Demographics

Shopper Marketing = Direct Marketing for Retail Brands

The problem with what is seen as a “fashion” name such as Shopper Marketing is that everyone seems to want to offer a different definition. Look at any of the Marketing blogs and you can see what I mean. All of which leads to a real confusion in the hearts and minds of the potential user.

Digital Marketing is similarly problematic. Digital is a channel, not a branch of Marketing. Still, as everyone understands that it is a carrier of Marketing messages, no-one argues too much about current usage.

Shopper Marketing is simply Marketing with Shoppers as a target. You could leave it like this and agree with the faction that is denying Shopper Marketing a separate label. However, closer inspection reveals that there are certain things that are unique and different about shoppers that have deserved significant study, and, certainly, reward the marketer who understands the difference with considerably improved results;

Shoppers are on the move to buy

It seems obvious that catching people on the way to purchase is a no-brainer, but much research shows that reminding them – even in oblique ways – leads to significantly increased sales

FMCG Shoppers at retail buy for convenience, so you can confidently predict their destination

If you know the geo-demographic profile of your shopper, you can narrow down the stores they will visit dramatically (think 80/20 rule here). Instinctively marketers know this, which is why they don’t set up Rolls Royce showrooms in deprived area, or advertise them in the Mirror. If you know the core area where your key shopper can be tracked to point of sale then you have another driver working to multiply the impact of investment……

People talk to each other – on the way, when they arrive, and at home to turbo charge your spend

By focusing all your efforts on your core stores, you will also get the benefit of word of mouth and social media recommendations with a real focus. While everyone views Facebook as a vast international monolith, in use people talk to their friends. Personal recommendation is the single claimed biggest reason for trialling a new product. Focus by area brings its own rewards for shoppers, store and brand.

So what’s different about Shopper Marketing that marks it out from simply Marketing to Shoppers, or any other kind of Marketing,

You can easily measure ROI

Roots of Loyalty

Roots of Loyalty

Shopper Marketing techniques are applied along the path from couch to counter, targeted at defined core customers, tracking their progress to a purchase, and influencingat various levels along the way.

We measure everything against the cost. Which is why I can tell you definitively that Field Marketing can be completely ineffective if it fails to deliver the kind of permanent, positive, change at the facing that is the only thing to catch the eye of the shopper. Meanwhile, at a fraction the cost, an on pack offer (managed through www.yousay.org) not only brings in 50% new users, gives great insight, but also typically increases sales by 20-30%. And, of course, you can’t miss it.

The precision of the targeting is of a different order to general marketing, that tends to focus on the consumer, what they look like, with a target of influencing, changing the brandgram they use.

All of the key UK retailers share sales data down to store level, so it is a simple matter to track spend vs results.

You can trial before you commit

Focus on your core areas. These are actually a nice compact package of consumers and the stores they shop in. Select from a broad set of options from in-store to posters to targeted social media and sampling. Your control is, of course, the areas that are similarly core, but not one of your trials.

You can understand supply AS WELL as demand

Over the past 20 years the major retailers have increased their market share and generated greatly increased profits by changing their basis of trade from commerce to banking. What this means is that the majority of the profit comes not from the margin on sale but from the fact that they turn over sales faster than they pay. On the basis of reducing stock cover in your core stores, they let your customers down and charge you more – although this has all happened so imperceptibly you haven’t seen it coming. Bringing the discipline of targeted supply chain to support targeted shopper marketing gives the virtual circle. All of which you can measure.

Never stop testing, and your advertising will never stop improving. David Ogilvy

Shopper Marketing is Measured Marketing and meets all the requirements of the DM channel;

  1. You can test including variants
  2. You can roll out
  3. You can get a level of predictability and reproducibility of the results

All of this is the reason we are joining the Institute of Direct Marketing rather than any of the other organisations that run shopper marketing events.

We see the most compelling reason for companies to target shoppers as being you can measure the outcome. Colin Harper

The results then stand for themselves.

We certainly would not still be in the business unless these results comfortably exceeded the expectations of our clients.

Given that you can measure the outcome, then all activity should be measured. Which makes the essential difference to other fmcg marketing activity.

 

5 things you must know about EDLP when you are going for growth

Tesco, ASDA and Morrisons are all talking to their suppliers about going to EDLP. Retailers do this because they believe (or at least they tell you they believe);

 

1. The only thing shoppers care about is price

 

This is, of course, entirely untrue. What shoppers care about is feeling they are not being ripped off.

 

However, most retailers, except Waitrose, have never been accustomed to delivering value. So the way they will look to increasing basket size is via a continuation of current promotions. Of course, we have been here before – at intervals ASDA has focused on EDLP as part of their parent companies raison d’etre. At the time they said, as they say now, take the margin you are using for your discounts, and give it to us, you won’t need to run promotions with us in future. As you can see when you walk through any ASDA supermarket, what they say, is a long way from what they do.

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Lidl on shelf offer

On top of this, the discounters also further discount and promote special offers. They realise that shoppers like to be given deals.

 

Moreover, just being well known simply for being cheap has not helped Poundland. They have seen profits fall in the year to 27 March in what chairman Darren Shapland said had been a “challenging” year for the discounter. Pre-tax profits were down 83.7% to £5.9m, with total sales up 18.7% to £1.3bn. The company said that excluding the 99p Stores acquisition, comparable profits were down 13.5% to £37.8m, with sales up 9.3% to £1.2bn.

 

Basically, the extreme EDLP of having a shopper pitch based solely on price has failed to deliver more profits. Highlighting the truth that depending solely on low margins is a precarious business. 

 

Obviously, retailers also feel (or at least they tell you they feel) that;

 

2. Lower prices will increase your sales

 

The KANTAR summary for the period to the 28th June was “Supermarket sales down as prices continue to fall”. Over the next 12 months, the focus shoppers for a branded business are declining in the core supermarkets.

What are the chances that, if you drop your price these incrementally fewer shoppers will consume incrementally more of your products next year than this?

