The Branded Pantry

Wow!   Whoda thunkit?

Part of starting up our ShelfSnap adventure was the need for some expanded office space.  The idea was to office both ShelfSnap and my Panther Mountain consulting practise in the same space since my former combo office/conference room, wouldn’t do the trick. 

So…..we went out and found some very nice space with plenty of space for the 3-7 of us that might be in at any given time (quite a few mostly virtual folks, but all save one are in the Chi-town area..for the moment.)  as well as some nice meeting space for some clients!  Great time to find office space.  Landlords are eager to lease and are willing to toss paint, carpet and other amenities around in order to hold some floor on pricing.  Plus we are great tenants…high tech, fairly green, responsible (mostly), and we don’t whine much. 

Movers too are relatively reasonable, since that business is hurting more than a bit.  We had office/computer gear picked up from two locations and delivered to two locations ….  The folks doing the work were mostly courteous, generally pretty industrious and did not whine when delivering in a blinding snowstorm.   We didn’t dicker much on the price since we had some last minute adjustments on timing and locations but…they didn’t take advantage either.

But the phone guys!  We started with with AT&T since that is what I had at our old offices in Lake Bluff.  After some fiddling we found out who we needed to talk to (no phone numbers on their website!)  Lined it up in one phone call and an email.  Set it up for two weeks from the date of the email and the next day…my LB number went away and my new number was activated…..course we had not moved out of our old space so we had no way of actually TALKING to clients.  A day later that was fixed. 

We moved and…….were informed that our phone guy would be there that day.  He finally arrived and installed the ….phone lines….but no high-speed lines.  This is not a small office building.  There are 10 tenants and based on the number of cars well over 100 professional type folks work here everyday.   We then placed a number of calls and found out that….AT&T did not think they serviced that building with high-speed (or any speed).  They had sent a letter to my house (arrived a week later) informing me of this.    The people at AT&T were delightful.  They just had no infrastructure to actually be able to ..you know….offer phone service.

We called both TDS and ComCast to try and find the answer.  ComCast was our first choice since they offer even higher speed internet and have some pretty fair pricing deals out there.  However…..they could NOT tell us if they serviced our building.   Again, this is a REAL OFFICE BUILDING.  How can they NOT know if they service?  They told us to sign up and within a week they would send someone out to survey the building.  If they DID service they would be happy to hook us up.  If they did NOT service the building they would not hold us to our deal and we could….start over. 

We called TDS.  They KNEW they serviced the building.  They sent us over some nice people right away.  They promised two day turnaround.  And they were right, sort of.  We received some of the promised services on a Tuesday and the remainder on a Thursday.  The next week.  However, the people are nice, the phones now work….and now if they could explain their darn bills we would be in clover.

I was relating my woes to the business owner in the suite next to ours and he told me that they were very happy with their HSI supplier….yeah, AT&T!

As I was stewing in mid-phone crisis during the period and whining to one of my partners, he commented that perhaps we should be pretty cognizant of the hoops through which we put our clients as they try to become clients with ShelfSnap.  Probably something we should all review from time to time.

Welcome to ShelfSnap.  After months of investigation, experimentation, negotiation and development ShelfSnap has launched!

ShelfSnap is a process infrastructure and patented capability for turning digital pictures of in-store conditions, products and promotional material into execution-level information.   ShelfSnap aims directly through  the roof of the CPG retail store which has long been considered a data desert.

Manufacturers and retailers have watched as products, merchandising plans, pricing directions, inventory and labor have gone into the backdoor of the stores, and they waited hoping these ingredients would turn out, much as a recipe should, as tasty predictable sales and customer satisfaction.

Most of the time the plan ingredients do not turn into the satisfying repast.  Trading partners have almost no visibility into what happens in the store.  It is similar to having no visibility into the kitchen where all those ingredients have been sent.  What is happening with all those ingredients?  What do they turn into?  We know through occasional store samples that the journey these ingredients take through the store is often circuitous and, occasionally, reminiscent of that famous Three Hour Tour  on the Gilligan’s SS Minnow. 

Orchestrating in-store compliance between the plan and operations is very hard.  All of the necessary activities need to occur while coping with an uneven and changing flood of customers, a fluid labor force (difficult to staff and at times difficult to motivate), a myriad of daily directives from headquarters  and a pressure to tighten the lid on the budget.

What the last 25 years has taught us over and over is that accountability drives execution and execution drives results!  Accountability requires measurement.  The task of measurement has traditionally been very difficult and costly to do.  Generally, completed on a periodic, sample basis by syndicated data providers and generally with part-time auditors using handheld computers who capture their interpretation of a “side-stack” display. 

