The Branded Pantry

Much has been written (perhaps most succinctly by CPGmatters.com http://www.cpgmatters.com/ProductTrends0310.html#anchor_140) about CPG’s move back into E-tailing.    A number of the articles focus on P&G’s initial “build their own” strategy.  Other articles focus on new platforms such as Alice.com which has attracted participation from 29 manufacturers.  

Almost all of the articles give a lengthy review of past forays into E-Tailing by CPG companies (almost always mentioning Webvan and other spectacular failures).  Many talk about the new efforts “getting it right.” 

Truth be known, CPG has been sold effectively through E-tail since 1989.  And while some efforts failed spectacularly others have quietly, done very nicely and have continued to grow significantly for years and years.   

Online CPG-retail much like many other categories, has shown year over year results that have consistently well out-paced same store physical sales.  Most of this has been on the backs of online sales channels offered by traditional grocers such as ShopRite, Harris Teeter, and Delhaize more through specialized online services such as MywebGrocer.  Other CPG sales have moved through straight E Tail services such as Netgrocer, Amazon, MyBrands, FreshDirect and Alice.com, as well as hybrid services such as Peapod. 

A great deal of innovation continues to flow from these services, so while the recent entries may well lead to some new ideas….there are other, very significant motivators for CPG firms to reengage in direct to consumer channels.  Three connected motivators spring to mind:

1.     The absolute number of outlets which could sell or at least stock the manufacturer’s items has been falling for years, but that decline has accelerated mightily during this downturn. (http://brandedpantry.com/2010/02/28/200000-1/ )

2.  .  Clean stores and SKU rationalization have eliminated sizes, flavors and entire brands from store shelves in the biggest food, drug, mass and even C-store chains.  A brand, size, or flavor eliminated in one retailer, is unlikely to be found worthy or continued space in another. The items left on shelf are being squeezed for pricing and for ad-support making them less and less profitable.

3.  .  Fewer outlets, fewer products and brands on-shelf, more of the ad budget in the hands of the remaining retailers….this all translates into control.  Most importantly this translates into the conscious shift in control of the consumer interface to those remaining large retailers. 

CPG companies know there is no hope in replacing the short term volume lost in the continuing SKU rationalization efforts and in ongoing store closures by simply offering an online shopping opportunity.  They are hoping to maintain or establish a more direct tie to their consumers.  Most I have talked to aren’t sure what they want to communicate to those consumers, since sending buyers into stores which no longer carry the advertised product is a recipe for disappointment.    

Perhaps these new efforts by the CPG companies to get online, might well sit down with the MyWebGrocers, the Peapods, the MyBrands and the FreshDirects of the world and see what has worked and what has not, as a good starting point for new efforts.  

There is little doubt a broader innovation, beyond simply connecting via a website and mobile coupons will emerge.  Little doubt at all. 

2009 will be a hallmark year for the paucity of new items introduced by manufacturers.  However, Fabric Care is a category with numerous new products and many of these deliver substantial innovation to consumers.In late April the first of these laundry brands hit the market, clamoring for space on key retail shelves.  Soon after both introductory trade promotion and heavy consumer advertising began pulsing through magazines and television.  Both were quite substantial outweighing most new product introductions from recent years.  The product was first seen on the grocery shelf in early May at least in outlets such as SUPERVALU and Safeway.ShelfSnap looked at the launch of this product in the largest U.S. retailers.  We picked a point in time 4-5 weeks after the product launch and promotion in feature advertisements.  We ran a second wave 4 weeks later.

PerformanceWave 1 - June 2009:

• 31% of the stores did not stock the new product at all. 
• Of the stores that did handle the products, the average store stocked only 4 of the 6 SKUs in the brand. 
• In total only 48% of the possible distribution was in place 6 weeks after the launch in these critical retailers. 
• The average SKU had 1.2 facings per store.
• In two-thirds of the stores the products were scattered across multiple shelves.

Wave 2 - July 2009 - 4 Weeks Later: 

•  All of the stores in these chains handled the product.
• However, only 85% of the possible distribution was in place at this 10 week point.
• The average facings per item had increased to 1.3 with only 5 of the 6 SKUs in the brand on the store shelf.
• The brand was always stocked on a single shelf level.
• Over 40% of the stores had changed the location of the brand from the prior wave.

Tools This type of performance occurred in the largest retailers in the U.S.  All of the most sophisticated traditional tracking and detection tools are in-place and being used by the retailers, broker and manufacturer.  The amount of scrutiny placed on this launch was very significant.  Somehow the tools were not up to the task of clearly laying out to the trading partners that compliance was compromised. (more…)

