The Branded Pantry

Instant Planogram Access, Part of the F.I.X. approach to salvaging Category-Space Management. 

In our last blog we outlined a process, based on documenting the causes for the gaps between the plan for the shelf, and the actual shelf, for salvaging the current approach to category-space management.   We also covered the first element in the salvage process.   We said:

Our recommendations for salvaging the current category management/ shelf management model contains three process improvements. 

We call the approach the F.I.X. process:
F.I.X. stands for
• Fresh Start to the store POG
• Instant access for all parties who need to comply
• X-refer (cross refer any changes that are planned for the pog with the shelf status.)

Today let’s deal with the second element of the F.I.X. process, providing instant access to the planograms for all parties who need to comply.   In the newly released study, Optimizing the Value of Integrated DSD, from the GMA DSD committee one of the surprising findings was how difficult it was for trading partners to gain access to what was believed to be the current and store planograms.   The report indicates that access was unavailable for the store resources charged with maintaining those planograms at the shelf over 40% of the time! 

Having easy to use, perhaps even picture based, POGs available to anyone working a store shelf section is a critical step in creating an expectation that the shelf will be maintained as the trading partners have agreed.  If they cannot see and understand what the plan is, they cannot execute the shelf.  Seems obvious but in conducting the GMA study,  we ran into a number of cases where even headquarters staff had trouble laying their hands on what they believed to be the current, agreed upon planograms for a particular store.  In one case we were told by a retailer that they “thought they had some PDF files showing the plan but they were about 5 years old.”

This issue is clearly costly to both trading partners.  At the very least they cost:
• Sales for the items which are not treated as they should have been in the plan
• Sales for the items introduced but not in the plan (therefore there is not plan for them)
• Sales for a category sub-optimized on the fly by personnel who do not have the expertise or data on hand to effectively deal with introducing products, deleting products or changing facings or shelf positions, based on whatever criteria they use in the absence of an available plan
• The labor costs involved in constantly adjusting space and assortment, from the conditions encountered upon arrival at store.  In many cases these adjustments are redone by the next person addressing the shelf.  
• Ongoing credibility gap between the field and HQ on the plan vs. execution issues.
• Ongoing inability to be able to effectively measure the impact that plans are having on sales.

Recommendations:

The retailer needs to keep up-to-date planograms available right in each section.  That way stockers, brokers and others can readily refer to the set as it is meant to be.

Reading the pogs if they ARE available.
Not only do the planograms need to be easily available, they need to be readable.  I was in my local superstore the other day, which is being transformed into an even bigger superstore.  There were extra personnel wondering around trying to finish some of the aisle to aisle and within aisle changeouts.  It was pretty obvious that the plain text POGs were pretty cryptic for even experienced folks to interpret, and harder still for the unskilled.  Up to date product pictures would have helped this. 

None of this is easy, but perhaps most difficult of all is trying to match a fully filled section with a planograms and determine what is set according to the plan, what things are missing and what things are on the shelf but not in the plan.  The human eye-brain combination is not really built to generate this comparison, at least according to the Harvard Visual Attention Lab.  However, between this process and the use of ShelfSnap understanding compliance, and fixing it are well within reach for the first time. 

We will describe the third leg of this stool in an upcoming blog.  It will describe cross-referring agreed upon changes and keeping the planograms up to date so that all parties can agree on when something is not in compliance. 

ShelfSnap was asked recently to help a retailer to bring their space management and category management from their self-assessed state of 1985 into the state of the art as it is now practiced.

Based on over two years of documenting the promotion and planograms compliance levels of the industry (well documented in a variety of our newsletters (http://www.shelfsnap.com/news-events.php) and in my blog (brandedpantry.com) we have no small body of understanding that should prove valuable.

As we have reported ShelfSnap finds that planograms compliance to plan is typically below 50%.  Type 1 compliance (ShelfSnap’s term) looks at both the items called for in the plan and the number of facings prescribed for each of those items.   The poor level of compliance is equally accounted for by assortment voids and by facings discrepancies vs. the plan.

