No Silver Bullets - Leadership in CPG
In an early June rant, I gave my impressions of the recent FMI show. I thought the show represented the changes in collaborative leadership that are beginning to emerge in the CPG and Retail Industries. Clearly both FMI and GMA are in a state of flux about their direction and about the issues in which they wish to be involved.
There seem to be 6 big movements inviting, tugging at the fabric of the industry. Within that 8-10 organizations or consortium are trying to lead the industry or at least parts of it, in those 6 directions. All of the movements address important issues. Clearly no one change will “win”. Some combination of these will, after vying for senior management support (read budget), take hold while others may fall by the wayside.
The 6 big movements as I see them:
1. P.R.I.S.M. This recognizes the power of the store as a brand-building advertising vehicle. This has some very powerful support by manufacturers and retailers alike. There is also enthusiastic encouragement by industries who would install and service the advertising components. The movement has clear appeal….after all where better to try to influence consumer purchase than while they are in “buy mode” at the place of purchase. The movement also has some infrastructural support as Nielsen has agreed to measure traffic and “convert” it to metrics common to alternative mass media. The movement is fraught with both potential and possible hurdles….. which include fundamentally opposing views of consumer reaction. Manufacturers and retailers hope the consumer is “captive” and will therefore see the new vehicles. The consumer seems most interested in getting through the store quickly, and may have other ideas. If the industry is correct billions of advertising dollars could easily flow out of traditional media and into the stores. Some of those dollars might well come from the retailer’s promotion vehicles such as their circular. Also the increased visibility into the store might well bring into view promotion non performance which could cause as many dollars to leave the retail network as come in on the advertising front.
2. Health and Wellness. Perhaps the most pervasive potential change that the industry could exploit. It is an opportunity to both tie consumers closer in loyalty to a particular banner and offer successful retailers and their supporting manufacturers the ability to “play” in a second enormous market…health/wellness - care. The consumers are very enthusiastic about this leadership role for their grocer. Combinations of organizations such as Harvard and Topco offer the ONQI service, the Delhaize Group is offering their version, Guiding Stars,and there are dozens of other efforts, most not quite as sophisticated. From my perspective the most well thought out approach (although perhaps the approach most difficult to understand) is provided by Bill Bishop and the Institute of the Future. This movement also offers challenges in that the quality of the basic product data required to offer consumers clear guidance is out of date and inaccurate (as is all product data in this industry). The inability of industry players to deal with this issue broadly will cause this movement and grocers great harm.
3. In-Store Execution. For years the industry has recognized that translating corporate plans to in-store actions is a $100 billion dollar opportunity for the industry. Two groups are approaching this issue from different perspectives. The In-Store Implementation Share-group is focused on bolstering the plan of action, and then measuring the results, first for compliance with the business plan and then to measure how the plan, when executed, works. Another Industry Share group is looking at the same issue but from a bit further back in the process and from a technology perspective. In effect, they recognize that there is no silver technology bullet, but that a number of newly emerging technologies (ShelfMeter and Store Eyes) along with some new but existing technologies like ShelfSnap can go a long way toward dramatically improving the ties between category, consumer and product plans to what actually occurs in store.
4. Category Management Changes. Most of the industry innovators (Harris and Weber) in this arena from a thought perspective are dwelling on shopper insights and dynamics as the basis for recognizing that people are less alike in their product preferences and combinations than ever before. The implications are a different thought process about store sets and assortments, tuned to the needs of consumers in that store….which change depending on the TYPE of shopping trip in which they are engaged. A tall order! Store by store space management, set executions, compliance checks and logistics bring both talent and technical challenges. Tying this movement to the in-store efforts is critical, for both movements to succeed.
5. The online world has been making progress at exerting increasing influence over CPG consumers, particularly in the targeted arenas. This is in direct competition with the in-store advertising potential which is represented by P.R.I.S.M. . While this movement doesn’t have the visibility of the in-store advertising elements, it does have a substantial fan club as the likes of Google and Yahoo are watching with no small amount of interest and are trying to push the in-store movement off its tracks. To date many of the efforts have disinter-mediated the retailer. Now however, with the MyWebGrocer Ad network and recent Yahoo efforts Yahoo with Wal*Mart.com and retail circulars involve the retailers are brought into the loop in an innovative fashion.
6. Industry Standards/Exchanges/Collaborative Work Groups. Agentrics, the New Ways of Working Together group, and GS1 are also trying to establish additional leadership profiles. In some ways they continue to try and actually solve the data quality and synchronization issues that continue to stymie industry efficiencies and for which they were founded many years ago. These renewed efforts are attempting to address some of the same issues as in-store execution but from much further back in the process.