Shopper Marketing

Will retailers at last start to care about what shoppers want?

If we wanted to be there, we would not have started from here!


Big, but empty

A recent article in the Telegraph commented that Supermarkets need to be smaller and smarter
Large retailers like Sainsbury’s, they said, have a capacity conundrum, but filling the excess space with toasters and hoovers isn’t the answer.  The Telegraph are, of course, absolutely right in suggesting that “old speak” – build it and they will come, no longer works. So ranging as if your goal is simply to sell more to a surplus of shoppers must be replaced by a ranging that will actively pull people in.

It is, of course, entirely true that smart money is building smaller, more local stores. A trend that was foreseen in a Coca Cola report in the 1990’s. So not exactly new. Tesco, then, are to be congratulated for seeing this trend earlier, and building their Express convenience chain.

In fact retailers tend to be very change averse even though they are typically very proud of their systems, and, to various extents, their insight into their customers. Normally the last thing they criticise is themselves. Typically it takes a seismic shift – such as we are seeing now – for retailers to see the writing on the wall. Often, of course, the writing turns out to be an epitaph in the case of KwikSave, Somerfield, Athena, Comet, Woolworth and many more.

Some recover. Sainsbury have already come back in the last century from rapidly losing their lead grocer status to Tesco. Amongst the issues they had to face was the fact that they were very upwardly reliant for their decisions. Board level policy handed down from the Sainsbury Family in tablets of stone proved to be as out of touch with the new reality as dunnhumby data has been in predicting the recent flight from Tesco.

Tesco grew to the premier position with the famous slogan “Pile it High and sell it Cheap”. This growth policy has now become “lets have little piles, make a good margin, and rely on being the biggest with the best range”. They all rely on their famous systems to allow them to thrust all of their stock costs onto their suppliers.

Sadly, both they, and Asda have suffered from a pretty simple issue. If you rely on your suppliers to manage a Just in Time delivery system you really do need to make sure that you get your promotion forecasting and ranging right. At the same time, you also need to be locally responsive to make sure that your store delivers what the locals need. Why is this important?


Availability the key issue

Grocer Article February 2015

An example here. In the City of London, financial companies report their bonuses at the end of January. Tesco stores all de-stock their champagnes just after Christmas. Stores with an astute eye can cream hundreds of thousands of pounds by having a local view. Store Groups are very variable in the extent to which they allow local demand to influence store supply. Many – despite real evidence to the contrary – persist with the feeling that their supply chain has all of the answers.

Asda, as an example, have local initiatives such as trade my store, and trade my promotion. This allows managers to flex their supply to meet local demand. Except that they have recently started to close down all of these avenues. Even, and perhaps this is worse, if managers express a preference to have additional stock, they can ask for it, plan for it, but find the depot does not deliver. This is simply because a store order goes back no further than the depot – certainly not far enough back to influence supply chain and buyer. Asda seem to have stopped all demand based allocations to stores.

So their recent decline in form, by retrenching to a centrally held belief in their all powerful systems is letting them down too.

Lastly in Tesco, clients have struggled to find a way of getting demand based additional allocations out to a select few stores. Discussions at conferences right at the top lead to conflicting views on the possible, and eventually giving up.

The benefits of giving stores more to work with is two fold;

  1. The promotion uplift is much greater as the initial demand can be met to a much greater extent than normal
  2. The tendency for stock computers to over-order in the last week of a promotion is reduced since if you satisfy demand earlier, it drops away faster.

    Just add a little stock

    Just add a little stock in the right place

Overall stock turn stays the same or actually improves, while sales goes up, often dramatically as with the chart – where the core (amber stores) had just a few outers more. In order to appreciate this you need to understand that these specific stores with more of the target market in them respond much more to a special offer. Not a surprise. Where would you expect to sell more Pot Noodles, the University of Westminster campus, or the Palace of Westminster. And how much more would they sell if you halved the price?

Local Flexing?

Yes, a great idea. The problems for these retailers lies in the fact that they don’t seem able to envisage a happy medium. That is to say, one where they allow flexing within a system that can deliver it, but also offer advice to managers on what to flex, and give them the space to do it. At the moment 60% of purchases are on promotion, but only around 30% of space is actually flexible. This space, gondola ends, mid shelf etc. is typically sold en bloc to a manufacturer for money. A manufacturer expects to find his product in all of these store-critical positions even though they may not be brand critical at all.