Why this process has gone so far off the rails?  Cannondale – Partnering Group studies put the impact of a well implemented category plan at 8% for the manufacturer and 14% for the retailer.  Yet no one gets these types of increases.  With compliance at the levels we have documented it is probably a wonder if much benefit at all accrues.

So ShelfSnap sifted through findings and came up with two approaches.

•    Salvage the current category management – shelf management model with better practices.
•    Start over with a new process.

The retailer had asked for our advice on salvaging the current practice which will form the basis of this and the next blog.  Then we can touch on some ideas for starting over.

Our recommendations  for salvaging the current category management/ shelf management model contains three process improvements.

We call the approach the F.I.X. process:
F.I.X. stands for
•    Fresh Start to the store POG
•    Instant access for all parties who need to comply
•    X-refer (cross refer any changes that are planned for the pog with the shelf status.)
Fresh Start to the Store POG: 

Most current plans for a given category are built upon historical plans.

Going back to the beginning, plans were started years ago when there were few store variations and almost no knowledge of what the actual section looked like in any given store.

Each year that plan, with last year’s modifications built upon every proceeding year’s modifications, becomes that base for the plan which is to come for next year.

Very few manufacturers or retailers check the actual shelf configuration, the product flow or the assortment and/or facings in any given store.  If they do check, they have done so once and make the assumption that the set stays in place.

At some point additional segmentation or versioning has been done to account for what is thought to be store size variations, or demographic or socio economic variations between stores.

In the last 5 years, store specific planograms are being built adjusting assortment, facings and location based on actual POS sales, loyalty data and on demographic information more specific to that stores trading area.

This historical foundation issue is the primary reason that plans are almost never implemented as designed.    The impact of using the historical foundation or “last year’s plan” is that the set team:
•    Almost never runs into fixtures set up as specified by the plan.
•    May run into a section that is smaller, larger than the plan calls for.
•    Almost always runs into products not accounted for in the plan or in the “drop” instructions.
•    In many instances will run into product flow set ups that differ from the very specific plans given to them.  In some cases the set is on the opposite side of the aisle anticipated in the plan.  In others the product flow (front-back of the aisle traffic) is set up differently.

All of these are costly issues for trading partners.  At the very least they cost:
•    Time for the set team to make adjustments to the plan
•    Time for HQ and regional personnel to try and “consult” on the fly to deal with the changes, if they are consulted at all.
•    Sales for the items which are not treated as they should have been in the plan
•    Sales for the items unaccounted for in the plan (therefore there is not plan for them)
•    Sales for a category sub-optimized on the fly by personnel who do not have the expertise or data on hand to effectively deal with the discrepancies encountered.
•    Ongoing credibility gap between the field and HQ on the plan vs. execution issues.
•    Ongoing inability to be able to effectively measure the impact that plans are having on sales.

Some Findings (from the top two grocery sellers in the U.S.):
•    Plan calls for 14 refrigerated shelves in two doors for creamers.  In fact almost all stores only had 13 shelves.  Efforts to fix this saw labor install a 14th shelf with not nearly enough room to hold stock in any merchandisable position.
•    Plans called for 15 shelves across three segments for bagged salads. 15% of the checked stores had either fewer or more shelves.  Range was between 10 and 17.
•    Plan called for 16’ set across a group of stores.  Just under 5% of stores had 36’ sections.
•    Stores were mirrored in over 25% of the cases for major category.  Retailer claimed mirroring never happened in their stores.
•    ShelfSnap have found that actual shelves are out of compliance immediately after set up to almost the same degree as shelves checked 6 months after the set.  The changes are different but the magnitude of gap is almost the same.

Recommendations for initiating a Fresh Start to Each Store POG:
1.    Have store personnel capture digital pictures of the set in each store, it takes just a couple of minutes.
2.    Have ShelfSnap turn the picture into a Snapogram which documents products, positions, facings and conditions.
3.    The Snapogram exports directly into your space management software of choice, this too takes just a couple of minutes ending hours of manual prep work.
You are now ready to begin building your plan with a current list of products handled, a clear and accurate view of brand blocking and flow and an unassailable view of the space and fixture configuration available.  And you will provide a plan that can be translated directly to the shelf by any team, quickly and reliably.  Your chances of getting you plan on the shelf just increased 90%.

