A study released from ScarboroughResearch put a positive spin on the declining fortunes of newspapers as an effective communication vehicle. Their point was that “Sunday Newspapers (are) Still Best Source For Coupons” according to the article in Editor & Publisher. 53% of households get their coupons from the Sunday Paper vs.: 35% from direct mail, 33% at the store, 17% from weekday papers, 22% from loyalty programs, 15% from magazines and only 11% from online. 27% of households clip or gather coupons once a week or more.
A second study released by Hitwise indicated that visits to Internet coupon sites increased 56% year over year.
Thus the dilemma of the traditional media. They are experiencing accelerating declines in traditional vehicle readership and advertising revenue (Gannett just announced a 14% decline in ad revenues for this last quarter vs. year ago.) Whilst they scramble for effective online strategies (Gannet’s online ad revenue was up 17%) the largest chunk of their revenuesand profits comes from the traditional print ad components.
Unfortunately the nature of the cost structure of the traditional print business is fairly fixed which means that any attempts to cut costs immediately affect the quality of their product, leading to further declines in readership. The hoped for growth in online revenues is obviously occurring, but the base is too small to make up the profit shortfalls experienced elsewhere ..and may not develop in time for these companies to survive. (more…)
Two articles in the 7/7/2008 Wall Street Journal illustrate contrasting market influences facing business leaders today.
“Look Closely Before Biting”, offers prospective investors caution about Whole Foods. They caution hedge funds and other program investors who are salivating over the 40% stock discount on the brand that they might end up with a not-so-savory snack. WSJ opines that this past-darling of grocery growth needs to cull costs, temper store opening plans and pull the plug on International Expansion in order to provide new investors a healthier diet.
“In Search of Growth Leaders”, is a scant section or two away in the same WSJ. In it a different set of experts talk about the importance of organic growth, focusing on the leaders and the “developing leaders” who help companies break out of industry molds, capture or create new markets and build innovating products and services.
Risking oversimplification, these articles represent different ends of the business approach spectrum. “Management” in one case are shareholder representatives (Hedge Funds, Private Equity, Mutual Funds). They in this case and in cases such as the current Yahoo battles, want a company which has been valued historically as a growth company, to change strategy and focus on internal controls to improve earnings. In the second article dominant management tends to be internal, entrepreneurial and employing a strategy that relies heavily on information external to the company. That information is often incomplete and management understands it will lead to some failures in their portfolio of growth strategies.
Two very different approaches to business, neither wrong in and of itself. Some would say that the internally focused approach should be favored during tough economic times. (more…)
I spent just a bit of time in the last month listening and looking over the shoulders of some folks who were in a variety of fields that have been around for a while including retail, manufacturing, merchandising, trade associations, private equity guys and others in the mainstream or in the periphery of the industry.
Busy, earnest people who have a view of what they are doing and how they are going to accomplish…”the next thing.”
True innovators, those that think they are innovators and those who cannot stop the wheel long enough to think about what they would change if they could.
Many of them running hard but just on the edge of the shadow of the technology, idea or process that fundamentally changes the ground-rules and economics of the business they are in.
It’s going to be a heck of a 24 month period!
Despite distractions from would be acquirers, shareholders and competitors Yahoo is beginning to focus some attention on CPG and CPG/retail.
In the last few weeks they have:
- Done a deal with Wal*Mart.com to target interested consumers with WM.com products on sale.
- Started to work with some Retail Circular suppliers across the retail spectrum, to peel off circular promoted items and feed them to interested consumers.
- Added 94 newspapers to their consortium of 779 newspapers for content to feed to local consumers. (in competition with Quadrant One.)