Where to from here?

All of the majors have noted that they are not great at managing their smaller stores. To their credit, Asda said so after their effort to turn their newly acquired Netto stores into mini Asda’s showed that the difference was much more than simple scale.

What retailers have always needed is a credible offering bought into by their shoppers. Not just those with a “loyalty card” but all. The discounters have hijacked value – even though it is actually simply price – that is drawing AB’s in, in droves. The large stores have to discover value again, but with a note that the old days of price competition between themselves has now gone. The Sainsbury advert comparing their prices with ASDA is not only laughable, but when they are mainly losing to the discounters (AB customers now make up 31% of Aldi/Lidl customers), demonstrates a level of out of touch they will regret when the discounters open up more stores next door.

The Challenge

Ehrenburg said that the first duty of marketing was ensuring real, and virtual, availability of your product to your core customers. He did not say, “Oh, and by the way, they are all the same everywhere in the country”. That’s what the retailers say, and of course, it is not true. “Oh”, if Tesco were here they would say, “that is simply not true. We have our Finest stores, and our price sensitive stores, and we adjust ranges accordingly”.

Yes, they do. However, our local Express worked out that we were an upmarket neighbourhood. So they gave us an entire store full of Tesco Finest products. If you want own brand there is a Lidl a mile away with quality own brands at half the price. Tesco range their own brands at eye level, despite the fact that people navigate by brand. Another example of “old speak”. We Tesco are confident you will continue to visit, so we make life difficult for you to shop the aisle deliberately so you will spend longer.

I am minded to recount here the millionaire at the turn of the century who left his entire fortune in non-negotiable buggy whip shares. As he said in his will. There will always be a need for efficient urban transportation…..

What you want – when you want it

The only credible positioning is relevance. Discounters keep costs down by having a really tight supply chain, and a restricted range. Large stores need to focus on local needs, and recognise that, if they do this, they need to flex more promotion space locally too. Shopper Value rests in being able to see more in one place of what they want, and actually working much harder to bring more people in to see the range.

This actually means paying attention to your local market. What do they want, and when do they want it. You can advise your local manager of what might be likely to happen, So he can decide whether to take your advice, or not.

Then you can fire the ones that don’t take a risk.

Can you offer advice on local ranging? Absolutely.

Will this happen? You tell me. Please.

Further insight and white papers



Are elections merely failed shopper marketing?

Researcher Kantar polled 6,000 main shoppers from its 30,000 strong panel to find out voting intentions and feelings on the economy. Combining this research with its political and social expertise has allowed Kantar to uncover the bigger picture behind voting intentions!


Robot Shoppers driven by background?

UKIP voters over index on British foods, preferring English breakfast tea, white bread, English cheese, sprouts and Empire apples. Those voting Labour like wholewhite bread, turkey and chilli, whereas Conservatives enjoy ground coffee, wheatgerm bread and avocados.

On the other hand people who say they intend to vote for the Greens have the lowest BMI and are most concerned about health issues (Do inhabitants of Brighton recognise themselves here). They also have the most eclectic shopping basket, preferring fruit and herbal teas, French cheese and mangoes. Greens and Lib Dems are the most likely voter groups to have cats (30% and 25%), while UKIP supporters prefer dogs (28%). Conservative voters spend the most on groceries per year, £4,437 compared to £3,925 per year for a Labour supporter. SNP, Liberal Democrat and UKIP voters are most likely to shop in a discount store.

Kantar also compared the situation now in the UK to the data it had from just before the last election in 2010. Consumers are now buying more on promotion (40% of our groceries in 2015, compared to 37% in 2010) and buying more private label goods (47.7% now compared to 45.8%). It is a tale of two countries, with 67% of us now shopping in discounters (compared to 54%) and the amount spent in Waitrose increasing from £3.5bn (2010) to £4.6bn (2015). Consumers also buy 3.5bn more calories in a year compared to 2010, which is 116 more calories per voter, per day.

Should you be surprised you are so predictable?