 

If you believe they will, where will this additional consumption come from? Obviously from your competitors, who are also on EDLP. Under EDLP it would be true to say that you will need to increase your competitive edge just to stay still. Without help whatever you got last year, you will get less next year unless you go out of your way to becoming more competitive in your category.

 

Will EDLP do this for you? Of course not. It is designed to get people through the doors of the supermarket, what they do when they arrive is frankly left to chance. We have just completed a comprehensive study of the British shopper for and with the Grocer, and without giving too much away, it agrees exactly with recent reports from Mintel and Nielsen that shows the biggest gripe shopper have with the majors is not being able to find product they expected to be able to buy.

 

Retailers fail to understand that;

 

3. Shoppers like promotions

 

They like them a lot. In fact research I did with the IPM and iMotions (a groundbreaking eye tracking company who measure emotional involvement alongside where people look) revealed that;

 

On pack promotions had the same impact on they eye as low grade pornography leading to pick up and purchase when messaging was added to packs.

 

The research was carried out with IPM prize winning promotions. They proved to be very easy on the eye, and opened the purse strings of those people for whom shopping is a chore lightened by finding something more on the shelf than they expected.

 

Mintel store selection

Selected by 1800 UK main shoppers as being most important in their choice of where to shop

Nielsen research reveals that 51% of shoppers report that having a range of promotions on offer is important to them. What does this mean? – well retailers focus on price as a means of getting shoppers in the door. When they reach this objective they will rapidly realise that they then need to add excitement to the visit to avoid falling into the Poundland trap of finding it really hard to improve the basket size for the average visit. Typically the way they do this is with special discounts.  Special discounts are there to create a distinction from the run of the mill, and this distinction is badly needed. Whatever, if you want to reach half the shoppers, you know how to do it.

 

For the majors, a Mintel report in May 2016 found 59% agreed that  “Sainsbury’s, Morrisons, Tesco and Asda all have similar prices”. Only 20% disagreed with the proposition. Clearly the ASDA intention of getting within 5% of the discounters, and under the rest is having little or no traction at all. Meanwhile, the same report highlighted that 51% of these shoppers said that a “range of promotions and offers” was part of their selection for where to choose to shop.

 

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Example of Lidl regular price offer

Special discounts appear right across the spectrum. Lidl does special discounts. Waitrose does special discounts, M&S do special discounts, in fact, they advertise them. What marks these retailers out to the shopper, though, is that their brand image is well understood, so shoppers have visited knowing what to expect. They stay to buy more because they are stopped down the aisle by a range of offers that persuades them to be more adventurous.

 

Special offers exist simply because shopper look forward to finding them, and, as a result, they buy more than they might have otherwise. ‘Which’ may feel this is a bad thing. But for brands and retailers, purchase outside of the standard shop is what turns a shopper journey into profit.

 

In a period when shoppers are buying in more varied outlets than ever before, closing out at least some of the larder to the next makes increasing sense. Except of course, right at the moment when buyers are promising no calls on promotion monies. Anyone believing them needs to remember the words of George Santayana;

 

Those who cannot remember the past are condemned to repeat it

 

 

4. There are other ways to add value and build sales in store

 

They have been around for years, but have typically been ignored since it was just so easy to simply do what retailers asked. With retailers basically driving branding out of sight, brands need to find ways to standout that are not driven by the Sales function, but by Marketing.

 

Stand Out on the Shelf in ways that are not controlled by the retailer in the knowledge that over half of the shoppers walking past you can be easily stopped if you make them an offer.

 

Extra Value FREE

 

Loyal shoppers will queue for this, and those simply browsing will appreciate the additional value. On top of this, the larger pack offers a greater standout, as well as value.

mars

On Pack Messaging and Promotions

 

28-07-2016 17-01-49You only have to look at the way people shop to see that they are drawn to the new, and the different. Often a changed message does not need to cost you anything, perhaps even just highlighting a product change that is a benefit. In the new tomorrow, product benefits will be really important. Don’t sneak them onto the shelves, shout them there.

 

On pack sales promotion messaging is still really important – an example being the Mars promotion – but there are a number more on the “In Place of Price” white paper you can access from the bottom of this blog.

 

Mars Chocolate UK announced it is bringing back its Sweet Sundays promotion for the fifth year running in 2016, offering consumers the chance to get hold of free cinema tickets for Sunday screenings.;”bringing back its Sweet Sundays promotion for the fifth year running, offering consumers the chance to get hold of free cinema tickets for Sunday screenings.” They also announced that “Sweet Sundays has been proven to drive bitesize category growth, increasing incremental value of the bitesize category by 13% last year. Returning bigger and better than ever, we’re confident the promotion will continue to increase in popularity with consumers so retailers are advised to maximise the opportunity for increased awareness in store, using our new range of POS solutions to capture their attention.”

 

Successful techniques haven’t gone away, they have just been forgotten.

 

Local Marketing, Signage and Supply initiatives

 

You can define your core by the shoppers – and core stores  (the 80/20) for you will have the following characteristics;

 

  1. They will sell 30% or better than the average store from the same space
  2. They will sell 60% or more the moment you go on promotion (and you will)
  3. They will struggle, and fail to cope with sales from the space that catman has allocated.

There is an opportunity to multiply the value of your sales in 20% of stores simply by identifying these, and making sure the store has enough product, and targeting your marketing support so they are able to consistently over-perform their peers.(Remember the store manager is competing with other managers in the same group, not other groups nearby).

 

You can do a really surprising amount in and around your core stores. For the store manager getting their local assortment right is more than simply useful.

 

Nielsen report that; “Only about half (53%) of global respondents believe that retailers always or mostly understand their grocery requirements, meaning that nearly half of those surveyed feel somewhat underserved. A core element in increasing share of wallet is understanding and responding to local consumer needs (my italics).”

 

It makes sense then, that differentiation from your competition could be an important way to build a competitive advantage. So what are consumers looking for? Mintel says; “40% of shoppers nationally complain the biggest issue they have with all their normal supermarkets is that products they want are not always available normally or on promotion – and that this issue is bigger than their concern about price now.”

