The Branded Pantry

Social, Location, Mobile and just plain Online access to customers, gives Grocer’s and grocery-brands  a better, more effective and soon to be mandatory manner of communicating.  That communication can seal the loyalty deal, or it can push the shopper into a more fragmented multi-retailer, omni-channel , multi-product world.

 

Today there are many “grocery shopping assist” applications available to the consumer.  List builders, price comparers, deal offer-ers, product locators, healthy substituters, product alternative suggesters and others.

·         In some cases these applications are offered by the retailer (Amazon’s price comparison tool,  Safeway’s feature price match program, Ahold’s Scanit).

·         In other cases the application is retailer agnostic and “customer-centric” (Google, Grocery Saver).

 

Regardless of the application approach used by each consumer, your store and your brand offerings are going to be compared against other choices.  You cannot help but to compete on price.  No grocery shopper wants to have paid more for their milk than their neighbor.

 

However, now is the time when you can chose to make price just part of the value equation which you offer customers rounding it out by including performance.   Bill Bishop refers to this opportunity in a recent blog of his at http://www.brickmeetsclick.com/updating-the-shopper-value-equation/

 

Let me broach two ways to bring performance into the equation allowing you to compete effectively against all current players regardless of their bricks, clicks or omni offering.  These two efforts tie out your communication efforts to your merchandising plans and to the actual condition of the shelf in a performance package that will satisfy your shoppers and that will be unmatched by your competition.

 

1.        Today you put a great deal of intellectual energy and creativity, collaboratively with your trading partner, in order to give your consumers the best possible shelf impression.  That planning, testing and re-planning is followed by tremendous efforts to put the plan into action.   How much time and energy is put into making sure that plan is still in place?

 

ShelfSnap has studied hundreds of products and categories in thousands of stores.   The assortment of products actually on-shelf for the very top brands in the very largest retailers differ from plan by an average of over 20%.   The facings presence on-shelf differed from plan by more than 50%.    The purpose of all that communication mentioned earlier is to drive shoppers to shelf to complete the deal.  When they get to the shelf and do not see products as you had planned them, the deal you were expecting to seal is ripped apart…the customer frustrated and you are just one more brand or store that promises great performance, but doesn’t deliver  on the promise. If you measure and make sure that the very well thought out plan is still on the shelf you will PERFORM 30-70% better than your competitors. 

 

2.       You are investing enormous effort understanding and experimenting with various So-Lo-Mo and O communications techniques and vehicles.  In order to “close the deal” in an online communication the shopper has to connect the product selected from the digital shelf with the one they encounter either on the real shelf or in the delivery tote.  If the product they see on shelf looks different from the product image they chose, or if their product doesn’t show up digitally  they will at least be confused, and in some cases frustrated. According to GS1UK at least half of these shoppers will either refuse to buy or will return the product if delivered.   All early indications from research is that consumers blame the retailer for the product “switch”.   At the very least “decision confusion” increases dwell time which translates into a smaller basket for that retailer.

 

ShelfSnap has matched virtually every source of grocery product images used by manufacturers, retailers and application providers  to products that actually sit on shelves in Walmart, Kroger and other critical retailers.  20% of the products on shelf have no images, or data to support any digital communication efforts, including shelf level health and wellness programs.  Of the products that are on the shelf and that do have images, in 46% of the cases the image is different from the package on the shelf.  When the image is different so too is the nutritional data over 60% of the time.

 

The short message here is take an active role in measuring and managing the matchup between product images in your communications efforts and the product packaging on the shelf.  ShelfSnap makes that matchup relatively painless, and the effort you go to in order to shore up the weakest link in the digital path to purchase will allow your offering to perform more than 50% more effectively than your competitor. 

 

Overall Holiday sales have come in between 3 and 4% over last year, despite some nail-biting ups and downs and thanks largely to price and hours-of-operation aggressive actions on the parts of many retailers.  After my lone-sojourn out on Thanksgiving evening (grey Thursday see earlier blogs) I hit the upscale Deer Park, IL mall and found 30-40% off store-wide sales everywhere I went.

No surprise that online sales gains led the parade turning in a +25% Y/Y sales performance.  10% of all online holiday sales were mobile, more than double last year.       Gains were dominated by the big online players, although some interesting small and niche players did well too.

An unofficial survey…still underway.  I have had a number of people tell me they shopped exclusively online this year for their holiday gift giving.   I have had no one tell me they shopped exclusively in stores.

Lots of interesting news from the online world this year, most of it caused by Amazon.  Everything from more availability of inventory of key gifts, to price gouging  on those same products, to the price compare app put out by Amazon inclusive of a $5 off coupon for any user who switched a product on a product scanned in-store to an Amazon based purchase of the same product.