This growing awareness of the importance of CPG and CPG retail is probably just a dollars based understanding. It is true that CPG and retail spend significantly on creating brand awareness with consumers. More importantly to ad vehicles such as Yahoo and Google is that FMCG (the fast moving grocery and GM products rather than electronics, music, apparel, etc.) are products that need to be repurchased, decided on, changed out at least once per week and in general more often. When it comes to frequency of purchase, number of products purchase on a single occasion and total spent over a year’s time the FMCG industry rocks! You Mrs. advertising executive want to grab attention, traffic and loyalty??…grab FMCG.
But! Tain’t easy. Not online. Consumers can turn off online commercials and sites, just like they do with TV and newspapers at home. Build your message into a convenient, contextual application designed for the way folks shop for groceries and you will be amazed at basket size, repeat purchase and WOM-buzz. Build it the wrong way and you are toast….but toast won’t buy your solution….at least not twice. (more…)
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. (more…)
Wow! At the May 28th Chicago, DisplaySearch conference, DIGITAL SIGNAGE, THE FUTURE IS OUT-OF-HOME, the buzz was on just how big this vehicle would become and how soon.
“The Fourth Screen” is the use of video displays for Out-Of-Home advertising (with the first three being; TV, your PC and your mobile device). It was clearly viewed as an opportunity worthy of huge investments. Speakers from Panasonic, LGE, NEC, Sharp, Samsung and others debated size of screen (big is good), technologies, distribution channels, connection streams and content complexity, but they were in absolute lock-step about the billions of dollars they were each spending on new expanding plants and R&D.
Stats were fast and furious but if I got it right the domestic screen count across the 8 markets targeted total 2.5 million today. ONE vendor talked about a new plant which would be producing 7 million per YEAR when in comes on stream in a year or two. AND the units this plant provides are bigger than ANYTHING available today! Bigger is certainly viewed as better, and after doing serious research in Wrigley Field last Friday I have to admit those little TV’s with the United Airlines sponsorship look pretty unimpressive by modern standards. New plants cost $5 billion each and there are $50 billion committed, over the next four years.
Now Out-of-Home advertising is neither new nor restricted to Digital Signage. Paper signage, lite-box diarama’s and other media have been around for years. 2/3rds of the efforts today are NOT in retail, but in office buildings, airports, elevators, schools and lots of other places where people are captive. That is what we USED to be at home. We HAD to watch the commercial between innings! Now we do not have to watch any advertising (other than in-show product placements) on our home screens so……naturally advertisers are going to watch for opportunities to either force feed ads to captive audiences OR put the ad in a contextual environment (ie: in a store,….where you can DO something about it!) So, again the appeal to Out-of-Home advertising is the audience cannot TIVO you and they might see you on a screen not too far from a shelf and a check out. (more…)
I visited the FMI show in Las Vegas in early May. I decided to wait and gauge the industry reaction to the show before expressing my own.
I appear to be in the minority in my view of the success of the show. Traffic on both sides of the aisle was clearly up from the anemic levels we saw in Chicago last year. Whether resurgence or last gasp (it WAS a trip to Vegas after all) is yet to be determined.
My observations:
1. The crowds of folks were legitimate buyers and seemed eager to find new news and services/products of value.
2. Traffic was good in certain areas. It seemed like the more popular booths were Online Grocery Marketing (note I did not limit to e-commerce), MyWebGrocer in particular, Forecasting and Pricing with Demandtec, KSSR and SAF having pretty decent audiences, the W5Networks guys with a new ESL technology, the systems guys (usual suspects like IBM and Agilysis) and a pretty good play for some surprises like the GS1 booth where some interest was focused on the recently announced product recall system.
3. The educational sessions were mixed. I went to a dozen. Some were pretty straight-forward “how to” type presentations. Others (Bishop on the CCRC Health and Wellness Map, a fellow on the importance of branding using all resources) may have been hard to get our heads around but held immense strategic value if studied. And a few that held promise (New Category Management, Jumping the Technology Curve, CAO, New Technologies (2) and New Ways of Working Together) but either teased for future releases or might have been a bit polite about the hurdles that stand in the way of widespread adoption.