Well, not really. But there is more to learn from this research. People with similar attitudes cluster together. This is why you have constituencies that will go one way – or another. Likewise, they are served by shops that need to flex their range to meet the needs of their core customers (and their service standards!). So Brighton, the Green stronghold should have more fruit and herbal teas, French cheese and mangoes. As well as cat food. They also ought to have more promotion stock on the shelves to meet the additional demand.

Do stores actually respond proactively to their customer needs?

Frankly, about the same as politicians respond to their constituents. There is a great deal of central talk about catering for the needs of the shopper/elector at irregular intervals when it is expedient to be seen to be doing something.

What can brands do, then, to meet local demand properly?

Usefully, there is a considerable amount that can be achieved by direct discussion at store level. Tesco and Sainsbury allow a level of store manager personal choice in what is stocked. If brands know they will sell well in a particular store then there is the chance to – potentially dramatically – improve base ranging. Two RetailVitalStatistics clients have 30% and 60% of their sales going through non-ranged Tesco stores. So those stores where shoppers demand more of a particular brand, are actually getting what they need by local application.

What can electors do to get their views heard?

I’m afraid shopper marketing only works if you have a free choice (such as the single transferable vote) of the same selection everywhere so you really do get what you are paying for. Sadly you turned this down when you were given the chance. From memory the prime reason for this was the fear of a hung Parliament. Which you now have anyway. So what you are likely to have at the end is a free choice of Scottish shortbread voted for by 15% of the shoppers.

At least as shoppers you can impact on what you can see in a store because your local manager actually has some power to satisfy you. Or as brands, you can help your shoppers to what they want. So take satisfaction from that.


Shopper Marketing – return today, return tomorrow or never?

teamwork-382676_1280How managers answer very much depends on whether they come from a sales or a marketing background.

Both have developed, quite independently their own toolsets, with sets of results that all are happy with. They are both managed quite independently, and each is totally unaware that if they worked together they could get the sales now that the Sales Department needs, and the growing brand over the next few years that Marketing has at the top of the agenda.

How is this?

Well the “sales now” that the Sales Department encourage is simply based on getting more sales through the retail tills. They do this primarily in two ways. The first by pitching for sales in more stores. The second by increasing the rate of sales through existing stores, typically with the use of discounts, but also with POP and other path to purchase that is typically implemented either across the retail estate or at the behest of the retailer. What the Sales Department does not do is to flex their investment to where core shoppers are. On the other hand the “sales tomorrow” that the Marketing Department encourage is based on precise targeting of consumers.  They target by media usership, by location in the case of outdoor media, coupons etc. Their objective is to build awareness into the right people across the country, increasing the level of brand demand and loyalty. The Marketing Department know that you need to target for growth and ROI, and they have many different ways of refining and measuring their approach. What the marketing Department does not do is check that their availability is sufficient in their core areas to allow their targets to reliably find product – in particular when the Sales Department is also trying to empty their shelves at the same time.

What do they both forget?

Availability the key issue

Grocer March 2015

The Category Management process develops average availability for stores with the same shelf space. However, where more of the right kind of people live they generate 3/4/5 times the demand in the stores they frequent. With, of course the same shelf space as their equivalents in other areas. So 50% of sales are actually generated by perhaps 15% of stores. Not always the biggest by any means. With the move away from large shops, small stores are coming firmly into the picture. The Grocer reports that availability – in particular promotionally – is the key concern of supply chains. Of course that is availability when the retailers are running the promotions and they have a fair to middling chance of  getting their forecasts right. When brands advertise or promote and add 30% to the demand in stores that are already struggling with more than 4 times the demand than the average something has to give. That something is shopper availability.

How do brands react?

On the Marketing side they don’t. Marketeers assume that retailer systems can cope with any demands thrown at them, despite all eveidence to the contrary. Working with one of the major cereal manufacturers we tracked the progress of a coupon. Its arrival coincided neatly with a half price discount and a complete absence of stock in Asda in stores AND depots, and similar reports from all of the majors. No wonder, then that the coupon results were appalling. So, indeed, were the results from the discount. The result, the company pulled out of couponing. Perhaps if the Sales Department has carried out the same ROI they would have pulled out of discounting! However introspection is not what Sales Departments do. And considering all the factors something that escapes Marketing Departments.

What might you conclude?