 

Looking after your local consumer is inexpensive, gives fast returns, and offers a stable way to invest independently of what retailers may choose to do to your brand.

 

5. You have a choice – should you choose to accept it.

 

Brexit has forced a re-evaluation of what being British means. The actions of the retailers forces brands to decide whether they really are a brand, and investing behind brand values and margins OR simply selling on price. There is no middle course.

 

If you want to change your fortunes in just one day, then join us on the 29th September 2016 at the CIM in Cookham for our seminar – Overnight change without pain.

 

Resources: You can download a white paper reviewing the options from here.

 

In Place of Price – the white paper

Promotions Make Waves – in the brain as well as on the balance sheet

Research carried out by our MD Colin Harper BSc MA for the IPM and with the University of Westminster generated hundred of lines of copy internationally. This is one example from the Huffington Post;

Want to feel lusty? Go shopping. A recent study at the University of Westminster found that special offers ignite the same level of emotional excitement that one experiences from sexual arousal. Bargains make people deliciously happy, firing up the brain in much the same way as watching an erotic film.

Researchers measured brain activity in the emotional parts of the minds of 50 volunteers, as well as their eye movements and emotional responses in the body, in determining which of several activities evoked the most excitement. They found that giving participants a coupon or free gift with a loaf of bread or a jar of the savory British spread Marmite induced the same level of excitement as being exposed to porn.

This makes perfect sense given that the brain emits the neurotransmitter dopamine during positive shopping experiences, which includes special deals. This chemical activates parts of the brain that bring us pleasure. It is also the same neurotransmitter that is released when we fall in love and the one that stimulates the release of testosterone, the hormone of sexual desire. New experiences, like coming across desirable items to purchase and, better yet, acquiring them, triggers this brain chemical of lust, increasing its levels in our system.

While claims that bargain shopping is as good as sex are certainly debatable, these findings help to explain why people are prone to shopping sprees when down in the dumps. It also gives clues as to how shopping can act as a form of foreplay for some, putting them in the mood for much more sexually stimulating activities when they get home. Whether a pastime, an excuse to get out of the house, a means to feeling less lonely, or a way to kill time, the “shopper’s high” could, arguably, be the occasional quick-fix to a slump in one’s libido. And, in addition to dopamine’s influence on desire, the reason may be wonderfully selfish.

It has long been suspected that people shop when they’re sad or feel bad about themselves, with research finding that we’re more willing to spend when we feel low, depressed or miserable. Better known as “retail therapy,” this escape from one’s troubles involves people spending more on themselves, even if they don’t have the money.

As confirmed in a 2008 issue of Psychological Science, a study involving 33 volunteers found that feelings of sadness lead to those of self-centeredness, which ultimately leads to a greater possibility of one spending more money on something that will act as a “pick me up.” The increased degree of self-focus has been suggested as the reason for the overspending, especially in shopping for things that can make us feel better about ourselves and our look, like clothes.

Instead of devaluing ourselves, we enhance ourselves with more material goods. Spending also fills an inner void in shifting attention from what’s going on inside to making one’s outside more attractive. And that can have any of us feeling terribly sexy.

If you want to know what promotions float your customer’s boat, then read this white paper;

The Path to Loyalty – Techniques and Outcomes

Aldi And Lidl Now Account For 10% Of Grocery Market

Latest grocery share figures from Kantar Worldpanel for the 12 weeks ending 8 November show the combined share of the discounters Aldi and Lidl has reached 10% of the UK grocery market for the first time, whilst Sainsbury’s became the first big four supermarket to claim a market share increase for over a year. .

Lidl’s market share reached a new record high of 4.4%, increasing by 0.7 percentage points on last year thanks to a sales growth of 19%. Aldi grew sales by 16.5%, keeping its market share at 5.6% for the fifth consecutive month.

Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, commented: “If you look back as recently as 2012 Aldi and Lidl only held a 5% share of the market, and it had previously taken them nine years to double their combined share from 2.5%. In the last 12 weeks the two retailers have attracted another additional million shoppers compared with last year while average spend per trip has increased by 4% to £18.85, which is 78p ahead of the total retailer average. The discounters show no sign of stopping and with plans to open hundreds of stores between them, they’ll noticeably widen their reach to the British population.”

Meanwhile, despite the high-profile Christmas advertising campaigns launched by the supermarkets in recent weeks, the overall market remained slow. Total sales were only up by 0.5%, held back by persistently falling prices which remained down by 1.7% on a like-for-like basis.

Sainsbury’s was again the only one of the big four in growth, flying in the face of the tough market conditions. It’s 1.5% increase in sales was sufficiently ahead of the market for the retailer to increase its share by 0.2 percentage points – the first share gain registered by any of the big four retailers since October 2014.

Sainsbury’s robust performance means it has once again regained its position as the UK’s second largest supermarket, leapfrogging Asda. With its strong focus on food, the retailer traditionally increases its market share over Christmas, and Kantar Worldpanel expects to see it keep hold of second place for the time being.

The other major retailers continued to struggle with sales at Tesco down by 2.5% while Morrisons saw a fall of 1.7%. Asda saw a decline in sales of 3.5% with Kantar Worldpanel saying the chain will be hoping that its raft of recent announcements including a range reduction and increasing click & collect opportunities can boost performance in the weeks ahead.

Waitrose and the Co-operative both managed to grow sales during the period, up by 2.7% and 1.5% respectively. The Co-operative’s market share gain of 0.1 percentage points to 6.3% was its first year-on-year share gain since 2011, when the benefits of the Somerfield acquisition were still being felt.

RVS feel that this is a paradigm shift away from the middle ground of Asda, Morrisons Sainsbury and Tesco. Tesco have done most to address this by their clear focus on brands to which shoppers are loyal. Asda, with a focus on olely price, and much higher per square foot costs has few places to go. Both the Coop and Waitrose are further away from discounter competition. With the launch of the new Lidl “just like Waitrose” format perhaps their time is yet to come.

drive time to discounter

 

The Profits in the Detail

Where are we?