Many of the most interesting discussions/services/products were held at Starbucks, in hallways and in more adult beverage locals with subjects around new RFID technologies, new RFID alternatives, P.R.I.S.M., Master Data, ISI and a number of other movements or companies that offered the next generation of solutions. These truly new and innovative ideas seemed to have a number of characteristics most of which demonstrated learning’s from the prior generations of products which were exhibited in the booths including: (more…)
Its encouraging to see the ISI (In-Store Implementation) work group start to talk about in-store implementation and the need for the CPG industry to improve on execution at the store.
I think it important that the group define its tasks appropriately so that the solutions sought do not yield “point” solutions only or limit the scope of the “fix” to corporate “silos“. This narrow definition would potentially exclude funcitons that contribute to what might appear to be in-store implementation issues, frustrating solutions.
One of the focal points of the ISI group and a good example of an expensive, stubborn issue is the out-of-stock “symptom”. This issue has generated consistent study results in 52 studies, for 17 years:
- 8% overall out of stock levels in grocer, drug, mass and c-stores, here and abroad
- Mid-teen percentages on promoted products
- 4% lost sales for retailers (3% for manufacturers)
- 70+% of cause is viewed as in-store
Lets examine some of causes contributing to the ”in-store root cause” in the study, but which actually occur as part of some other “silo” of responsibility. (more…)
by: John Pryslak, Prime Consulting
While current, accurate and complete product information data is the foundation of any Health & Wellness program, any competitive advantage is NOT contained in the data itself, but rather in how the program (Guiding Stars, ONQI etc.) is designed and communicated to the consumer.
That said, a lack of current, accurate and complete product information data will be the Achilles heel for a retailer’s Health & Wellness program. Imagine a program where individual products are rated against a defined and proprietary set of nutritional criteria and assigned a rating based on how good they are for you (not TOO hard to imagine since several such programs are already in place). The overall nutritional worth of any item is communicated through a shelf tag that essentially tells the consumer if a product is “safe” to eat, or if they should consult their doctor before ingesting.
The health and wellness effort represents an altruistic endeavor on the part of a retailer to help consumers purchase the most nutritionally dense foods for their money. Unfortunately, the reality that underlies this system is flawed since most of the available data used for these systems is not designed for Health & Wellness in general much less any single rating scale.
(more…)
If you remember your tales of Vlad, you may recall that slaying the un-dead requires a stake through the heart, a chance encounter with the light of day or…a silver bullet!
I have had the good fortune to spend some recent time with a few pretty sage industry ICONS and an ICON-in-the-making or two.
There were enough threads in those conversations to weave a bit of common wisdom.
We discussed long standing, unsolved industry ills. These center around the trading partner friction points in the demand chain…. implementation miscues and mis-translations, compliance and actionable measurement, mostly in-store.
If teased hard enough that fabric from these icons we find a couple of truths, some causality, and perhaps a real solution.
The Truths:
- There are no silver bullet solutions to these industry ills. If there were, we would have seen progress in fixing them! And while we have seen billions taken out of supply chain inventories we have seen no real improvements in the in-store implementations that frustrate consumers and waste BILLIONS. The proof of this lies in the statistics measuring out-of-stock levels, excess inventories on slow movers, wasted or ineffective in-store task labor costs, poor promotion execution, and even in shrink levels and price implementation costs and timing. These issues remain at the same levels of inefficiency as was the case when first measured.
- The skepticism that the industry shows in its adoption of new technology is to some degree justified (see truth 1!) but will doom the industry to a continuing, unresolved dialogue of these subjects for years to come. This doesn’t mean we have not spent (we have spent billions) but that we probably look at things too narrowly and seize the solutions that are the least expensive, simplest or constitute “point” fixes that appear to generate “hard” savings.
The cause (or some of them). We, as an industry, have tended to compartmentalize problems (out-of-stocks VS.
(more…)