Well you might conclude that if the Sales Department worked to deliver availability to match Marketing demand generation in core areas from Marketing investment then you would get sales uplifts now AND tomorrow. Indeed the same might apply if Sales Departments worried about their core store availability in the face of heavy discounting coupled with reduced overall stock cover through all retailers.

Why does this not happen?

Could it be that Sales Departments don’t believe that Marketing investment actually delivers increased sales at any time, or that they feel they can’t actually impact in any other way than centrally? Or could it be that Marketing Departments believe that while they target people in areas they don’t need to worry about supply in areas as well. This, of course, flies in the face of everything they read that tells them retailers struggle to cope, and that the push to deliver the same profits off slimmer margins will make the availability position even more critical in  their core stores. Perhaps they believe that Sales Departments actually do have as a goal impacting availability.

The White Queen in Alice in Wonderland believed in 6 impossible things before breakfast. Only 5 to go then.

The Future

Smart companies will get together and make sure that their investment is mutually supported. That means Sales and Marketing investment delivering now for shoppers and shareholders, and tomorrow for everyone. That’s retailers too.

Showrooming – death or salvation for bricks and mortar retailers?

One of 43. million people

One of 43.4 million people by 2017

In the rush to condemn shoppers having the temerity to use their smartphones in stores commentators have forgotten one basic fact.

By 2017 Statista estimate that 43.4 million people will have a smartphone in the UK

That means the vast majority of people walking through the door will have one in their pocket or bag. Looking to the future, around half of smartphone users plan to increase their range of activity. Meanwhile only 10% plan a decrease of any kind. Leading to store owners seeing many more people face to screen down their aisles. Research carried out by RVS in conjunction with ResearchBods shows that those people who are showrooming tend to make a buying decision in the first stores they get to. In fact out of 1000 people, only 34% said they would buy an alternative product online or in another store – or not buy at all. Showroomers are, therefore, exactly the kind of people you want in your store; They have committed to spend time on a purchase They are committed to a purchase mission (in fact they report only 12% of the time they go home without buying) They have not bought YET since if they had, they would not be there They are active and knowledgeable.

Overall being in a store to showroom was expected to lead to a purchase in that store 56% of the time, while the buy elsewhere option was only recorded 22% of the time. Being a second choice store definitely has its drawbacks.

The question, then for retailers is, as there are going to be so many, and so important, how can you make sure you are the first store they visit – and then the one they buy at.

Perhaps the first things a retailer can do is to

  1. Be Showrooming friendly – WiFi has no real cost, but a good signal saves the phone charges, and will help to persuade people to stay, and not go.
  2. Offer incentives for people to buy from your range there and then. One obvious one, and top of the list in research is to offer free home delivery if they buy a product to be home delivered from within your stores. Given that 61% of people quoted lack of availability in a store as a reason for not buying it is easy to see there is a mutual benefit here – you can manage your stock better, and they get what they want more often in your store.

To offset people shopping from home, you can count on 6 million people by 2017 in the UK to be heavy smartphone-in-store users, or use quite often for showrooming. This sector represents people willing to travel to your store to try and, potentially, buy. As such they are people you would want to encourage to offset those people quite happy to sit at home and order from cloud destinations. You would want to encourage them back again, to the extent of offering these people direct incentive not available to your normal on-line shoppers. The kind of incentive they look for will vary – but you would want to give some consideration to non-price alternatives such as coffee, or a free magazine of their choice to bring them back on a monthly basis. RVS publish a list of the importance of incentives in general, although this does vary dramatically for different socio-economic types (see tables) Price is clearly important – but getting alternative pricing that counts against you does not necessarily mean that they will leave.  Bricks and Mortar shoppers value the experience of being in your store – or at least they ought to. The key reasons they give for buying in a particular store is headed by the store environment, and the quality of your staff in delivering re-assurance on the day – and in the event of a post-purchase issue. Interestingly, the drivers for showrooming are exactly those for loyalty in our first white paper – staff attitude and store trust. Product availability, the second important loyalty measure crops up as a key reason for leaving, as opposed to one for staying. Showrooming represents yet one more sales opportunity – but only for retailers who are first choice. The age of all day shopping around in person, in a variety of stores is coming to an end. In it’s place is people shopping for the experience, but expanding their choices as they are doing so. Retailers not heading the shopping list are not in it.

Showroomers Download white paper here