We are going back to the 1990’s in the way the grocery trade is structured. Back then the major retailers had around 50% of the market. Savvy industry commentators are expecting this to be the place they end up, with all that ensues in the way brands will need to restructure their sales approach. If you want growth you will need to talk to more retailers and more buyers, who are all demanding more money than last year – often in the certain knowledge they will deliver less
Brands are also going back that far with shoppers as the number of stores they shop in is increasing up to nearly 4 a month. The brand destined for success needs to be visible in as many as possible. Back then shoppers were coming from a background of shopping in local butchers, green grocers and bakers. Now it is more likely to be for other types of meal or larder fill.
Effective distribution (working for your core shoppers) must come right at the top of your agenda, as must targeted messaging – reaching your core shoppers on the way to, or as they, shop. Targeting these will improve brand growth, the effectiveness of marketing investment AND your profile with the majors, all at a significant ROI in the year you invest.

Is price really the big issue?

Right pricing is the approach brands need to take, for the multiple they are negotiating with, since most people shop for convenience. Retailers need discounting to boost the image of their stores. Brands need to find the best way to profit from the footfall generated by all this noise.
The neglected loyalist can be reached in other ways than discounting, so a growth strategy needs to be developed by retailer that builds loyal shoppers for your brand. That objective will not be reached by discounting. The key value for discounting is volume, and building alongside retailer plans. So investing where you get the best value discount ROI is vital.
However, the Lidl/Aldi small store/restricted range format has bags of room for becoming local to many more people, as does the Waitrose/Booths end of the market. And don’t forget Amazon with their millions of existing customers, and Ocado with a now-profitable model with much more scope for growth and range extension than the Tesco store based supply.
All this adds up to more choice for shoppers, and a greater need for retailer differentiation. The Workshop looks at what this might be.
We can confidently expect that the majors, with their me-too strategies, will remain under pressure for some years to come.

Workshop Contents

What are the measures that brands and retailers need to focus on?

(Ideally these illustrations are drawn from a brands own data – illustrations we offer free contact )
Brands Need;
  1. To identify new benchmarks for success with their retail partners and within the company to get long term change. Two only are vital – stock cover and locating core shopper areas, and the stores in them. These two measures help driving hundreds of thousands of pounds value (millions for big brands)
  2. To identify the most profitable investment outside of discounting to gain growth. This requires investing in parallel in all distribution channels (including food services and online) in core areas
  3. To have a measure to evaluate the ROI from their discount activity – and be able to target better the next activity they undertake.

1. Benchmarking for success

 Do you know where your core stores are? They are the stores that really overperform for their size, and allocated shelf space. They are also the ones that struggle to keep their shoppers happy when demand ramps up.
What typifies them?
They sell more from the same space as their similar sized colleagues
They are much more likely to run out of stock at critical times

 Core measure 1

Stock cover (what you get when you divide weekly stock with weekly sales.)
sales price and stock
Stock cover is a mirror of sales success/shopper demand. However sales success will be limited if stock cover drops below a level at which an individual store can keep shelves full. You need to learn by product, the stock cover each product needs, and at that point you can see exactly which stores need to give you more space, and which really need central negotiation. Like this brand.
The Y axis is average sales y store. The X axis is distribution (how many stores are you in). By and large the high stock cover is the brands with lower sales.  Retailers do not range by anticipated demand, but by store size. Brand space is allocated by retailers based on their perception of your brand strength.
They often get this wrong. The grey blobs are own brands – and you can see that typically they perform less well, and have greater stock cover than the brands.
Bongrain relay
Yes, and these core stores also have the potential to respond really well promotionally – see this profile which is for thousands of products. They need more stock to be able to succeed. On the other hand the standard allocation leads to poor stores having excess stock simple because they don’t sell it.

Core measure 2

Coreness – how well does it perform vs similar sized average stores. Core stores cluster together as core people cluster together, and you can stick pins into them on a map.
 Seabrook map
 Core stores will always have the least stock cover, the greatest risk of being out of stock and a disproportionate share of your business. There are clients much more skewed than this. Your core stores can become category drivers for your retailers. 
Core Store Strength
Core stores are core simply because they have a much higher percentage of the right kind of people in their catchment area. This means they could be situated regionally (As this brand was) or geo-demographically, such as along the South Coast where older, better off people might buy you.
One more thing – perhaps obvious – but core stores are much more sensitive to promotion offers whether money, or other appeals. The average core store across many thousands of products can give you a 10 times uplift, while non-core delivers 2. Most stores fall under the heading of average or poor stores. Core stores are a much higher percentage of your business the moment you incentivise their shoppers. Promotion performance
So you can identify a core store either by poor stock cover or higher sales.
ILLUSTRATION AND DISCUSSION
Tesco have now expressed their stock objective in stock turn terms. ie 4 days stock out of 7 on the now expanded shelves (stock cover .44) knowing what you know – will this meet the needs of their shoppers for all brands. Will increased availability overcome additional variety.

Summary

Core Stores have the potential to do much better than the average, and you can identify them because they are struggling
If you advertise they are the stores that will deliver you the uplift OR they will irritate your existing customers simply because the new users empty the shelves
DISCUSSION Asda have removed any and all store specific ability to support local demand. How much do you feel that this has contributed to their faster than average rate of decline for your brands. They no longer respond to reasonable requests for demand related allocations.
Is their supply chain actually fit for purpose? What can be done to overcome this barrier?

2. What are the most profitable investments outside price to gain growth?

Step 1 Satisfy your existing customers
Identify the level of stock cover that does not result in out of stocks – and the brands that need the help, and where. Use these insights to drive both immediate action and central negotiation.
Work with core stores on profitable actions to build their growth. (See three step approach)
Step 2

Retailers are very poor at managing your brand. Make sure you get at least what they offer you, and target more relevant products in core stores. Click on details to regain £680,000 per annum from stores that should sell – but don’t. (see the variability in stores selling in the chart above).

