The Branded Pantry

In part one of my Shopper Marketing review, we discussed definitions, benefits, progress and some of the hurdles standing in the way of even the most advanced practitioners.   The two central hurdles commonly acknowledged are in-store execution and the measurement and compliance confirmation of that execution.

Organizations are not able to calculate the impact of their Shopper Marketing efforts or identify which programs, partners or tactics are the most successful.  While most organizations plan to employ rigorous performance measurements in the future, less than half of them are able to measure impact today. 

Even the organizations most  advanced in the science of Shopper Marketing find that execution is their Achilles Heel.  Plans fall flat if:

• Tools and data for uncovering insights and measuring results are unavailable or ineffective
• Compliance cannot be tracked confidently

Establishing the committed, collaborative relationships between trading partners require trust and transparency.  The most valuable long-term relationships can only be established if both sides can credibly demonstrate their genuine intentions.  The GMA/Deloitte Study examines Shopper Marketing Measurement Tools and finds that measurement of execution is devoid of any meaningful tools or suppliers.  These findings agree with the In-Store Implementation Sharegroup White Paper  published this spring. 

Early efforts to capture execution compliance confirmation in-store have fallen a bit short.

• P.R.I.S.M. has proven that it can measure and project results for traffic within store.  However, projecting marketing execution in-store, has never been close to precise nor complete.  Execution needs to be precise, indisputable and at a census level for effective measurement.
• A variety of companies have tried to use POS sales data, transaction data and POS pricing data to estimate what marketing stimuli might exist in the store.  This technique has never been very successful and has been the source of a good deal of trade partner friction even before marketing and trade dollars were on the line. 
• There have been a number of efforts to measure marketing placements in-store involving RFID,  weight-sensitive  pads on shelves,  heat sensors (to track customers) and PDA/checkout systems.  None of these appear to offer a sensible, cost-effective, capable method for collecting Shopper Marketing or other marketing efforts in-store, at scale. 

Developing a robust execution measurement and evaluation plan is critical to directing resources to the programs and partners that drive the significant Shopper Marketing impact.  Even the most advanced practitioners do not have evaluation figured out.  Data is not available to a deep enough level to determine causality.  The perceived cost of data collection, analysis and technology challenges stop most companies cold.  The level of analysis requires granular data at the account, store, program and tactic level. 

Execution compliance measurement is absolutely critical to the success of Shopper Marketing.  Manufacturers are still largely expected to provide the resources for this expensive effort.  They become frustrated after bearing the expense of developing deep shopper insights and producing a promising retailer specific plan, only to see the retailer haphazardly implement or scale back the the program.  According to the study the manufacturer is frustrated with retailers who do not have the human capital to ensure consistent in-store execution and will move their resources to retailers who can  perform.  Retailers recognize this as the study quotes this grocer, “If we do not show manufacturers that we collaborate well, we will be at a disadvantage to our competing retailers.”

Luckily, technology is beginning to step in to fill the in-store intelligence void.  Remember, to accurately access the impact of Shopper Marketing execution must be reviewed at the census or store by store level.  Tools to complete this store by store review are becoming available at a cost that is affordable to virtually all retailers and manufacturers. 

ShelfSnap, for example, enables the measurement of display, new item and planogram compliance utilizing image recognition technology to generate comparisons of in-store plan vs. execution compliance.  Digital technology and Internet data exchanges resulting in actionable, store-level feedback provides both the retailer and manufacturer a view into the store.

ShelfMeter reports the stock level on a upc by upc basis in each and every store installation.  Using an electromagnetic item signature, ShelfMeter identifies item count and depletion to monitor the stock condition and issue store level alerts when products hit an out of stock range.  The technology driving this reporting is very cost effective and within reach of most retailers unlike other solutions such as RFID which requires a large investment in equipment and infrastructure.

The impact and benefits of Shopper Marketing will be understood and can be effectively capitalized on once these store by store evaluations become a routine part of the Shopper Marketing process. 

I have written several times about Shopper Marketing as one of the big movements affecting both the increasing complexity of the trading partner interface and the flight of dollars away from traditional brand and banner building media. 

