Bill Bishop did the first useful benchmarking of how consumers view their grocer’s digital offerings in his report Connecting with Modern Grocery Shoppers   (http://www.brickmeetsclick.com/special-offer–connecting-with-modern-grocery-shoppers ).  A fascinating read well worth the investment to get inside the issues, but the nub of it is that the consumer sees a pretty big gap between their view of their physical store and their view of the online offerings from that store.  In other words there is a lot of room for improvement and no one has this even close to right today!

These two points seem contradictory.  “Hurry up and do something”, and “no one really has pulled this all together to the satisfaction of consumers.”     So what can we do productively in the short and mid-term and what approach should we take with our customers?

Bill’s report is correct when it reports that no one has done this right, it is also true that some have done things more correct than others. It is time to take some lessons my design of the MyWebGrocer system.  This service continues to convert grocery shoppers into buyers at rates 2 and 3 X the nearest competitors in the food industry. 

 Grocery Customer facing tools and applications absolutely need to:

Be simple to use.  Maybe it is worth a consumer’s time to learn how to buy a car online or a computer but butter?  Most online grocery tools are too hard to use.  Even old pros such as Peapod fall into these traps.  I recently gave the wife an IPad and when she went to access her Peapod account there were 4-6 non-obvious steps.  USE YOUR OWN applications and you will find dozens of annoying, useless little steps than need to be eliminated.  Enlist your customers and your customer’s data….not for their insights, but to determine where they get frustrated.  Product data is part of this as well.  If categories and products are not organized logically it will thwart even the most determined consumer.  This is usually overlooked and data that comes natively from suppliers always needs to be worked into a consumer friendly order.

 Be fast.  Part of being fast is achieved by being simple and intuitive to use.   Tune the search function for food and brand queries.   My DBA reviewed lots of data in determining how to refine our search but conversion went up by 20% after the tuning, and retention went up by more than that.   At the same time resist offering graphics heavy usage suggestions or “people who bought this also bought” suggestions.  If she/he wants complimentary items in grocery, they will search.    Technical design also has a lot to do with speed.  We were absolutely nutty about never making the customer wait to get to the products they wanted or thought they wanted.  I just read a GS1 brief on making product data available through the GS1 network to internet application providers (health and wellness, price check and other types.)  Their objective is to return results to consumers in under 5 seconds.  5 seconds is an eternity in this digital world!

 Make the parts work together.   This means a couple of things:

1.       Different applications need to feed each other.  If the shopper wants to shift from the ad to the recipe engine, let her.  And let her do that from the site, or her mobile or through a link in the email reminder you just sent her.  Seems obvious but almost no one does this well today and it means that the consumer is forced to assemble parts into actions.   If you THINK your offerings do this, see the point about simplicity above and USE YOUR OWN SYSTEM.

2.       Does your pricing discount schemes work on your site?  Your loyalty card discounts?  Do prices tie out to stores and visa versa?  Are the items a customer sees in an ad for a store the same as are offered IN that store?  If not you are in no position to even begin to win at this effort. 

3.       Customers are in your stores to buy products.  If the product data online does not match the products offered in the store customers become frustrated, confused and they will look for competitive alternatives.  This affects the simplest of things including the customer shopping lists.  If they are generic (peanut butter) vs. specific to a customer they do nothing to build loyalty to your store.  Items with “image coming soon” do not sell.  Items with images that are different from the packaging on shelf at the very least confuse and slow the customer down.   I hate to say this, but if you want an advantage this is one area you can create one,  but you will need to collect product data yourself.

Make it personal.  One of the dirty little, brilliant secrets to success in this multi-channel world is the customer data.  If you have loyalty data it must be the crux of the offering to the customer.  If you don’t have loyalty data you need to lever the data you will collect from each customer online, but you are operating with one arm tied behind your back.    A site that looks at customers thru the lens of EACH CUSTOMER will have advantages in speed, simplicity, interactivity, conversion and retention.  And it will have a huge advantage in development.    This approach is how Amazon, Facebook, eBay, Google, Groupon and others will come at this market, should and when they decide to do so.  If you are already operating from this perspective….really operating from it, you will have a shot at playing alongside them.