You can support them in a variety of ways that do not include field visits. Here simple additional central allocations will deliver £680,000 additional annual sales.
missing stores
Step 3
Going for Growth
Understand that any good shopper marketing investment into core areas will deliver great returns.
On pack promotions bring in new core users, that discounts don’t. If you want to build, discounts won’t do it.
Click here for shopper marketing ROI that you can gain if you understand supply and demand targeting  >> Case Studies

What about new products?

Mintel data shows the number of new food launches fell 33.6% year on year [12 months to June 2015], an acceleration of a three-year trend that saw food NPD fall 18.7% in 2014, and 10.7% in 2013. The last time food launches grew was in 2012. On top of this the market for brand innovation is shrinking fast as discounters take increasing shares of the market, and the major retailers shrink in proportion.
New products have to work fast or they will be dumped fast. We believe you will need to add promotions to build new core users. Check out the Case Studies to see example uplifts and ROI.
Step 4 Allocating your current budget
Strategically, you may want to allocate more investment overall to core areas, and to supply chain initiatives with the majors to build stock, in particular promotionally.
Different retailers will give you different ROI from investment in discounting. This can all be measured, as can any other directed activity, to identify best practice.

 

Top up Shopping or the next meal – can retailers tell the difference?

Convenience stores are the most used format for top-up shopping, with 60% of shoppers visiting them for this type of trip, according to IGD’s latest ShopperVista research. This is because their network is widespread, making them easily accessible for most people.

However, competition to capture total top-up spend is intensifying, as shoppers now visit a number of different types of store to meet shopper missionstheir top-up shopping requirements. As well as convenience stores, some 42% of shoppers now also use supermarkets for top-ups, as well as 31% who visit food discounters and 22% who use high street discounters. This is a summary of the relative importance of the key shopping missions

The convenience channel is ahead for staple top-up items such as bread, milk and eggs with 50% of shoppers using c-stores for topping up on staples, whilst 32% use supermarkets and 18% use food discounters.Asda

However, IGD data shows that when it comes to topping up on fresh foods such as meat, fish, fruit and vegetables, the supermarket is the most used channel. Some 29% of shoppers use supermarkets for a top-up shop on fresh foods, against 18% who use convenience stores and 18% who visit food discounters. Other channels used for fresh food top-ups include specialist stores such as greengrocers and butchers, farmers’ markets, high street discounters and hypermarkets.

HiM research showed that the average value of the shop in convenience stores was also going up BUT this is mainly a result of the big spenders increasing their basket size.

Obviously top up shop is a phrase that is designed to conjure up an image of shopping carried out between major shops, perhaps for staples. However, with the increasing variety of convenient stores I question if there is enough distinction made as to where, and what, the next meal will be.

The Personal Journey

Much is made of the shopper buying for the family, and relatively little attention paid to the occasions when, and where, they buy for themselves. There is also a significant distinction building up between the way people behave when they are buying for someone else and the way they buy without the added pressure of the family.

This applies in spades to lunchtime in urban areas, where healthy snacks outperform standard confectionery.

The rapid growth of concierge services shows how convenience as a service has to become more responsive to local diverse needs. It becomes the way that they can stay in a growing business without the purchasing resources of the majors. It is also, incidentally, the reason why the one size fits all for the majors is likely to impact next on their convenience offering.

Asda already discovered that their mini Asda approach to their Netto stores does not work. The recent moves by Tesco to completely close down local variety will come back to haunt them later.

 

 

Smarter is as smarter does

waitroseRetailers are often confused as to what constitutes a promotion. Basically, they are seriously fixated in simply giving money away.

So let’s here it for a retailer finally looking outside of the casket.

Waitrose said the launch of its ‘Pick Your Own Offers’ promotion has helped to drive sales, with total provisional divisional sales (excl fuel) for the week ending 20th June seeing a 2.3% increase on the previous year.

The scheme offers loyalty card holders 20% off ten products of their choosing, from a list of its most popular branded and own-brand products.

Waitrose marketing director Rupert Thomas said: “Among the most popular choices from the list of nearly one thousand lines are essential Waitrose bathroom tissues, Waitrose British blacktail free range eggs, Waitrose cherry vine tomatoes and essential Waitrose British chicken breast fillets.

People rushed into press to denigrate this approach. A letter in the Grocer this week opined;

The actual mechanic and required commitment will turn folks off. Waitrose shoppers won’t really care because they can get 20% off their toilet paper for the next 3 months…..

Most people entirely miss the point here. The older shopper is more into theatre – and this offer gives you theatre in spades. They are also more into reading, they grew up with it, something Millennials often find hard to understand.

With a shop of £50 you could save a tenner, and have fun deciding how you actually “spent” the discount.

There are two huge advantages to Waitrose in this flexible approach to running discounts;

The first is that they will get a behavioural economics view of what really matters to their shoppers. Shoppers could choose to reduce the cost of staples, but in the knowledge that they would not necessarily save an enormous amount per purchase. OR they can reduce the cost of those little luxuries that make life right – bringing them down to nearer the everyday price. Looking at the list above you could see a mix of strategies here.

The next step might be, of course, to pick a few of those that fit into the luxury category – and offer them direct via e-mail to people keen and eager to listen. As Waitrose don’t get all the insight that Tesco receive, this is really a no-brainer for them.

The second advantage is that this approach spreads the demand burden over 1000 lines and not just a handful. This makes it easier to manage by the supply chain who ofte3n struggle in Waitrose in particular.

It’s the sort of approach that shows Waitrose understand their shoppers better than the commentators do, and certainly better than Tesco the rest.
Win Win in my book

Profit from change before change removes your profits – the Sales Challenge

The UK retail environment is currently undergoing violent change. This is in part driven by a change in attitude and circumstances of the shoppers – but also by a lack of response of the key retailers to this change.

This blog is about how you can turn the current position to your advantage.