The roots of Shopper Marketing began in the 1990’s with Procter’s “first moment of truth” efforts or “Hello Consumer, meet shelf!”  Shopper Marketing growth continues to accelerate.   Number studies indicate compelling potential gains.  Perhaps the most complete study is offered in the 2008 GMA/Deloitte Shopper Marketing Study.  Shopper Marketing drives top line growth in a mature industry.  It helps trading partners build and sustain brand AND banner equity while traditional marketing media continue to falter. 

Let’s examine what is meant by Shopper Marketing.  According to the GMA/Deloitte Study:  “Shopper Marketing is the employment of any marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand/banner equity, engage the shopper and lead him/her to make a purchase!”  When done well, a shopper should feel as if the store was designed just for them.  For the manufacturer Shopper Marketing fills a void in the long-desired goal of 360 degree marketing which integrates all marketing elements into a single holistic story.  Brand equity is generated via the retail environment.  For the retailer Shopper Marketing is about driving the relevance of the brand to the shopper and retail partner.

Experts believe Shopper Marketing will soon become the dominant concept in store selling.  Why?

1. CPG retail faced tough times even before today’s challenging economy.  Seventy percent of consumer goods categories had lower sales lifts from promotions this year than last.  Market share of the Top 10 brands is declining. The percentage of shoppers loyal to brands or banners has decreased steadily over the last 10 years.  Fewer than 10% of the more than 30,000 new products introduced each year remain on the shelf three years after introduction.
2. Experts agree that:  Shopper marketing can grow brand revenue over 25% faster than overall category growth.  CPG brands and retail banners that fully adopt, execute and engage a well conceived Shopper Marketing strategy will gain significant and sustainable advantage over those who are slower to adopt.  Fragmentation of consumer demand and the emergence of market niches stand at odds with traditional investments in brands, mass media and mass distribution. 

An October 6 ADAge article reports that Shopper Marketing gets higher marks for ROI than conventional media.  Most big CPG firms are jumping on the Shopper Marketing bandwagon, as are retailers.  Seventy-five percent of surveyed companies rate Shopper Marketing as one of their Top 4 activities.  The GMA/Deloitte study add that both trading partners intend to increase investment in in-store marketing over the next three years.  The growth is second only to investments in interactive/Web marketing.  These investments come at the expense of traditional media.  Procter’s A.G. Lafley continues to throw increasing support behind his already substantial efforts commenting that “more of the shopping list is being decided in the store.”

Shopper Marketing is not a mature science.  The best Shopper Marketing practitioners admit there are no perfect strategies.  GMA/Deliotte reports a wide disparity of company experience and ability in Shopper Marketing with only 5% of the surveyed firms “culturally embedding” the practice.  The other 95% of trading partners who are participating in Shopper Marketing are just beginning to scale their efforts.  Current financial pressures may slow development, particularly, as substantial business gains take some time to develop. 

 Clearly, the promised results are worth the effort and expense, but adoption is slow in coming. 

The Top Four challenges facing CPG and retail trading partners when adopting of shopper marketing include:

1. Insufficient technical and process capabilities
2. Cost of data collection and analysis
3. Budget
4. Skillset for analysis.

The other hurdle broadly acknowledged is the measurement of execution compliance.  The study defines execution as the gap between what a company’s leaders want to achieve and the ability of the company to deliver.  Put another way execution is the universal pitfall of Shopper Marketing just as it has been for so many industry efforts. 

A Supermarket News quoting an IRI study listed some interesting consumer trends.  Consumers were visiting Supercenters 5.5% more often, Dollar Stores 4% more often, and traditional Supermarkets 2% less often than was the case a year ago.  And this was before the full impact of the current credit crisis was known/understood (many would argue this has yet to happen). 

The study argues that consumers have redefined convenience.  They are increasingly pantry filling at the SuperCenter regardless of the distance to that Supercenter.  Then they are using Supermarkets, Drug Stores, C-Stores closer to home for their fill in trips. 

I am not sure that consumers have redefined convenience, but they may have instead re-weighted the price-paid part of the equation particularly as gas prices begin to decline (its all relative, eh?).  In the absence of real convenience (shorter trips or no trips via online shopping for groceries) consolidation of trips (less fuel) and lower prices will trump customer service and the other attributes that industry participants usually list when asked about convenience.

Oh, and according to MyWebGrocer online grocery customers are making fewer, larger trips, but there are more consumers making the switch so same store sales are trending very nicely.