 Two additional mid-term areas for consideration:

 Traditional grocers look at their assortment as a strategic weapon in this war.  It is not.  The big pure plays flank this view (Amazon) and it is only traditional retailers who forget the importance of assortment in their shopper offering when they go online (most grocers limit their online offerings and suffer because of it).  Hybrid distribution models will and are becoming available and must be brought online to take advantage of the store’s proximity to the consumer without entirely relying on the range handled in the store, while at the same time taking advantage of that inventory.

 With local (pickup),  hyper-local (drive by) and home delivery models comes the necessity of  developing new capabilities in the:

·         Supply and delivery logistics

·         Store picking capabilities.

 There are some fascinating, very early stage developments in both.   Winning in these areas will be absolutely critical for grocer’s as not winning here will mean very substantial cost disadvantages in a market where pricing is increasingly transparent for the consumer.    It is best to be a pioneer here if you can afford it.  If not than at least be a fast-follower.

This is not to say that Amazon’s growth is coming from grocery, it is not.  As a matter of fact they have had remarkable success in gaining, every week every household business despite by their own numbers generating FMCG purchases from only 4% of their customers.   So they have not turned their sights on grocery in a significant way…yet.

The point is that consumers have been much more willing to change their purchase habits and channel preferences than any of the experts have predicted across the consumer products spectrum from shoes to sugar.  

The amount of volume switching channels and seeking benefits other than those provided by their traditional retailers is staggering.  Over 3 billion dollars shifted out of traditional book, electronics, music and other outlets in one quarter.  

And so for our next few blogs we are going to concentrate on two issues: 

1.    A few key areas that FMCG retailers should concentrate efforts in order to position themselves to at least keep pace and potentially win in the shift in consumer shopping habits. 

2.    A couple of hypothetic models of how some of the big digital based interlopers might come after your grocery customers.  No inside knowledge here, just speculation. My purpose is clear…to give the grocery retailer of the day a foil against which she might counter strategize. 

Procter & Gamble announced the closing of its Retail Pulse organization in favor of brokers for in-store servicing.  “Shelf-Back” is now in the hands of a small group of super-brokers or “shelf-nannies”, who ply the supermarket, mass, drug and convenience aisles.  

Kraft Foods Group, Inc. will no longer be supported by the vaunted wall-to-wall retail service program but will use these same organizations.

Our brands are our “children” and they have increasingly been entrusted to three companies: Acosta, Advantage Sales and Marketing and Crossmark.  These companies care for an enormous portfolio of our carefully planned brands.

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So how do we keep in touch with the kids and, as importantly, with the environment they play in each day?

There are a variety of “proxies” measuring tasks such as new product cut-ins and OOS in an attempt to keep us in touch with the store environment.  These are usually based upon some version of POS based demand forecasting that attempts to guess at OOS and other in-store factors.  This data is generally supplemented by self reported statistics, often accompanied by a deluge of raw, unanalyzed pictures.

However, an unintended consequence of entrusting our products to these shelf professionals is that we become detached to the world in which our products live. . . . the retail shelf.    Our perception of that world is shaped by these dashboard reports, a few carefully selected photos and some syndicated reports which are rolled up and weeks old.   The more estranged we become from that shelf reality, the more our interpretation may lead us down paths of action that are inconsistent with the real needs of our brand’s equity. 

The best way to keep an eye on our products is to use ShelfSnap.  ShelfSnap turns pictures from their current role as garnish into “center plate” by transforming that snap into hard, indisputable facts about products, positions, conditions and facings.   In short, ShelfSnap lets you look at how your real products are fairing in real stores.  

Procter & Gamble recently introduced Tide PODs with huge expectations.  The dashboard reports that the products achieved good penetration in Safeway’s Dominicks division based on:

• The sell in report from the Sales executive
• The initial cut-in summary report compiled by the broker organization.
• Some level of POS based reported sales which confirm that the products were somewhere in the store and the price at which they were going to be sold.
• A few pictures of in-store execution might be included.   It is impossible for the brand to tie the actual data hidden in the picture back to what was reported on the dashboard. 