ShelfSnap solves for the four biggest hurdles facing the comprehensive collection of in-store intelligence.  With ShelfSnap almost anyone with a camera can be an In-Store Intelligence Data Collector.  Snap a picture of the planogram, new product cut-in, display, Point of Sale material or other condition.  Upload the picture to ShelfSnap’s servers via the Internet and we turn that image into data on product presence, number of facings, product adjacencies, shelf position, out-of-stocks, planogram compliance or new item or display cut ins in 1 store or 10,000 stores.  The hurdles we solve include:

1. Costs.  ShelfSnap is more efficient and accurate than scanning product UPCs.  Almost type of store labor, broker, 3rd party merchandiser, DSD labor or even the store personnel themselves, can snap a quick picture and effectively collect the data needed.  ShelfSnap enables census collection on every event that you are funding.
2. Accuracy.  Pictures don’t lie.  ShelfSnap provides a wealth of summary statistics on store conditions and underneath it all is the digital record available for verification and review. 
3. Collaborative.  Trading partners can review the pictures and agree on the results.
4. Action.  Data can be turned around for exception based reporting in just two days.

In addition to myself, the ShelfSnap Team includes:

Craig Hamilton:  After almost 25 years with Kroger  in a variety of line and technical roles, Craig caught the entrepreneurial bug while at efficient market services, inc.   Following ems Craig helped found STORE EYES which is a digital image collection platform and task management aid designed for retailers.  Currently, at ShelfSnap Craig runs our retailer products, product development and business development.

Brian Rock:   With a career that began in Customer Service at Nielsen South Africa, Brian truly found his calling in the product development arena.  The Architect at efficient market service,  Brian designed the infrastructure that supported store-specific data collection and reporting and first introduced the CPG industry to the first taste of census data.  Following ems  Brian has continued to work in the CPG industry with MyWebGrocer, Gladson, Hobart Valassis  after co-founding POSNet which offered the first engine to convert promotional offers from a variety of sources into POS resident

Rimas Siliunas:  With years of developing systems and software for the CPG industry first at ESCA and most recently at his own venture, Intersoft, Rimas has been the leading system contributor for the following companies:  efficient market services, inc., Nielsen, POSNet, Hobart/Valassis and Market6.

• Housing prices off another 9% in September
• Fuel prices off peak but we still ship $70 billion off shore to fuel the economy
• Market down and gyrating enough so that no one knows which way is up
• Credit trust = bone dry
• Jobless rates climbing
• Retail businesses choosing to liquidate because they cannot line up credit to go chapter 11.
• Good time to start a business, right?

A number of business associates/friends and I have been looking at some new technologies in the in-store intelligence arena for about 10 months now, and have integrated/developed solutions in this space under the company name ShelfSnap.  I will cover more about what this service offers in another blog update.

My eldest daughter, who works for NPD’s  Displaysearch, worked for me in one of my earlier ventures and suggested that starting a business in such a challenging environment might be an interesting topic for some blog updates.  Who am I to argue with someone as smart as Heather?

 When I started Panther Mountain over a year ago, I became involved with a number of companies which are offering some real advances in in-store intelligence and online capabilities, aimed at either current demand chain ills or current consumer-serving opportunities.   The market has been tough on funding, piloting or even getting-in-early, despite substantial proof of both execution and ROI.   Still, all of the firms continue to progress.   I spent quite a bit of time reviewing the challenges all of these firms have faced, trying to decide how that would influence my decision to go ahead and start ShelfSnap.  Needless to say, I decided to move ahead anyway. 

Part of my reason for moving ahead despite the unsettled times is driven by a firm conviction that the service can provide real value to our customer base, the manufacturers, and retailers in the CPG space.  At the CPGCatNet Category Management Conference last week, Bob James who heads up marketing strategy for A&P  listed a group of values that Retailers should be following in these troubled times.  One of those was to DASH FOR EFFICIENCY, in other words find simple solutions to current problems that can impact profitability quickly.  Our new service does that for both manufactures and retailers, so I was encouraged. 

Another reason to move ahead was that two of my prior start-ups began during recessions or “busts”.  efficient market services, Inc. opened its doors in 1991.  Four other folks and I started the company despite the times.  The company reached $30 million in annual revenues and break-even by 1999 when I left, but subsequently went away after some new leadership decided to take the company into the software space.  We made plenty of mistakes, but had an offering that we believed would solve some of the Industry ills and day/item/store level forecasting and reporting has become more commonplace today as elemental in understanding demand and customer reaction.    The second company MyWebGrocer started on the eve of the Popping of the Internet Bubble in 2000.  Webvan rose and fell in our first 18 months of existence.  Everyone thought we were baked.  However, we focused on finding what the consumer really wanted in online Grocery services, and established superior services that met those needs building conversion, repeat and click through e-mail and advertising rates that are unparalleled by any Internet service, serving any industry, anywhere.   Today the company offers the biggest and fastest growing connection with consumers of any food site or network.  Thank goodness I am still an owner and still involved with this one.

Both these companies offered serious solutions that signficantly advanced either the state of the art in supply chain applications, or consumer convenience and service.   Both were a bit early for their market, but all innovation is ahead of its market.  Both these markets met with success due to offering real value to customers who had problems or recognized opportunities and, even in tough times, knew that Industry leaders would find ways to become involved in these innovations because that is how Industry leaders maintain their leadership.