In our next blog we will cover the I and the X in the F.I.X. process.

There has been a decent amount of hype about Amazon and Walmart fighting over the bones of the traditional grocery industry, at least in the digital media.  In the face of this onslaught it is easy to lose track of the efforts that those traditional grocers are making to win the digital war for the weekly (or more often) grocery chore.  

 Perhaps more accurately it is hard to find meaningful gains made by traditional grocers.   Most of the efforts are concentrated on: mobile offers and coupons, generation two of web applications, monetization of web traffic through advertising and of course social media.    

In my opinion, and with no small amount of experience in this area there has been a good deal of incrementalism passing itself off as innovation when it comes to applying a cohesive technology, process and data approach to the grocery consumer.  

Still, there have been some meaningful improvements advanced by traditional grocers.   One of those was a business decision to allow online grocery shoppers to shop as many times as they wish for one monthly fee.  Harris Teeter was an early adopter of the online grocery channel option.   They allowed consumers to shop online and pick up their already shopped items at their local H-T store as early as 2000.    

H-T traditionally charges a shopping fee for each order, as do almost all retailers offering an online grocery shopping option.   That fee is to help offset the labor costs of picking the customer’s order for them in the low-margin, high-labor cost grocery environment.    In addition to offsetting a small chunk of the additional labor, the fee encourages the shopper to time their purchases and bundle their orders to offset the cost of the shopping fee.    Thus online grocery orders are typically huge, much larger than normal grocery orders.

Since shoppers focus their online efforts on their “big, stock up orders” they still go to the store for their secondary or top off orders.   In a typical month the average shopper may make 2-4  of the “big, stock up trips” but they make an additional 6-10 trips to stores to grab milk, meals, tissue and many other things of which they have run short.   The idea behind a single fee with no limits on shopping frequency has been an effort to capture more of the shopper’s share of stomach and therefore loyalty.   Frankly the purpose is also to keep the shopper for visiting other stores where they may become enamored with other features of those retailers and abandon the primary grocer.   One of H-T’s primary competitors, Lowes Food Stores had also entered online grocery shopping early and pioneered the fixed monthly fee approach long before Amazon ever thought about Prime.     

Both of these grocers have been at the sharp end of many of the advances in the online grocery shopping and marketing arena. 

Early efforts with this ”one fee” approach were pretty successful at converting a group of shoppers, and heavy analysis of the data (by yours truly back when I was President of MyWebGrocer) indicated that the technique indeed had captured  a share of stomach/daily needs much higher than even the most effective of loyalty programs.  

Even with all of this activity I am still not seeing the next great leap forward in harnessing the digital grocery arena as part of a cohesive multi-channel effort.   The fully integrated approach to satisfying the needs of what I call Shopper 5.0 in a manner that earns that shopper’s loyalty in ways unheard of in any shopper loyalty program today or in the past.   But that ….is for another day.

The big guy finally started to play his cards.  Walmart announced Project Titan, their online grocery shopping effort at the beginning of the month.It is rumored to involve grocery delivery in the San Jose area.

The press is covering the project with some enthusiasm mentioning WebVan, Home-grocer and other failures while at the same time offering some positives by looking at Walmart’s own ASDA online grocery delivery experience in Britain. 

Online grocery shopping, and other online grocery activities (promotions, other marketing efforts) have been successful in the U.S. as well as in Britain, Sweden and other areas.In the U.S. online ordering with “drive by pickup” is the preferred method in all but the most densely populated urban areas.   Walmart has no small amount of experience in this model, albeit with non-grocery items having been the focus over the last few years as they have continued to tinker with the service.   Chances seem very high that they will offer this pick-up option in addition to delivery on grocery.  With their current store based expansion plan including smaller formats (smaller super stores, more supermarkets and their new convenience effort) they will have more touch points convenient for consumers on their way home. 

The addition of the non-grocery assortment to the offering online for the shopper gives Titan a real advantage on the margin game, if they can convince the shopper to toss in a pack of socks or a can opener.   That and the CPG ad revenue will be substantial through this new channel. 