So two quick snaps from either the broker or from a service such as Field Agent or Gigwalk, uploaded to and interpreted by ShelfSnap’s web portal would tell you that:

• This item is not on the shelf but only on this display.
• The item is in front of the wrong section.
• Most importantly this item does not have a sign . . . . .nor price . . . . from either direction.  

These facts does not just slow sales it stops them cold.  No sales, no trial.  No trial, no repeat.  And it has nothing to do with consumer demand for the product.  This store was visited on two consecutive days with the same result.  What are the chances it was the ONLY store with this condition? 

Using ShelfSnap as the basis for your in-store merchandising assures absolute accuracy and brings a real understanding of the shelf back into your arsenal of competitive tools.   Using ShelfSnap as your occasional store level review allows you to get that consumer eye view whenever you feel the need to better understand what your dashboard is trying to tell you. 

Call or write Mike (mike.spindler@shelfsnap.com) or Cyndi (Cyndi.Metallo@shelfsnap.com) to find out more.  ShelfSnap 224 848 4790.

Folks like Target Stores are hinting at emulating this “exclusive” product strategy for different reasons and coming at it from a different angle with less control.

Perhaps most interesting is the move by Amazon to purchase Kiva Systems.  Kiva is at the forefront of warehouse fulfillment automation.  It provides a system featuring robotics which intelligently locate and transport needed products to “pickers” in warehouses run by Amazon companies such as Zappos and Diapers.com.    Controlling; this set of technologies, the patents protecting them and the scientists who continue to tinker with system improvements give Amazon control on which of their would-be competitors will have access to these capabilities …and the low-cost, fast pick results that come from them.

So I went to the site pretty motivated to see what kind of story I could make up about my first.

It very quickly became evident that I was going to have to select a body style, color and condition from a preset group of cartoon cars.    Then I could narrate all I wished.

That was a disappointment.  Why not simply allow me to select the actual car make, year model and perhaps color?  That would be so much more fun, at least for a guy.    I figured the site design might have done this because it was too difficult to find the various makes, models and body styles.   So I looked for my first car and within the top of the first image fold found one that would be more than acceptable to tell my story.

;

I don’t know about you but I would think this would have made the “game” more fun, more personalized, more social, and more effective.   Sorry Chief, but I Missed It By THAT Much!

February 20, 2012; 22:56 pm by BrickMeetsClick

What do the challenges of the brick meets click space look like to independent grocers? They look a lot like the challenges the big chains face, according to BMC Black Belt Mike Spindler. Mike attended the NGA convention in Las Vegas last week, and we asked him to share his perspective on key takeaways related to the digital side of grocery shopping for these food retailers.

What did you learn at NGA that BMC readers would want to know about?

Mike: Let me set the stage first. The National Grocers Association is made up of medium-size and smaller retail grocers and some one-store independents. These are survivors. They are universally good at the food business, after all, in the face of competition from the corporate giants, they are succeeding or at least surviving. They spend a lot of time focusing on their stores, which means they don’t have a lot to time to spend thinking about digital issues. They are also a tough-minded crew that brings a degree of skepticism to anything new. They’re always being sold by some very good sales people, so they tend to be wary.

All that said, when it comes to what’s happening in the brick meets click space, I think they have the same issues as the big guys. In this situation, size doesn’t matter. The competitive challenge is the same whether the organization is small or big.

Was there any theme that ran across what you saw and heard at the meeting?

Mike: Yes and it’s one that I heard expressed several different ways. It goes something like this:

There’s no shortage of information out there – but the only information I want is the information I need to make decisions. Where do I go to find this information?

So, part of the problem is finding the right information about what to do, and getting it from a source you can trust and someone who understands your situation. The other part is recognizing what to do with the information you’ve got. I talked to one grocer who got 400 hits on his U-tube video and another who does 5,000 emails a week – these are impressive accomplishments – but neither one knew how to evaluate the results he was achieving or leverage that information into next steps.

Another theme was closely related: “We need to understand and accept that we don’t know all of the answers, but we need to begin to find them.”

Were the people you talked with concerned about the cost of moving into more digital communications with shoppers?

