The Branded Pantry

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.   

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…)

I have written extensively about the underlying product information challenges facing the companies attempting to inform consumers about eating more healthy through simplified labeling.   Some of the providers (Guiding Stars, ONQI/NuVal and others) have reverted to collecting their own product label information directly from the store shelves due to the inadequacy of commercially available data.  This approach too, given the designs of those programs will end up failing.   The newest solution on the block, points out some additional product information challenges that may lurk even if the program or commercial suppliers of product data were to successfully tackle the data collection accuracy issues. 

 eatingsafe.com is what I believe to be the first of the H&W 3.0 applications.   The company has been in business in Australia and just now coming to the States. (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…)

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…)

3 events this week prompt yet another commentary on the risks of using CPG product information in its current state.

1. A conversation with a colleague from a large grocery chain. They were talking about populating their emerging PIM/MDM systems with product information for a variety of applications across functional silos. When asked “with what will you populate this new system” the answer was “we will simply expect to get product information from the GDSN.”
2. A fourth announced (with many yet to be announced) product rating system for health and wellness. This one from a shelf tag supplier who has hired a nutritionist and assembled some product data from various sources.
3. Additional clarification from two retailers on their expectations for product ratings using the Overall Nutritional Quality Index (ONQI).

Precise, all-inclusive, up-to-date and homogeneous product data is a prerequisite for any frictionless inter or intra company business activities that concern products. This includes supply chain, demand chain and customer facing applications. Health and Wellness rating programs are the latest, but perhaps the most serious of these applications from a product data dependency point of view. Consumers are depending on their supermarkets to give them the straight scoop, the supermarkets are depending on the rating guru’s….and the guru’s are depending on the available product information.

The current state of product data collection (DIY and databases collected by third parties) were simply not designed to be precise, all-inclusive, up-to-date and homogeneous. They will not support uses such as Health and Wellness programs, as our studies have shown. Prime Consulting and I have studied this as have others (see “Its the data stupid” post on 1/3 below with its link to the original author at GXS) and have a pretty good approximation of just how much of the available data is of sufficient quality to be useful. If the product information is wrong, dated, incomplete or not correctly converted, the ratings will be wrong and the advice to the consumer will be wrong. GIGO lives!

More importantly we have identified the four primary areas in the current product introduction/revision process where information quality leakage occurs. Doug from Prime and I will co-author a blog on these four soon.

Ziff Davis Enterprise Researchjust released their survey of IT professionals. Not surprisingly the CIO’s agree on the need to spend feverishly on a number of fronts. Three of the top four business priorities included: providing better service to customers, improving business processes and cutting costs.

The technologies judged to offer the biggest impact included: business intelligence, collaboration and systems/data integration.

Their top technical priorities for implementation? Strategic applications, infrastructure changes and build-out to keep up with business growth and way down at the number 5 of 10 listings was improve the quality of information. (more…)