Cull your range – and improve your sales at the same time

Tesco are already planning to remove products they don’t feel are worth their space on the shelf. To be fair there is a very long tail of low performing products clogging the shelves, and using space that could be better utilised as flexible space for offers or as additional fixed space for the best performers  makes absolute sense. Shoppers have really complained in the past about Tesco availability – in particular during promotions. So full marks for picking this up.

Tesco/Sainsbury/Asda have a tail. But so do you. The knee jerk reflex in the past has always been to build range to gain additional sales. This will be much less of an option in the future unless you can make a very strong case – and back this case up with more money. Make no mistake, all the retailers will increase the listing cost for new products to reflect the higher value they now place on every foot of shelf. Profit Matrix 1

The RVS profit matrix chart gives you exactly what you need to understand how the retailers, and your shoppers, see your products. The green blobs are products that do better than your shelf average return. The Y (left) axis, shows the return you get from space overall. While the X axis shows how well they do in smaller stores. The size of the blob indicates the number of stores the product is in.

This chart offers some really obvious opportunities, to go with the space return issues. Simply trade places on the shelves with your poor performers to meet both of your objectives. Promote change NOW before the change is implemented for you.

Make sure new products get on their feet immediately

shelf adder and stickerIt is quite usual for new products to go on the shelf with a discount. However, anyone familiar with the profile of promotion performance will be fully aware that this is just like a Chinese meal. A few hours later you need another one.

However, if you spend a little more you can get seriously better results. Retailers tend to treat all of their customers as a homogeneous mass. You,. however, don’t have to.  The “Try me free” stickers are very powerful in recruiting new people who will come back. Of real interest to you is that you can get the same uplift as an 80p drop in price for a reward cost of less than 1p. The stickers link directly to our yousay site which rewards the purchaser and gives you instant feedback. Meanwhile the Shelf Adder®” on the front is absolutely ideal as an alternative to the shelf strip in the channel. Apart from anything else, you can actually see something, as opposed to price labels! However, it is also there to hold your space and let the night shift know what should be in place.

Close to the product (Layer 1 investment) is the most powerful way you can spend to build loyalty and instigate change. You still need discounts for volume BUT you need growth above all.

Horses for Courses

shutterstock_219381586Every product has stores in areas where more people than the average seek to buy. People of like mind tend to live together, their children go to the same schools, and they shop in the same range of stores. In short, we tend to behave just like our friends. So when we visit our local store, the average shelf space will be wrong when the product filling it is in more demand than the average.

Build your Core

If you can identify these core stores, (RVS Pulse provides you with a complete list of each of these) then you can invest a little more with larger shelf adders geared to giving you a little more space. These can be placed after discussion with store management.. It is typical for companies – if they focus at all – to choose just the large stores. Actually, if they are not core, they usually have more than enough stock cover and space to manage standard demand. So whatever the size of the store, it it is core, work with it.

Some managers may look at the figures and say “lets work with the poor performers and bring them up to speed”. Wrong. Poor performers have many fewer of your target market passing the shelf. Catching their eye will get you a muup[lift from promotionsch smaller reward than working with your core, if indeed you manage to convert anyone at all. If you are in Sales, ask your Marketing colleague why they target their money at specific high potential and not at low potential areas. It’s the same calculation.

Store managers in your core are important. Build sales by investing behind them, and they look like superstars to their area management. Core2Store have developed a full range of shopper targeted techniques that offer you guaranteed store based growth based on PULSE data that you, and the managers you talk to, can depend on. And make sure these core stores understand that they need to allocate much more space as soon as you go on promotion. The uplift they will give you makes them vital for your sales, and for your core shopper happiness (see the next section). Whatever you do though, do not rely on field calls to give you this rapport. Field teams, no matter how good they may be always have variable quality in front of your managers. Talk to Core2Store about how they received this accolade without any field team usage at all;

I have been at a Local Sourcing Conference today where we received an award for ‘Understanding the Tesco Strategy, Category Strategy and Local requirements’ and ‘Working 24/7 to drive growth’.
This is a really positive acknowledgment from the Tesco Local team and its thanks to all the hard work you put in that is helping our business move forward in Tesco.

Check your Stock

Those amongst us with long memories will understand the concept of stock pressure! Managers will always seek to get rid of stock hanging around in the back. The problem for them, and for you, is the way that retailers manage stock at the moment, leaves too little in any of your core stores normally (out of stock at key demand periods) and in particular when you are on promotion.

There is a direct relationship between stock promotion upliftthe stock cover you have in a store, and the uplift possible when demand increases.

This may be organic (such as at weekends) or artificial, such as promotionally via price, couponing or advertising.

Store support needs to be proportionate to shopper demand, and not store size if you want to get sustainable growth from satisfied shoppers.

Raise your sights by looking at more stores

It is becoming increasingly important to give stores and their shoppers what they need, rather than what they say they want. Central systems have lead to local problems. Moreover, the habit of retailers to allocate products to convenience retailers simply on the basis that it sold well in large stores is perverse. We have brands where they only sell in smaller stores simply because they appeal to the impulse purchaser. It will surprise many Sales Directors, I am sure, but the 2,500 Tesco Express stores have the potential to sell a third, or better, than the sales in the larger stores – in particular in core areas. If you have the right product then, that’s equivalent to 800 large stores. That’s bigger than all Tesco Extra and Supermarkets put together. And, of course, convenience stores are growing. Not just vs their larger competitors, but organically. Have a look at this;

him! has just interviewed 20,000 shoppers, across 20 leading convenience chains, as part of its Convenience Tracking Programme (CTP) and found 18% of them admitted to picking up something on impulse vs just 15% in 2014 and 14% in 2013.

“Interrupting shopping behaviour in a convenience store is no easy task; 3-in-4 shoppers want to get in and out as quickly as possible and 42% don’t notice any comms or signage in-store. But retailers and suppliers have been putting a real focus on ‘interrupting and inspiring’ their shoppers in-store in order to disrupt this shopper often on auto-pilot,” suggested Katie Littler, Communications Director at him!

The number one driver of impulse purchasing is promotions, according to shoppers. “But it’s not just the cost saving which tempts shoppers,” explained Littler. “The focus and visibility given to promotional products help the get noticed by shoppers.”