Mike: Yes, but after several conversations, it became clear to me that two issues were being mixed together.

The first involved the cost of the tools and resources needed to execute digital communication – software, ad agencies, etc. There are clear limits on what small and medium-size retailers can spend in this area, but these limits weren’t nearly as complicated as the second issue – developing a clear idea of what you’re trying to do.

Deciding what to do to support the business is a big challenge, given the resources available. It doesn’t take a lot of money to set a digital strategy, but it does take focused effort, and there are a lot of other demands on these people. Some companies are definitely a lot better than others at this, but no grocery retailer has figured it all out yet, not even the biggest ones. Also, the target is always moving.

What does this mean about the ability of medium-size and smaller retailers to compete successfully in the expanding digital component of the marketplace?

Mike: There is good news here. If you know what you’re trying to do, and it supports your overall business objectives, you can be pretty competitive regardless of your size. And you may even have an advantage over bigger organizations in terms of how fast you can adjust to the changing situation in your local market.

It’s a little like the story about the two hunters who are being chased by a bear. One of the hunters figures out that he doesn’t have to outrun the bear, he just has to stay ahead of the other guy.

Food retailing is still a local business, and the trick is to be sure to consider all of your competition, not just the usual suspects, and not let any of them get ahead of you in terms of serving your target customers. All retailers are facing the same challenge, regardless of their size: A long-term and permanent change is under way that’s affecting the way people shop for food, and we all have to accept the need to “learn through doing.” Size doesn’t matter in this situation; big or little, we’re all working it out.

Today there are many “grocery shopping assist” applications available to the consumer.  List builders, price comparers, deal offer-ers, product locators, healthy substituters, product alternative suggesters and others.

·         In some cases these applications are offered by the retailer (Amazon’s price comparison tool,  Safeway’s feature price match program, Ahold’s Scanit).

·         In other cases the application is retailer agnostic and “customer-centric” (Google, Grocery Saver).

Regardless of the application approach used by each consumer, your store and your brand offerings are going to be compared against other choices.  You cannot help but to compete on price.  No grocery shopper wants to have paid more for their milk than their neighbor.

However, now is the time when you can chose to make price just part of the value equation which you offer customers rounding it out by including performance.   Bill Bishop refers to this opportunity in a recent blog of his at http://www.brickmeetsclick.com/updating-the-shopper-value-equation/

Let me broach two ways to bring performance into the equation allowing you to compete effectively against all current players regardless of their bricks, clicks or omni offering.  These two efforts tie out your communication efforts to your merchandising plans and to the actual condition of the shelf in a performance package that will satisfy your shoppers and that will be unmatched by your competition.

1.        Today you put a great deal of intellectual energy and creativity, collaboratively with your trading partner, in order to give your consumers the best possible shelf impression.  That planning, testing and re-planning is followed by tremendous efforts to put the plan into action.   How much time and energy is put into making sure that plan is still in place?

ShelfSnap has studied hundreds of products and categories in thousands of stores.   The assortment of products actually on-shelf for the very top brands in the very largest retailers differ from plan by an average of over 20%.   The facings presence on-shelf differed from plan by more than 50%.    The purpose of all that communication mentioned earlier is to drive shoppers to shelf to complete the deal.  When they get to the shelf and do not see products as you had planned them, the deal you were expecting to seal is ripped apart…the customer frustrated and you are just one more brand or store that promises great performance, but doesn’t deliver  on the promise. If you measure and make sure that the very well thought out plan is still on the shelf you will PERFORM 30-70% better than your competitors. 

2.       You are investing enormous effort understanding and experimenting with various So-Lo-Mo and O communications techniques and vehicles.  In order to “close the deal” in an online communication the shopper has to connect the product selected from the digital shelf with the one they encounter either on the real shelf or in the delivery tote.  If the product they see on shelf looks different from the product image they chose, or if their product doesn’t show up digitally  they will at least be confused, and in some cases frustrated. According to GS1UK at least half of these shoppers will either refuse to buy or will return the product if delivered.   All early indications from research is that consumers blame the retailer for the product “switch”.   At the very least “decision confusion” increases dwell time which translates into a smaller basket for that retailer.