So far traditional grocers have not reacted much to current (Amazon, Amazon Fresh, Sears-Kmart, Netgrocer, Alice, Fresh Direct etc.) businesses trying to move into the grocery space.  A few physical grocers offer full online shopping services include Safeway in select markets and a number of regional and independent players as well as Peapod through a number of Ahold banners.The number of stores offering is limited, under 600 in total out of a universe of 30,000 supermarkets.    The size of the business is relatively small based on dollars but is growing much more rapidly than the store based business, as has been the case in every other industry where online is a viable channel. 

So, why aren’t more traditional moving more aggressively to protect their turf?   This is most assuredly NOT your father’s WebVan.

What a wild ride this last month or so.   It’s like that frenzy of making sure you have a date or several, lined up to go to the prom. 

There has been a great deal more activity in the last six months than the transactions circled above.  However these three are of particular interest aren’t they?

While Walgreens has posted some pretty impressive numbers over the years, they have had a tough time breaking out of being seen as …well as a drugstore.    They have done a great deal to re-merchandise and remake their front ends to capture the up and down the street, milk and bread shopping trips from the gas stations and the supermarkets.  They are even putting in some meal solutions in case you want to consider them as an alternative for dinner, on the way home (huh?) 

They also have a pretty nice online presence and a great new mobile application in their own right.  So why buy Drugstore.com?  I don’t have any crystal ball into the strategy but if it doesn’t involve the two most important assets this combination can bring…they are missing the boat. The assets?  DS.coms customer base and that vast real-estate empire.  7,000 pickup locations with pickup facilities already in place.  Yum!  My experience in the online grocery biz indicates that most consumers prefer to pickup their groceries while running their errands (don’t make them get out of their car though) rather than having the groceries delivered.  

 Morrisons bought a chunk of Fresh Direct in New York.   They purportedly bought the share in order to gain access to a better set of online tools than they could assemble using their own resources.  They are certainly looking to try and gain their fair share of the growing consumer dependency on the web and mobile apps to inform, influence and generate sales of groceries and other sundries (whilst tossing in the odd t-shirt for profit enhancement).   I am not sure they are going to get their $50million worth.  Building a successful shopping application for mainline grocery is a very tricky business.  Lots of folks have tried, most have failed.   Fresh Direct always was a great experience for a first, second and third time grocery shopper.  Then the consumer wanted to move to an app that actually understood the week in-week out grocery shopper.   Further, the secret of bricks and clicks grocers is the ability to move back and forth between applications that drive coupons, or the weekly circular or a recipe, and loyalty offerings and ….well you get my point.  FD is one dimensional in that regard. 

Finally we have ebaY adding to a very curious assemblage of capabilities by purchasing GSI, the many retailer online backbone.  Add this purchase to Red Laser and Milo and you have a very, very interesting capability IF……If they are thinking grocery and if the plan is to make ebaY the odd man (or application) out in the plan.    Done right, this might be my favorite of the bunch.

Symphony IRI has reported an increase in the amount of goods sold on deal for the second consecutive year.

Given the lingering, limp economy this should not be surprising.  Further, manuacturer’s routinely try to hide commoditiy cost based  price hikes with promotions.  The product is priced at $2.89, goes on a deal for $2.29 and comes back at $3.19.  

IRI measures 70% of the categories carried in a typical supermarket sell 30% or more of their goods on deal.  The deal will include at least a price reduction, but may also include participation in the retailer’s circular ad and/or a display in store.   The 70% number is up from 60% only 4 years ago.   

