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.
A Progressive Grocer article on September 1, 2008 gives some additional insight about the collection techniques that Nielsen will use in trying to connect the stimuli that a consumer is exposed to in-store and their reactions.
Pioneering Research for an In-Store Metric is at its core, a movement to move budgets that have been tied up in traditional advertising channel into the in-store environment. In order to do this the industry has to bring transparency into what happens to the consumer between the time they enter the store and the time they checkout. What did they see, what aisles did they visit and what messages were effectively delivered and either acted upon or ignored.
Nielsen has proven over the years that gathering information from a sample of consumers can be both insightful and representative of actual consumer trends. In this case however, they also need to “project” executional behavior. The consumer is not the only element that disappears when it hits the store door and doesnt reappear until checkout. Products and promotional execution also disappear when they hit the back door and the reappear in the POS sales reports. What happens to those products in terms of merchandising, POP support and other advertising/promotion support is every bit as important as which aisle the consumer visits.
Nielsen will capture in-store stimuli in their sample of stores, but when dollars are at stake and with increasing scrutiny on ROI, both trading partners are going to want indisputable, in-store intelligence to help tune the plan and document the execution.
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…)
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…)
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…)
There is a very interesting battle beginning to take shape in the CPG advertising world. Three evolving advertising approaches are poised to pick apart the traditional advertising providers carcass (and the revenue spent thereon.) The three camps include:
- The traditional players disguised as new media players. Entrants here include quadrantOne and Yahoo’s newspaper consortium (sheep in sheep’s clothing?) As structured I don’t think this will pan out but will cover my reasoning and the capabilities in future articles.
- Approach number two involves moving traditional advertising dollars into new vehicles and approaches to the place where CPG dollars are spent, the store! These advertising dollars are not to be confused with the already large pot of manufacturer dollars spent in trade allowances with retailers. It will be a fresh infusion for brand advertising involving current and new in-store vehicles and technologies. The approach is early stage, but with support from top pedigree manufacturers, agencies and retailers. Their efforts under the banner P.R.I.S.M are ongoing and picking up steam rapidly. But there are some pretty significant unanswered questions. This too, will be the subject of future articles.
- The web and web 2.0 are also siphoning off traditional CPG advertising dollars. The trickle of dollars that began some time ago is becoming a stream as manufacturers discover BT and soon BT/contextual combinations. These powerfully targeted tools are receiving rave reviews for efficiency and effectiveness and are driving the transition. For instance Kimberly Clark spent 10% of their ad budget in 2004 on alternate media, including online. This year they will funnel 34% into the channel.
(more…)
According to CPG Brief: At Wal-Mart food products related to entertaining and baking performed well, in posting better than expected same store sales of 2.4% for the five weeks ending 1/4/08. Further, Costco added 7% same store sales increases with strength in produce deli, cooler, candy and foods.
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Amazon announced that they are expanding their local online grocery delivery (and pickup) service in the Seattle area to additional neighborhoods. This “experiment” is reportedly doing very well as consumers are evidently quite pleased with the full grocery service including perishables (produce, meat and bakery) offered by Amazon. (more…)