The most interesting statistic to me was the 5 million Kindle products Amazon sold during December (including Fire).  Obviously Kindles cannot be looked at as one time sales.  Kindles, particularly the Fire are sales appliances and need to be viewed as both a sales platform and loyalty tool.    Quite a set-up for the rest of the year.  I wonder what strange bed-fellows this might bring together.

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.

The pace of change in the digital to consumer world is quickening, particularly with regard to the most coveted FMCG market place.

In the last few weeks frenetic  new world activity has included:

1.      Facebook and eBay ( I did not see that combination coming) joined up with an open network deeper integration with components of x.commerce and Open Graph.  That combination brings the power of Paypal, Milo, Magento, GSI, Zang, Where and Red Laser into a powerful platform on Facebook.  The ingredients provides a delicious base for both clever minds at either eBay and Facebook, or any third party application developers.  This one bears close watching.

2.      eBay announced an increased expectation for mobile sales this year for $5 billion, up from $4 billion forecasted just a few months back.

3.      Facebook and Walmart (a cross-over old world retailer, trying its best to become new world) announce a powerful local marketing powerhouse, again fueled by Facebook’s enormous client base.  Perhaps most important to Walmart is the depth of data they will be able to cull from the efforts.  Having customer or prospect data, and mastering how to  correctly understand using it…is one of the 5 key elements to retail dominance by 2015.

4.      Amazon announced the expansion of their catalogue of specialty stores.  They also got physical with at-store pickup in several test location 7-Elevens.  Finally, and perhaps most importantly they moved aggressively into the tablet market with Kindle Fire.  I suspect they see this device as a controllable consumer purchase and purchase-consumption device.  This additional manner of “connection with the consumer” supports another of the 5 key elements to retail dominance in 2015.

5.      Google engages with the announcement that they will secure $2.5 billion in mobile ad revenue up from $1 billion last year.  They announce a new “circular” style for search results.  They go head to head with …just about everyone with an online music store.  And finally they move aggressively to push NFC checkout pads into more retailers so they can gain the high ground with Google Wallet.  

In the old world the pace quickens as well as more traditional bricks and mortar players strap on mobile and online

applications, and even pursue online grocery shopping.

1.      Price Chopper and Marsh announced new online grocery initiatives.  

2.      Interestingly Price Chopper and ShopRite are going head to head in both store based and online grocery shopping in Albany.  Shoprite is using both traditional advertising and more stealthy search based tools to penetrate this new market.  And ShopRite is able to feature it’s online store.  Price Chopper is suing because ShopRite has purchased the online search rights to Price Chopper and Price Chopper Flyer.  This IS the new world colliding with the competitive rules of the old.

3.      Price Chopper is also adding integrated multi-channel capabilities in mobile and online.

4.      Shop N Save (SUPERVALU), has added a mobile application that will help customers find products in stores.  Wegmans has had this for a while.

5.      Safeway just touted their ability to deliver stealth pricing to individual consumers through their Just for U program.  They did this as part of their quarterly reporting to analysts.

6.      I have talked to five grocery type retailers in the last month.   All have big plans for the growth of their online commerce business.  Multi-billion dollar plans.  Within the next few years.  

It strikes me that the old world and the new are approaching this from opposite directions. 

In the case of the old it is “buy something from me.”

The new world seems to be saying “connect with me and let me help you buy something.”

Very different approaches.  In both cases however, they seem to be closing in on the same objective.  They want to be become relevant to the consumer.   Relevant retention is another of the 5 key elements to retail dominance by 2015.

A few will eventually succeed.

 

There has not been much hoopla made of Amazon getting physical by establishing consumer order pickup locations at several test 7-11 stores and at several shopping malls.  

 

This lack of news seems odd to me, although clearly any long term strategy is shrouded in some descriptions of the lock-box mechanisms used to protect the shipment to a consumer within the four walls of that 7-11 which may have led much of the tech news down a less interesting path.   

That mechanism  does  seem unhandy, but is probably necessary for the ease of mind of the shopper.   After all the purchases have to get into the lock-boxes somehow.  One would suppose the same store personnel responsible for sorting the UPS or USPS shipment and placing the parcels in the Amazon box in the first place are also the same clerks from whom Amazon is trying to provide buyers peace of mind.   

Nonetheless, let not Branded Pantry be led astray in the same way as the rest of the pundits.  The fact of the matter is that in a small, little noticed manner Amazon just established what it has always lacked, an easy to use pickup location near you.   E-marketers and commerce types have known for quite a number of years that it is not always convenient to have parcels delivered via post or UPS.   Most of us are not at home a good deal of the time, and given our propensity to be in our cars, a drive-by pickup location on my way to (name one; school, work, the gym…..even the store) is a very nice thing to have, particularly if it is done correctly.  