The real news in this report was that the average lift per promotion had dropped by 57% in more than half the categories.  So manufacturer’s AND retailers are promoting more and enjoying lift less.    Why? Not part of the study but some educated conjecture will reveal that:

• Most promotions, event those carefully planned collaboratively by retailer and manufacturer are not implemented fully or well.  In recent studies by ShelfSnap, which turns pictures of displays into data, they found less than have the planned displays built at all.  Further they found a significant number of the displays built were smaller than planned, had a smaller product assortment than planned, or had the wrong assortment.   In one study, the promotions were built as planned, but ShelfSnap revealed that half the stores in which the displays were built had put out price signs on the displays.  Even if a consumer were attrated to the end-cap, they had no way of knowing what they would pay for the enticing products. 
• Consumers become conditioned to pricing discounts and product-promotion cycles.  Just as day traders develop a sense of timed pricing inflections so too do consumers react to products.  Just watch how consumers flock to Costco after the monthly spate of coupons come out. 
• Consumers continue to trade “down” to private label or, at least have adopted some of these “just as good” PL items as their new staple.
• Consumers have not been stocking the pantry as aggressively as they were prior to the recession.  With rising commodity and gas prices this restocking trend may reverse itself in the months to come.
• Some of the “deal” lift that used to accrue to grocery stores is occuring in unmeasured outlets such as Costco and Walmart and some from pure play online providers like Amazon, or Alice  who can be quite price competitive.   Some of these online players have ongoing replenishment models that both offer better pricing and the added convenience of “no-thought, deliver to my door” service.
• And online - mobile coupon providers like Shopkick,  as well as price comparison mobile applications such as Aisle Buyer and Scanbuy can move a prospective buyer standing in front of the shelf with a “special” price to another store with a better deal, particularly since that store is probably on the way home.

To me, the most interesting new application designed to move promoted volume away from the actual advertiser (combination of retailer-manufacturer who is sponsoring and paying for the promotion or deal) is a new service being tested by Safeway in Hawaii.    Their new DealMatch program evaluates the chains biggest competitors advertised deals, and then applys that same price to their customers loyalty cards so that the customer is ALWAYS paying the lowest price at Safeway.  This is one of the three legs to the author’s Shopper 5.0 model.  I would guess that it will be much more complex to implement on the mainland, but if they figure it out, it is a great new move. 

The flu has hit the northern suburbs of Chicago.

My two granddaughters and my partner’s daughter have all been hit in the last week.   Lots of fevers, coughs, sniffles and other symptoms that need to be dealt with.

So, while we were off snapping some sample pictures of Campbell’s new soup rack in a local Supermarket we wandered by the Children’s pain/cough/cold section. 

Wow.  What a mess.  Of course, on seeing the shelf we were immediately reminded that the section has been beset by a extraordinary series of product recalls and supply chain difficulties.  In some cases products have been recalled, redistributed and recalled two and three times. 

The sections outlined by the circles are complete out-of-stocks.  That is with the exception of the circle at the top right, which is a clip strip holding a thermometer in front of the Tylenol section. 

Two years ago Tylenol dominated this section.   Now the few brand facings are partially covered by a clip-strip product. 

The section looks a bit like a war-zone.  17% of the space is supply chain out-of-stocks meaning it is difficult to tell how long the products have been, or will be out.  

Two quick perspectives:

17% of the retailer shelf is totally unproductive.  Nothing is being sold from this space.  While it is clear that it makes no sense to reset entire sections if the interruption is going to be brief, in this case the interruptions have been ongoing and repeated.    At what point does the retailer reclaim their space?

And, there is now a whole generation of children who have gone through at least one and perhaps two cold-flu seasons where the missing products were unavailable for consumers to meet their needs which may have long term implications for customer loyalty (moms, dads and yep even granddads) for the brands and perhaps for the retailers who best meet this shortage headon with the most impactful manner of dealing with recommending substitutions. 

 How will the retailers and manufacturers gain an effective view of this shelf, and its progression over time back to whatever the new balance will be established?  The only effective management tool would seem to be ShelfSnap.  This picture of a top retailer store would indicate that no one is watching the shelf, which makes it difficult to manage the sniffle.

I have a many years love-hate affair with cars.  Like most “guys” the technology of my youth was primarily transportation oriented.  Fascination with bikes, motorcycles, cars, boats and airplanes led to some excitement and over the years a good deal of expense.   

A few years ago I bought  the first Mazda RX8 available in the Chicago market.  A Winning Blue 2004 8 with their Renesis rotary engine.  The big on.   

Not the most practical car:

·         Six speed manual

·         Rear wheel drive (in Chicago)

·         You HAVE to have snow tires if you are not going to stable it for the winter

·         Four seats, the two in back for imaginary yoga practitioners who can fold into themselves.