The other area which is driving impulse purchasing is the till and queue area. 1-in-10 impulse shoppers pick up the product from this area of store, according to the 2015 CTP research.

The way to get into the smaller stores is to prove how well you can do there. Seem impossible? Not so.

Commit to Change

Many companies are keen to do more of what they already do, but negotiate the price down. You need to ask yourself if what you are doing at the moment is actually taking you where you need to go. If it isn’t or you don’t know, this is a Green Shield moment for you.

Back in the day, Green Shield stamps were offered everywhere – but the biggest giver by far was Tesco. It was commonly felt that it would be suicide to pull out. This is the Wikipedia comment

In 1977 Tesco launched Operation Checkout, price-cutting aimed at countering the new discounters such as Kwik Save. A decision was made to abandon Green Shield stamps, saving £20m a year and helping to finance price reductions.

Recognise the scenario, and want to bet against dunnhumby being bought out? Nothing wrong with the Club Card, except when you call it a loyalty card. It’s not. And if you can’t target your competitors, it has no value for you either. Remember, a pack based promotion does target your competitors. Shoppers who are lapsed users became so for a reason. There is a direct relationship between more purchasers and more loyalists. Target always getting more purchasers and you get the loyalists as a bonus.

Thing is, if you invest to your core, and you know where it is, you can measure the impact via the sales data you get for free from all the majors. If you don’t see the impact, you aren’t getting any. If you don’t measure, you can’t do better.

“If you don’t know where you’re going, any road’ll take you there”

This quote loosely from Alice in Wonderland should be placed on the wall. The data exists (and PULSE from RVS makes it readily available) to understand where you are, and plot a measured course ahead.

This can then be shared with retailers at all levels, as well as within the company so that all activity is directed, supports, and is measured together.

Keep your fingers on the PULSE of your business

 

Invest in Layers for Maximum Return on Investment

You need Growth BUT you also need ROI…

Best ROI across 15 years  of IPA award winners came from 3 stacked messages on the Path to Purchase (See Page 69  Beyond Shopper Marketing or refer Shoppernomics).9781472424853

Objective

1.Accelerate growth by gaining additional stores, facings and ranging

2.Accelerate growth by building shopper/consumer awareness and standout all the way to the pack

The closer you invest to the shelf and the store the closer the relationship to sales, the greater the immediate ROI and the easiest to measure. The further you get away from the pack, the more people you can reach, but the less direct the impact on sales. Obviously stage 1 before you embark on any other support is to check PULSE Profit to make sure you are getting all the sales you should be from your negotiated space, identify where your core is, and build as much store space, stock and ranging as possible. You would be surprised how much additional support simple actions taken here will pay for.

(The internet is also close to the shelf for on line purchases and increasingly used for in store purchases)

Layer 1 – Pack and Shelf Based Advertising

Affinity on pack sticker

On Pack delivers up to 40% Sales uplift and appeals more to potential loyalists than discounts

Shelf Adder2

Shelf adders scream out at people if the shelf is not full – they typically add 5% to sales

Closest to the pack is the pack itself – this needs to shout pick me up against the other packs around. So use NEW if you can. If not deliver other benefits. A send away price offer on pack can deliver the same impact as a 60p drop in price – for significantly less than 1p per pack. It’s your pack, and what it says is wholly under your control. Don’t waste the opportunity.

Shelf based signage makes sure that your space is only filled with your product – this is a huge issue in the UK where space is negotiated but not guaranteed. This placement can often be achieved by simple discussion with store managers. You need to be sure, though, that material can be easily removed if shelf locations change.

We have developed a type of sign not typically used  centrally-the shelf adder – that is very acceptable to the store. This could easily incorporate a QR code giving access to review sites, or the advertisement. Holding space – and keeping it filled is your number one priority. This is vital in you core areas. KOS redemption siteCore areas are those where more of your shoppers buy than the average. The shelves run out sooner and all your marketing effort will give you better return – but only if you make sure you get better supply there. And yes, it is entirely possible to focus sales, supply chain, and marketing effort on specific stores. While QR codes are touted as having a relatively small usage at the moment, our smartphone usagerecent research with the Retail Bulletin revealed that 40% of what will by 2017 be over 40 million people are currently using it. So the most powerful way to add value in a small space available to you.  Interestingly, while it is always felt that all people are interested in is price, this is far from the truth. Sure, price comparison web sites are important, but reviews are growing in importance almost as fast.

Lastly off shelf display is typically by central negotiation. In the most stores, however, these can also be negotiated at store level. So absolutely no excuse.

Layer 2 – Path to Purchase near the store.

This is vital for building sales and awareness where you have localised distribution or in your core areas. There are many types of local support such as local internet, outdoor, sampling, leaflets, coupons of various types. RVS have measured the impact of most channels.

Burns Petfood Sainsburys proximity 6-sheet

This layer can be structured so you have impact on the Head Office, the store and the shopper. Buyers are comfortable to give you more if you demonstrate (and they can see) you will be investing alongside them.

The most effective short term use of posters is close to store, and in conjunction with specific in store activity. There are a number of studies we have done, this is the most recent;

Although the primary objective of the 6 sheet posters was to introduce the NPD lines, it also increased awareness of the brand name in general which in turn increased the average sales of all the brands products in these stores

Poster results

Without stripping away the other forms of activity, the 6 sheets looked to generate around £60k in added value sales.

This level can give real interaction with the brand – as an example a link to a site with the commercial on, or to a competition. This can be achieved through the use of a QR code – and this can be augmented with a direct click through link (try it and see). This links to a current promotion in store redeemed through our research/reward site yousay. QR codes have a much higher penetration to the under 35’s.

The graph shows the difference between control and poster stores. The content was in support of NPD and a promotion in the store BUT the impact was seen on all associated products

Layer 3 – National media.