While this is not the first time Amazon has gotten physical (grocery and other merchandise home delivery in Seattle or 60+ distribution centers within an hour’s drive from  X% of the shopping population) it is the first time Amazon has bonded with another physical retailer to provide what should be a symbiotic service.   

Mark my words…this is just the beginning and there is a plan yet more grand to come.  Are you waiting for the other shoe to drop…or are you doing something to anticipate where that shoe might be found after it falls and how it will affect you?

 

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?

Lists have always been an essential tool of the grocery shopper. Lists used to be simple oft-times taking the form of roughly penciled “categories” such as milk on any piece of paper or cardboard handy.  They served as a reminder to a shopper who kept the details about brand, item and size in their heads.   

I believe the grocery list will become the most powerful customer loyalty and customer centric marketing tool ever devised.  My plan for this blog is to:

·         Review the last two major “upheavals” in lists

·         Review the major innovations and talk about why they aren’t so new, how some have regressed and how there has really been very little innovation for almost a decade.

·         Talk just a bit about what needs to happen to make list the most powerful customer loyalty tool and customer centric marketing tool ever devised.

·         Talk a bit about the companies I see that might be able to play in the development, implementation and potential domination.   

Last Two Evolutionary Trends:

In the last 10 years the “list” has become both more and less useful..in fits and starts.   

Lists took a radical move toward more utility with the advent of serious online grocery shopping in 2001.  At that point they moved from category and subcategory…to items, with UPCs!   Full grocery store assortments became available and loyalty programs allowed retailers, usually supported by online service providers such as MyWebGrocer, to give consumers a choice among real products they had shopped for before.     

Most recently beginning about 2009, a number of other list services, not necessarily connected with any particular grocer are emerging.  Some of these are focused on savings (allyou.com has a localized circular tracker that compares all of the circulars in your immediate neighborhood).  Others are more traditional lists with bells and whistles that either give you optional drive-downs to brand based on pre-loaded products (which presumably either advertisers or other shoppers have specified) or allows you to scan items at the upc level or capture a picture for identification….if any data on that product exists in the supplier’s database.  

Major Innovations in Lists

Six innovations on the path between general category and item specific lists:

1.   The use of loyalty data to drive lists for online grocery shopping or use in the store.  Loyalty data from in-store shopping made for an effective “seeding” into the list.   In cases where loyalty data was not available, shoppers could build lists and save/name them for a variety of purposes (holiday list, vacation list).  The best applications organize lists by category and subcategory.  Current preferred store assortment, prices, specials and retailer coupons were all incorporated into the list.  If the customer wanted their list applied to a store that was not their preferred store (picking the one on the way home from work rather than their primary store) than the list modifies itself to reflect the assortment, prices, specials and promotions from that store.  All of this of course is within a particular chain or banner.

2.   The interoperability of other applications into the list.  A shopper could add specific items from recipe engines, from the electronic version of the circular from the coupon pages and so forth directly into their list.

3.   The use of loyalty data and product scoring mechanisms to focus the hundreds of circular items each week into a dozen or so key products that should be of prime interest to the shopper.  Not “you bought coke so here is a deal for pepsi” or even “you bought catsup so you need hot-dog buns” but products that the shopper had actually bought in the past. 

4.   Moved the list to the mobile consumer.  First through email.  The combination of lists (most often purchased items), shopper specific specials in a neat little package that they could either use as their total trip or use as a starter and delivery/pickup slot holder allowing them to finish the order off later from their laptop. 

5.   Adding aisle locations (as best could be done) This made the list, already heavily used in the store, more useable.

6.   The addition of non-retailer, errand based items (cleaners, wine store, drug store).  This was primitive, much like many of the early generic lists, but was an early form of trying to serve greater shopper needs with the host grocer as the “portal.” 

These innovations all occurred between 2001 and 2004, most of them with me at MyWebGrocer.  Since then there has been very little innovation.  The three notable, improvements since that time are:

a.    You can share the lists via mobile phone.  This is not much different than the old email days, but it is more portable.  Also some of the newer lists let you mark off what you already purchased which is handy for you….and if you need someone else to complete the shopping accurately, quite handy for them.   GroceryIQ is pretty cool here.

b.    You can scan barcodes to add products to your list.  In some ways this is less cool than it seems.  You would do this for three reasons:

a.    You wanted to see if there was a coupon available on the product.

b.    You were in a store that was not your normal store and you wished to remember the item.

c.    You want to add it to your list, but not for this trip

In these cases the chances of the application returning any useful information including the name or the correct image of the product are very, very remote according to studies done by ShelfSnap (shelfsnap.com) and by GS1-UK. 

c.    The application can be owned by a retailer or non retailer and may not be aligned with any particular retailer.  The shopper could have lists for each of his/her available retailers in one application.  They could have lists comparing prices on products they like or at least on categories in which they buy.  Some of these applications are not list builders at all except in the most rudimentary sense, but instead are price comparison applications.  Again, the application seems cool but …. The ability to combine relevance to any one consumer, and the availability of product images and information on that particular item or family of items is a very limited.  Usually the application is using circulars to satisfy the comparison, and product UPCs are usually not included in the ads.  An example, Grocery Circular Roundup by allyou.com is independent of any retailer.  A retailer owned version might look like Just For U from Safeway.  