·         Suicide doors

·         Generally awful gas mileage, and premium fuel at that

Great fun to drive.  Outrageously generous top end.   Most of which is wasted of course in Chicago to and fro traffic.   At any rate, I love the car, but at 120,000 miles the dealer from whom I bought it announced that the engine was shot (and just 20,000 miles over the warranty!)  I talked to the dealer about replacing it and he gave me an estimate much bigger than I wanted to hear.  I checked another dealer on a whim and they came in about 12% less expensive.  I decided to do something I have never really done and that is check non-dealer auto repair shops.    Many moons ago I did many of my own minor and some major repairs on my cars.  I pretty much stopped all of that nonsense as I began climbing the corporate ladder which took most of my spare time. 

I have never really tried the grimy little shops that seem to congeal around the outskirts of towns and the industrial parts of cities.   In my investigation I found out that while one has to be prudent and careful, if you can find a really well thought of repair shop, they:  

• Will not take on work they do not feel comfortable doing (most don’t want to touch a rotary).
• Have a great network of similarly reputable shops to which they will openly refer jobs they do not want to do.
• Are generally quite willing to share with you tricks of the trade, options and likely outcomes of procedures.  They will certainly tell you what is likely to go wrong next, but also what is worth fixing and what is not.
• They seem to be incredibly busy with vehicles long in tooth, owned by those in the most need, by the frugal and by people like me who have a hard time parting with a very impractical piece of gear. 
• Are darn fair to deal with and work on fair margins.  They ended up doing a stellar job for 2/3rds the cost of the original dealer…and they bought the engine from one of the two dealers I had originally talked to.

 And they are genuinely nice folks and are sources of all kinds of information.    At any rate, the car is done.  After another 400 miles of break in, I will be back to Zoom Zoom.  And based on my experience I found out three things:

·         I probably have established the record for the most miles on a Renesis rotary engine.

·         Entrepreneurs come in all shapes and sizes and some run some hi-tech shops that are very unlikely to be overtaken by ecommerce nor likely to fall to big consolidators. 

·         There are plenty of honest business folks in the car-repair business.

More news from the online and mobile shopping front over the last couple of weeks continue to support the notion that the complex world of trying to convince shoppers to become/remain loyal has become a lost cause.  There is plenty of hope to regain loyalty, but more about that later. 

11% of online shoppers made a purchase from their smart phone in the 2010 holiday season, a five-fold increase from 2009!   

A third of all online shoppers accessed retailer sites and shopping applications to compare products or pricing either stand alone, or as they were standing in front of a desired item in a physical store.   

About 35% of all smart phone users have downloaded some sort of bar code reader application meaning, we have just scratched the surface of mobile shopping usage. 

As it expands it will both move out (more users) and down (more categories, more often per user.).   

Last week Amazon announced earnings and a variety of other actions that will accelerate its dominance over the current online environment. 

1.    At $34.7 billion dollars they would be (if Amazon just sold groceries) the 6^th largest grocer in North America.  Just below SUPERVALU and far north of Loblaw and Publix.

2.    Their growth rate, despite their size is accelerating not shrinking.  They had the strongest growth since 2000. 3.    Total growth over last year was 40%.  North American growth rate…their most developed market was 46%.  4.    They added 13 distribution centers worldwide last year, an increase of 33%.

5.    They account for over 10% of total online sales in North America.

As importantly, they continue to look for ways to innovate in the shopper loyalty arena.  Their new AmazonTote program allows for direct-to-home delivery of almost all products offered by Amazon, quite an expansion from the AmazonFresh grocery deliver service.  Both are limited to the Seattle area but this clearly represents continued experimentation with loyalty methods to offset what might be perceived as an Amazon disadvantage to retailers with store pickup models.  Sears Holding too offers a delivery model, primarily on Groceries for the moment, called MyGofer in a number of cities.   

All of these alternatives and the results being generated clearly demonstrate that the consumer is ready to be led into a variety of areas as they search for shopping nirvana.  Part of this willingness to be led away from last year’s shopping model and store, stems from early-adopter gadget intrigue.  No question about this as many of the applications are limited in product scope, not all that friendly to use and not connected to other shopping support and shopping applications.    