Day after day, week after week category and shelf plans are made.  Plans are communicated to the store, brokers and reset teams.  Team supervisors lead the charge and changes are made at the shelf.  What does the space management team know about each store’s shelf set?  What decisions does the store manager override?  What decisions are the reset team leaders forced to make during the reset?  What unplanned changes occur to this carefully orchestrated plan in the weeks and months following the reset?  Do any of these changes work their way back up the line?  Or is the whole process more like a game of Telephone?Planning, implementing, maintaining and running the store’s business is expensive.  Money is spent creating and implementing the plans.  Hopefully, money is made when the plans are complete.   You are already spending the money, a lot of it.So, here is the question, “How do you know you are spending money effectively?”  Measuring the implementation and maintenance is hard, but critical in managing this money and the results of the investment.Recent research by ShelfSnap evolved the definition of out-of-stocks to include products that are in the PLAN but that are in fact missing from the shelf.  This includes:1.    Traditional Out of Stocks2.    Assortment Voids3.    Short facingsDistribution voids and short facings, have been found to be every bit as big a problem as traditional out of stocks.  While traditional out of stocks affect 8% of products on the store shelf forfeiting 3-4% of sales, assortment voids are at least another 8% or larger and more detrimental to sales because the voids are day in and day out.  

(more…)

Curiouser and curiouser. 

A bevy of articles written by a variety of folks in the last 60 days point out the pickle in which advertisers find themselves. 

The subjects range from the claim that the future of advertising is in Print, TV and perhaps online (Advertising Age) to a BrandWeek piece talking about the superiority of in-store signage and displays to the article on How Mobile Makes Bricks-and-Mortar Retail Accountable for advertising and for operations. 

The article from Ad Age cites the ARF and a Wharton School study findings about how traditional media drives word of mouth advertising and there has been “no erosion of TV advertising sales impact over the years.”  Similar comments are made about other traditional media including print.  Much of the research backing this up however is from the 1990’s which gives one some pause.  (more…)

 Not just any word though. 

We have had discussions with a variety of manufacturers, retailers, brokers and others who work day in and day out to carry out the four major in-store efforts in order to build sales. A surprising number take pictures of their efforts.  Not so surprising was finding that most of those pictures are quickly forgotten after they were captured.  While there is certainly the “ooohh and ahhh factor” in having pictures of real in-store conditions the systematic analysis for action process of those pictures is nowhere to be found.  

Why is that?  Well pictures contain an incredible amount of information: presence, facings, assortment, holes, out of stocks, shelf location, proximity, signage and shopability.  Information that you cannot discern from hand-held scanned data.  What is more information derived from these pictures is accurate and generally undistorted.  And when pictures are taken in lieu of HH-scanned information, data collection times are dramatically reduced.  However, without a process to pull that data out of the picture, organize it, roll it up with all the other pictures of the same event and then generate the exceptions to the planned execution those pictures are worthless.  They are akin to those boxes and or jump drives of family photos.  While each image is precious, together they are overwhelming, unmanageable, frustrating, under-informing and ….well you get the picture.    This is one of the reasons that ShelfSnap is meeting with such an enthusiastic reception from manufacturers, retailers, brokers and others.  We recognize that the picture has three roles in the process:1.    A very efficient data collection device, that cannot distort the truth.2.    Raw material for the ShelfSnap Image Recognition system which identifies products in the picture, and the SS Spatial Analytics Churn Engine which counts the facings, identifies the shelf on which the product resides, understands the out-of-stocks and the like.3.    The picture also validates the interesting status miscues (or successes) or the exceptions to the plan that ShelfSnap identifies. The value that the unique ShelfSnap service brings is the ability to understand what is in the pictures, and then the ability to inform you of the important news in and across pictures.  The WORD that is worth a thousand pictures is exception!  The ShelfSnap process reports the exceptions and therefore the yields ability to direct action to the stores where conditions warrant.

Bill Pearce, CMO of Del Monte Foods company recently gave some advice to his peers in a talk.  He suggested that they “spend on marketing, capital investment and innovation or risk losing your business in the next 5 years.”  He did this in the face of an environment where the management (mostly through avoidance) risk is the name of the game. 

Part of the advice was to review what was working and what was not in this new environment.  Using a historical viewpoint is a mistake because the “revenue stream now is not where the stream was 12 months ago.”    Mr. Pearce intoned that “now is NOT the time to shy away from new ideas” further suggesting that you fund them by cutting current practises that worked in the past, but look dubious now or are break-even.   “The companies that invest in innovations and roll out…new services now will reap disproportionate benefits when the economy makes a turn.“  (more…)

We did a bit of work recently looking at a major retailer display program in a top 3 retailer across the stores in a top ten marketing area.  The retailer accounts for almost 50% of FMCG (Fast Moving Consumer Goods) sales in this market so, if the manufacturer is going to succeed in using display in this market, either standalone or in conjunction with other in-store media . . . they need to succeed with this retailer. 

Some interesting findings based on the ShelfSnap analysis.  The retailer took pictures of all of their displays, uploaded them to our service and we identified the products, facings, OOS, assortment etc. on the displays.  Some findings:

1.    All stores that had the display up.

2.    58% had the two brands included in the promotion that were specified . . . wow!

3.    All stores that had the display had an endcap.  Of those stores:

a.    20% had a 7 shelf endcap  (why do we care?, it affects assortment of flavors!)

b.    42% had a 6 shelf endcap

c.    38% had a 5 shelf endcap (more…)