So as we continue to move forward with ShelfSnap I will occasionally report on progress, setbacks and the process of starting up companies in times such as these. 

Meanwhile, we are excited, way overworked, a bit frightened, grateful for some early successes and mostly having a ball.

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. 

Supermarket News reported in an early August post that CPG companies “are still making minimum  investments  in RFID technology to satisfy their retail business partners demands” and are “becoming increasingly skeptical about the benefits this technology offers.”

Another article recently pegged the cost of implementing the retail outfitting of a pharmacy with RFID at $80,000+.    This of course, does not include the cost of RFID tagging on the products themselves.

These reports bring into view the issues which have stymied many an industry initiative including in-store execution, solving real out-of-stock issues, data synchronization and of course RFID.  Those issues include:

• The benefits-to-coverage conundrum.  Both trading parties must gain from these investments.  The benefits to the retailer or the CPG manufacturer only come when either all the vendors or all the retailers have implemented systems in a consistent manner. 
• The systems depend on other “problem elements” to succeed.  In the case of RFID, both sides need accurate, up-to-date product information and that simply doesn’t exist today (see point above). 
• Investments are large and if priorities do not put this at the top of the investment list….see the first point.

 Technology never stands still, and alternate technologies to RFID …and frankly to these other dilemas mentioned above are emerging.  Alternatives that overcome these traditional hurdles, are more cost effective and can provide benefits to both trading partners immediately.   

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.

The association recently interviewed Branded Pantry Blogger Mike Spindler about the evolution of the in-store environment.  The interview is repeated here.

An Interview with Mike:What needs to happen at Retail and how can manufacturers enable this?
There are at least five big trends at retail that are driving the need for change in the U.S. retail market.   All of the changes involve gaining transparency into the last great frontier…the store itself.  Today the store is a data-desert.  No meaningful, accurate in-store intelligence exists for effective demand signaling nor compliance measurements exists.  That is about to change. 1.       Retailers continue to build stores, albeit the “drive for size” is mitigated somewhat by both lack of real estate and the realization that shoppers interpret convenience differently than most retailers or manufacturers. 

2.       Manufacturers and retailers both are having a hard time successfully dealing with implementation problems in-store.  They spend billions to make plans and yet almost none of those plans are executed flawlessly, most of them are executed with some exception to the plan in every store.  The In-Store Implementation Share-group is the most vocal current movement to deal with these issues, but they have been on the table for at least 20 years, with no measureable improvement in execution noted.

3.       Plans generated by both manufacturers and retailers are targeting consumers more closely.  This includes store by store planograms driven by shopper insights (Safeway, Kroger, DelHaize elsewhere).  These types of store specific merchandising and promotion requirements exacerbate the demand signaling and supply chain issues which will increase the impact on implementation problems.  

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Plan, Do, Measure….That is the mantra of the In Store Implementation Share-group, and has been in one, shape or form the tactical basis of every effective management technique for many years. 

 Easy to say…hard to do.   Not so much the planning.  We have scores of effective shelf, category, shopper insight, pricing and promotion planning tools which are made more sophisticated each year.    Not even so much the doing, as we have built any number of both organizational structures (3rd party merchandisers, distributors, wall-to-wall resources, etc.) in both our retail and our manufacturer organizations.  We have also built more effective task management systems (Reflexis, Red Prairie, others) that have the ability to prioritize and manage the crushing amounts of instructions headquarters wants to have implemented in their shelf, pricing, promotion and “fixit” efforts at store level. 

 The measurement….not so easy.    Oh, we have our syndicated data that gives us a smattering of causal (display, ad and special price information) generally from a sample of stores.  Not enough detail, nor timely enough, nor complete enough to give an accurate, actionable picture of shelf/store conditions.  Certainly enough wiggle room to allow the trading partners to disagree about the readings provided….and therefore about the conclusions about the effectiveness of the planning or the doing.   

POS data was also viewed as a potential measuring stick, particularly as it moved from weekly to daily and had marvelous models applied to it to determine out of stocks and the like.  Over time we have come to understand that while POS is a measure of results….with no view of the store conditions that in the main caused the results we are in no better position to change our plans or our execution if we do not know what the prior plans nor execution actually executed!

Other tools were supposed to measure (self reporting systems tied out to task management), or eliminate the need for measurement (Shelf Strip Systems).   These of course are fraught with issues that either cause some element of trust barriers to acceptance (self reporting?) or are systematically insupportable (Shelf Strip Systems start with data from the Product Information Masterfile… the accuracy issues have been discussed in this blog, GXS, Agentrics, GS1 and many other areas at length.)

There are a couple of emerging technologies that have the potential  of  effective measurement in an irrefutable, collaborative and efficient manner.  RFID was thought to be the front runner in this arena, but technical, business practise and cost hurdles continue to plague this dream, although VCs still invest millions into companies such as Altierre and Goliath.  The new group of solutions appear more pragmatic.  One of these is ShelfSnap , another is Store Eyes and the third is ShelfMeter by Ferveo Technologies.  (more…)