Here you can have a national reach if the market is right with social media, or through smartphones. We have conducted extensive research into the value of smartphones you can access here. The value of interactive content to the 43 million people who will own them by 2017 cannot be underestimated. Click here for our industry white paper with the Retail Bulletin > showrooming in stores

However, National TV in local areas can be purchased within a budget of £20-40,000. If content Burns pet food 48 sheetalready exists this “National Equivalent” can be very effective in giving a national profile to buyers, for a young brand. With more limited distribution it is important to tell people where exactly they can buy the product – view this.

Posters can, in their own right, also deliver national impact. As with this 48 sheet poster as part of the pet food campaign alongside small format posters above.

Balanced marketing is a mix between the three areas – you need to remind people on their Path to Purchase to get their full attention. However you must keep all three layers in place, and in proportion as you grow to get the benefit.

Spending on digital advertising is expected to comprise more than half of total advertising expenditure in the UK this year. However, while there are clear opportunities to drive brand engagement in stores with the huge number of smartphones, it is still important to remember line of sight whenever, and wherever, this can be leveraged.

Where Should you direct your investment for ROI today?

Every brand has a core user base. The type of people that want to hear what you have to say. These people tend to cluster together, and to shop in the same stores. Waitrose core shoppers enjoy house price rises where a new one opens up – it’s that important to them. You need to identify who your core customer is, and where in the country they cluster together the most. Investment there will get you the greatest return. List in new outlets to make their managers and shoppers happy. Combine the two actions for guaranteed short, and long term, growth.

The latest census, that we use, is the most insightful yet. Combined with store by store sales data you can identify your strengths, and measure the return from your carefully targeted activity.

You will hear people tell you the contrary – you should work hardest where you are weakest. However, you are weak there for a reason. If you spend your budget talking to people who are not that interested in hearing, you will need to invest much more to convert them. Wait until you can afford national advertising to build here. There is a direct relationship between the more people who buy your product, and the more loyalists you have. Build first where it is easiest – and don’t just relay on discounts to do this. See why here

Refine your Message

If you want to deliver impact AND ROI it is vital you understand the media to use, and the kind of message that appeals to your target market. Here RVS is working with the British Population survey and redemption data from the largest handling houses in the UK in an initiative we call PULSE Promotion. Not only can we tell you where your core customers live, but we can also tell you which media they are most in touch with, and the appeal they are most likely to respond to.

The IPA say that “Advertising and Promotions are a match made in Heaven” based on analysis they carried out of the most successful campaigns since their records began. This, naturally, agrees with the principle of not letting one channel carry the load on its own.

We identify 3 major groups of people – in terms of their general response to appeals – broken into 20 UK subcategories of people. The largest two sections we call face to face and face to screen. There is a huge divide between them. The former keep their friends close, they prefer to talk to them, and have little interaction on social media. However, they can be extensive users of the commercial internet. The latter use all aspects of the internet heavily, but they are still a small proportion of the UK population. There are a crossover group that use ALL appeals heavily.

If you know who you are talking to, you will get cut through. Click for Case Studies

Don’t just target consumer impact – target shopper sales

Learning from the UK’s Leading Brands May ’15

Kantar Worldpanel’s Brand Footprint Ranking reveals the strength of brands in 35 countries around the world, across the food, beverage, health and beauty and homecare sectors.  It uses an insightful metric called Consumer Reach Points which measures how many households around the world are buying a brand (its penetration) and how often (the number of times shoppers acquire the brand).

The Leading UK Brands are Home Grown

Kantar consumer reach

Within the UK the leading brand list is headed by Warburtons. In the worldwide Brand Footprint ranking, first place is held by drinks giant Coca-Cola. However, the success of domestic brands means it is the only brand in the global top 10 to make it into the British equivalent, where it sits in ninth place.

While the top 10 UK ranking is made up exclusively of food and drink brands, the global ranking tells a different story. Compiled using data from 35 countries, the global top 10 includes a more diverse range of FMCG brands, from health and beauty favourites such as Colgate and Dove to household and hygiene products.

There are two things that are striking about this list. The first is that there is a close, direct relationship between the household penetration and the frequency of purchase.

Penetration and Frequency Relationship

Penetration and Frequency Relationship

This relationship is inherent within Ehrenburgs Double Jeopardy Law.

Lower market share brands in a market have both far fewer buyers in a time period and also lower brand loyalty.

This is normally interpreted as the fact that loyalty is a statistical offshoot from penetration and not an entity that you can, or should target.

Allied to this is the realisation that actually, given there are 365 days in the average year, how little products are actually bought. So while it might be attractive to worry about why people don’t actually buy more, you are going to get much better value for money by getting more of them to buy. Simply focus on getting your offering right so you don’t lose them.

What does this all mean for the average brand?

Firstly that local brands can do really well by focusing on a local message, and making sure that it gets out to the shopper.

Secondly, your penetration – and the loyalty of your shoppers – will be linked to your availability;

  1. the stores you are in and whether the shelves are kept full when people want to buy
  2. your placement on the shelves, and the relationship between your local demand and the shelf space available to satisfy it
  3. the standout values of your pack in stopping and converting the shopper

The discounters cannot be ignored by all of these big brands since for some people they are the only store they visit. Similarly they can now be the basis for getting your brand in front of the young family, and building a loyal user base (more people buying) to take to other retailers as you grow.

Lastly, as you grow it is from the facing outwards in Layers. This drives how, and where, you invest to get the attention of your core shopper.

Layer 1 Point of Purchase – Focus on pack messaging and promotions primarily – and keep this effort going, as it gives you pack standout wherever the shelf is. As you can afford more;

Layer 2 The Path to Purchase – Move onwards to local messaging in your core areas. Posters outside the store. Local sampling. But ally this to gaining greater availability in the area (more stores and facings)

Layer 3 – The Greater Good – There will come a point where you can look to national awareness and the goal of getting onto the top 10 list yourself.

However, while you are reaping the fruits of all of the labours, never forget that you need to keep re-inventing this process since brands just like yours was, are waiting for you to slip up.

Why not download our guide to what actually does work in the first two layers above from here Case Studies

 

 

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