The Branded Pantry

Mid-June and Sears announces grocery delivery through their mygofer.com site.  Initial delivery can be found in New York City and the Hamptons in Long Island.   

Pretty ironic move from a number of perspectives.  

1. Grocery has not been the strong suit of Sears or K-Mart in…well in forever.  I can remember their regular K-Mart grocery stores way back when I was a wee lad in Evansville, Indiana.   Pretty much dead last in the food chain of food chains!
2. Sears and K-mart have not had much to crow about since their combination some years back from the standpoint of innovation in merchandising or meeting consumer needs.  
3. Still, from a legacy standpoint, Sears was long dominant in the home delivery business, with demand generated by their catalogue many years ago.   They delivered everything from underwear to houses at one time or another.  
4. One of the early pioneers in web-catalogues and home delivery was Lands End, which was eventually purchased by Sears and folded into their overall web applications.  

Overall a good move.  They understand the role groceries play in the consumer’s life and the impact of having consumers tied out to them via multiple touch-points in an intimate fashion 1.5+ times per week.    However, like so many others they do not understand the key elements necessary to win consumers, and more importantly keep customers in the online grocery world.  The Mygofer.com site is simply not built to accomplish either of these goals, and the lack of fresh thinking about bringing in real expertise is uncomfortably familiar.  

They will need to do some serious rethinking to get this right.  But, the guys that do??? That will be a powerful entity.   

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. 

You are the CEO.  Ten years ago a competitor emerged creating a new distribution channel.  You eventually followed that competitor into the channel, but not until they had claimed a very substantial chunk of business…a chunk that continues to nibble at your market share.

Now that competitor has opened yet one more channel.   Industry pundits discount the competitor’s self reported  

progress for the new channel, claiming that the product lines delivered through this new format are not full price product and therefore might not represent true impact.  Still, the delivery method has grown from 10% of sales in March of 2009 to 60% of sales in January 2010.  From whom do you take your advice?

Peter Drucker “the most important work fo the executive is to identify change that is already happening.  The challenge is to exploit these changes and to use them as opportunities.  Far too few businesses are willing to slough off yesterday and as a result have too few resources available for tomorrow. ”

The product line in question here are books, the statistics Amazon’s percentage of sales on books “kindle ready”.  The trend is real, rapid and irreversible.  The game is afoot, has been for some time.  Traditional book sellers have already lost with Borders reporting holiday sales off 14% from year ago.   Next year the book source brands people will be talking about for the holidays will be Apple, Google and of course Amazon.   Borders may well be a division of B&N and most probably there will be more empty retail space to add to the over 200,000 retail doors that have closed since the beginning of this downturn. 

I bought two Kindles for Christmas ‘08.  One for my very tech savvy eldest, who travels extensively and reads voriciously.  One for my tech-aphobe wife whose relaxation depends on books.  One week after my daughter left from her Christmas break and went back to work in Texas, my wife still had her head buried in the Kindle and had “improved” the design by adding a battery powered reading light.  The game was clearly well underway at that point. 

What change that has already happened am I failing to exploit?  What game is already afoot, in which I am not engaged?

Sometimes companies are faced with new process or technology decisions where the criteria for judging alternatives are difficult to comprehend and are made confusing by the propaganda offered by vendors.    This can be particularly daunting in the retail arena.   So many of the technical choices can offer slim feature/benefit differences.  Others offer real differences but the expertise of the buyer is limited and so the “claims” that each vendor espouses, makes the vying products “look” similar.      (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…)

A neighbor and retired Ad Exec, sent over an article from the Times the other day.  It documents cable operator efforts (specifically Cablevision) to target consumers. 

Cablevision will use a new targeting technology to route ads to specific households based on data about income, ethnicity gender, kids and pets.  They will do this in 500,000 homes generally in the NYC area.  Matt Seiler from Universal McCann- Interpublic Group stated in the article…”we have been talking about this since the beginning of time, now that we have it in 500,000 households it is real.”  Seth Haberman the CEO of Visible World was quoted as saying “TV was always big and dumb.  Now, we can be big and slightly smarter.”

But is it real….and can TV be smarter…and mostly,  does anyone care?

(more…)

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).  (more…)

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.  (more…)

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.    (more…)

 Despite distractions from would be acquirers, shareholders and competitors Yahoo is beginning to focus some attention on CPG and CPG/retail.     (more…)