There is also no question that shoppers are driven to these applications in the hope of finding the ultimate or best deal possible on desired items. Today’s economy drives shoppers to look for the best deals they can get their hands on and the number of applications to help them achieve this goal, continue to explode.  Shoppers feel foolish paying full price for anything and with a little effort and patience the panache of having the coolest thing first, is quickly being replaced by having the coolest thing and paying the lowest price for it.   

All of these things drive shoppers further and further from loyalty schemes except when the loyalty scheme involves price.   As this movement continues to explode combined services will evolve to protect shopper loyalty by providing a package of value wrapped in convenience, that will trade price protection assurances for loyalty on an expanded set of products.  Will it be Amazon that develops this?  Walmart?  Or will it be your local Grocer?  Shopper 5.0, mentioned in earlier blogs (http://brandedpantry.com/2011/01/03/porous-four-store-walls/ ), starts to unravel this potential.

Situation: A good deal of hoopla, and more than a bit of angst about the significant and growing roll of mobile shopping comparison applications in traditional shopping trips by customers has been on tip of tongue and pen since Black Friday.   

Consumers seem quite willing to use their smartphones to:

Check availability of comparable products

Switch stores, even if the consumer is in one store and finds a better deal for the desired item elsewhere.

Buy the product online while doing the comparison if the item is available at a better deal in an online environment.

It would seem according to Retail Insights that 45% of consumers with smartphones have used them to perform due diligence.    

The CEO of Walmart claims that this is the era of pricing transparency.    Some manufacturers and retailers look at this as an opportunity, others with more than a bit of trepidation.   The retailers looking toward opportunity feel that if they can get the consumer into their store for a “hotter” special, based on a price compare they might be able to move that same consumer into more profitable additional purchases.   It is clear the trick to success in getting the hotter special is not going to be easy to master.  Those with misgivings correctly view this movement as accelerating the demise of retailers who do not have competitive pricing.  Others hope to hang on by either controlling the new technology (both using it to attract shoppers from other stores and to better the offers of other retailers that might sway their consumers) or controlling the environment in the store so that “we will block mobile phone reception in our stores.”    Yeah sure, good luck with that.    Still others hope that their “superior customer service” will win the day.  Not so much, as a study by Accenture indicated that most experienced smartphone shoppers would much prefer staring into their phones rather than chatting with store personnel.  

Vision:  Mobile adds yet another dimension to the multi-store, multi channel choice game that is developing for consumers.  Electronic coupons, online ordering for a variety of delivery options (online, via mail, store pickup), shopping comparison tools and the like.  All of these developments seem aimed directly at the heart of shopper loyalty to specific retailers, particularly for oft-purchased items.  These applications fly in the face of what retailers had hoped to achieve.  They had hoped to convince shoppers to go to one place to buy everything.

In reality, at least for oft purchased, items consumers want the same thing.   In our view: Customer needs drivers fall into a hierarchy that is definable with a finite number of common variables, but with infinite time and intensity variation.  Some of these are:

1.    Convenience -What I want, when I want/need it.  

2.    At a price I am willing to pay,

3.    Don’t make me work hard to get it. 

4.    Occasionally surprise and delight me with relevance. 

5.    Anticipate my wants and needs

6.    And . . .  don’t do anything that will make me go or look elsewhere. 

We believe, structured appropriately these new technologies can be bundled to help the shopper achieve a new level of loyalty to the retail entity which creates a loyal devotion to meeting these needs for each consumer.    We call the vision around this development Shopper 5.0.  Done well, it could produce more retailer loyalty than anything ever built .

Hurdles: The applications are not yet there.  Nor will all of the potential power of these applications come together in a cohesive model easily.  Finally, the product data necessary to support the necessary applications and comparisons does not exist today, particularly for FMCG products.  Some retailers rely on product differences in order to avoid being directly compared with other retailers, particularly in the electronics and durables arena.  This product information area needs a rework in order to support these new applications. Lots to come in this arena.

Much more on this to come.