ShelfSnap has matched virtually every source of grocery product images used by manufacturers, retailers and application providers  to products that actually sit on shelves in Walmart, Kroger and other critical retailers.  20% of the products on shelf have no images, or data to support any digital communication efforts, including shelf level health and wellness programs.  Of the products that are on the shelf and that do have images, in 46% of the cases the image is different from the package on the shelf.  When the image is different so too is the nutritional data over 60% of the time.

The short message here is take an active role in measuring and managing the matchup between product images in your communications efforts and the product packaging on the shelf.  ShelfSnap makes that matchup relatively painless, and the effort you go to in order to shore up the weakest link in the digital path to purchase will allow your offering to perform more than 50% more effectively than your competitor. 

No surprise that online sales gains led the parade turning in a +25% Y/Y sales performance.  10% of all online holiday sales were mobile, more than double last year.       Gains were dominated by the big online players, although some interesting small and niche players did well too.

An unofficial survey…still underway.  I have had a number of people tell me they shopped exclusively online this year for their holiday gift giving.   I have had no one tell me they shopped exclusively in stores.

Lots of interesting news from the online world this year, most of it caused by Amazon.  Everything from more availability of inventory of key gifts, to price gouging  on those same products, to the price compare app put out by Amazon inclusive of a $5 off coupon for any user who switched a product on a product scanned in-store to an Amazon based purchase of the same product.

The most interesting statistic to me was the 5 million Kindle products Amazon sold during December (including Fire).  Obviously Kindles cannot be looked at as one time sales.  Kindles, particularly the Fire are sales appliances and need to be viewed as both a sales platform and loyalty tool.    Quite a set-up for the rest of the year.  I wonder what strange bed-fellows this might bring together.

I do believe we have discovered that shoppers want to be entertained, and are perfectly willing to join in and become part of the “event” when they sense an opportunity.   In addition to these two we encountered folks dressed up as their favorite footballers, although that may have been their natural state.

Fun at Walmart.  Who’da thunk?

I was able to observe my eldest daughter and her husband, two Ubershoppers, in their natural habitat.   When I encouraged the idea of visiting the Walmart, the two immediately hit their tablets to determine the environment we were likely to find and to understand the rules around the desired product, a Blue Wii for $99 which my other daughter wanted for her kids.

They found that the product was on a first come first served basis, limited inventory and was to be released during the 10 pm promotion as opposed to the items made available at midnight.

We hustled to Walmart, found a just vacated parking spot a block away and hurried into the bedlam at just after 10:30 pm.

We scurried, as best we could, to the electronics department (picture).  We did not see any Blue Wii’s.  A question to a clerk ended with a chuckle and a terse “long gone.”  The Ubercouple said not to despair but wandered about to listen in on conversations, hoping to hear about new stock.     I simply eyed a cart containing the Blue Wii hoping the cart owner would become distracted with some other bright shiny object.

Patience paid off as a rumor surfaced that there were indeed Blue Wii’s about over in some back corner.    The Ubershopper one began a systematic search and found a two layer pallet of the Blue Wii’s hiding in behind the light-bulbs, guarded by two fierce looking Walmart ladies.  It was determined that we needed a ticket to release one of the Blue Wiis and so we were summoned by smart phone to help guard the pallet in case a flood of ticket equipped consumers showed up.

Ubershopper number one went into “sweetheart mode” and convinced one of the two protectors to escort her to the “holder of the tickets.”  Ticket secured, we picked up the elusive Blue Wii momentarily ecstatic, until of course we realized that we had a two hour wait to check out.

Ubershopper two and I headed up to see if we could find an approach that would give us a shorter line.  We found one, but still had 20 or so shoppers with carts ahead of us.   Ubershopper number one stalked other lines and put in a smart phone call to tell us that the lines in electronics had become confused opening up the two center checkouts.  She pounced on the lapse and we arrived just in time to have a slightly bewildered young fellow check us out and ask where we had found the Blue Wi.

We were out the door by 11:06 pm with a Blue Wii strapped across the hood of the car.