   

What Needs to Happen to Harness Lists: Manufacturers, retailers and now, even applications and service providers have approached most application development from their own perspective.  “How do I keep the loyalty of my customer, or …how do I earn the loyalty of her customer?”   In reality loyalty can only be given, and only by the consumer.  

Back in January of this year I wrote:

Mobile adds yet another dimension to the multi-store, multi channel choice game that is developing for consumers.  Electronic coupons, online ordering for a variety of delivery options (online, via mail, store pickup), shopping comparison tools and the like.  All of these developments seem aimed directly at the heart of shopper’s loyalty to any specific retailers, particularly for oft-purchased items.  These applications fly in the face of what retailers had hoped to achieve.  They had hoped to convince shoppers to go to one place to buy everything.

In reality, at least for oft purchased, items consumers want the same thing. 

In our view: Customer needs drivers fall into a hierarchy that is definable with a finite number of common variables, but with infinite time and intensity variation.  Some of these are:

1.    Convenience -What I want, when I want/need it.  

2.    At a price I am willing to pay,

3.    Don’t make me work hard to get it. 

4.    Occasionally surprise and delight me with relevance. 

5.    Anticipate my wants and needs

6.    And . . .  don’t do anything that will make me go or look elsewhere.

 

We believe, structured appropriately these new technologies can be bundled into a shopper specific list.  This would help the shopper achieve a new level of satisfaction with the entity which is devoted to meeting these needs for each consumer.    We call the vision around this development Shopper 5.0.  Done well, this list will produce more loyalty than anything ever built .

 

The Companies who Might Drive Building and Operating THE LIST:

·         Amazon

·         eBay

·         Facebook

·         Google

·         Visa

·         Catalina

·         Walmart

·         Tesco

·         2- 3 regional players

I think more than one but fewer than a half dozen players.  It will take much more than the shoppers list.  The guys who don’t have stores will form a variety of relationships with a group of retailers-suppliers that will serve as a physical touch point.  But, the list will be the critical element.

 

And it won’t be your grandmother’s grocery list.

If one reads the research behind these two claims carefully and interprets the results across the studies, one can come up with what seems to be a reasonable, additional view of actual consumer behavior.  Both sets of statistics could be about right, and perhaps the studies should be read as complimentary.

Most consumers are not entirely loyal to a specific brand in a category.  Most have a set of acceptable substitute solutions that they chose from based on:

• availability
• price
• other promotions or incentives
• other factors likely to impact the current purchase (”Fred’s mom does not like my brand”)

Traditional grocery lists (perhaps all shopping lists) serve primarily as “reminders” to the consumer triggering an in-store scan and grab for the product of primary choice or select from a largely pre-determined set of substitutes.    So, the list while not explicitly calling out products, does evoke a specific customer centric set of product choices for each list entry.  The list determines a small set of products, the final choice is made at the shelf based on the conditions or circumstances laid out above.

 If I am correct about this, an I see no reason to doubt myself , this should critically influence how application and ecommerce platforms and loyalty service providers think about building list capabilities.

Back when I designed the MyWebGrocer online grocery shopping product selection display, I chose alpha by brand/size as the hierarchy to be used.  After we had launced and run for a bit I looked at the impact of this display hierarchy on consumer product selection behavior.

I worked with Lisa Selip at Lowes Foods and looked at market share comparisons between online customers and in-store customers on toilet tissue.  I picked that category because it tends to be purchased frequently, universally and there is not a huge switching penalty between brands.  The result was surprising and probably a bit dismaying for brand managers.  The market share for the first products displayed in the category was almost double the share generated on those same items in-store.

My conclusion about these seemingly disconnected studies,  is that while a product might be on a consumer’s mental or actual list , loyalty to that selection is generally quite tenuous.  Meanwhile influence is and can be exerted at the shelf to move a consumer from a primary selection to a pre-selected substitute.  It is much harder to move them to an item not on their evoked list at all.   The implications on the designers, developers and advertisers who wish to gain access to that consumer list are far ranging and complex.  The rewards for figuring it out are monumental.