strong local and rural retail brands in the home center space and Sparkle worked hard at becoming a featured brand in those outlets with key seasonal promotions.   He also moved the brand, and high end companion products onto the consumer direct web store years before most brands even began to think about that channel.   

Leveraging the unique streakless-smearless cleaning characteristics of Sparkle, particularly on sensitive surfaces, was the next target.  Sparkle re-sized the product and packaged it with accessories for the professional the academic and the scientist.  Reaching those audiences with a focused message, focused media and focused distribution put Sparkle on the map, and more importantly in the supply cabinet of this new niche group. The native “green” status of Sparkle’s formula was the next brand focal point; with a line extension brought out to accentuate that status, again well ahead of the trend.  

These moves have not just kept the brand in consumers pantry’s but increased year over year sales consistently, with the latest quarter ahead by 30% vs. year ago.   Life after the “BIGS?”  Heck yes, and then some.  According to Dick, who has worked with Panther Mountain for years, “to stay ahead, you need to re-invent your brand every day.”

Much has been written (perhaps most succinctly by CPGmatters.com http://www.cpgmatters.com/ProductTrends0310.html#anchor_140) about CPG’s move back into E-tailing.    A number of the articles focus on P&G’s initial “build their own” strategy.  Other articles focus on new platforms such as Alice.com which has attracted participation from 29 manufacturers.  

Almost all of the articles give a lengthy review of past forays into E-Tailing by CPG companies (almost always mentioning Webvan and other spectacular failures).  Many talk about the new efforts “getting it right.” 

Truth be known, CPG has been sold effectively through E-tail since 1989.  And while some efforts failed spectacularly others have quietly, done very nicely and have continued to grow significantly for years and years.   

Online CPG-retail much like many other categories, has shown year over year results that have consistently well out-paced same store physical sales.  Most of this has been on the backs of online sales channels offered by traditional grocers such as ShopRite, Harris Teeter, and Delhaize more through specialized online services such as MywebGrocer.  Other CPG sales have moved through straight E Tail services such as Netgrocer, Amazon, MyBrands, FreshDirect and Alice.com, as well as hybrid services such as Peapod. 

A great deal of innovation continues to flow from these services, so while the recent entries may well lead to some new ideas….there are other, very significant motivators for CPG firms to reengage in direct to consumer channels.  Three connected motivators spring to mind:

1.     The absolute number of outlets which could sell or at least stock the manufacturer’s items has been falling for years, but that decline has accelerated mightily during this downturn. (http://brandedpantry.com/2010/02/28/200000-1/ )

2.  .  Clean stores and SKU rationalization have eliminated sizes, flavors and entire brands from store shelves in the biggest food, drug, mass and even C-store chains.  A brand, size, or flavor eliminated in one retailer, is unlikely to be found worthy or continued space in another. The items left on shelf are being squeezed for pricing and for ad-support making them less and less profitable.

3.  .  Fewer outlets, fewer products and brands on-shelf, more of the ad budget in the hands of the remaining retailers….this all translates into control.  Most importantly this translates into the conscious shift in control of the consumer interface to those remaining large retailers. 

CPG companies know there is no hope in replacing the short term volume lost in the continuing SKU rationalization efforts and in ongoing store closures by simply offering an online shopping opportunity.  They are hoping to maintain or establish a more direct tie to their consumers.  Most I have talked to aren’t sure what they want to communicate to those consumers, since sending buyers into stores which no longer carry the advertised product is a recipe for disappointment.    

Perhaps these new efforts by the CPG companies to get online, might well sit down with the MyWebGrocers, the Peapods, the MyBrands and the FreshDirects of the world and see what has worked and what has not, as a good starting point for new efforts.  

There is little doubt a broader innovation, beyond simply connecting via a website and mobile coupons will emerge.  Little doubt at all.